Armor Holdings agrees to settle UN-related bribery charges

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Armor Holdings Inc, a maker of body Armor, will pay US$16 million to resolve US criminal and civil charges that it paid bribes to win contracts for United Nations peacekeeping missions, and hid commissions it paid to win business from foreign governments.

The alleged wrongdoing ran from 2001 and 2007, and predated Armor’s acquisition in 2007 by global defence giant BAE Systems, according to the US Department of Justice and US Securities and Exchange Commission (SEC), which announced the settlements yesterday.

Armor did not admit wrongdoing. The Justice Department said its accord reflects Armor’s cooperation and remedial efforts, and the fact the alleged conduct predated the BAE Systems takeover.

Armor agreed to pay a US$10.3 million fine and enter a non-prosecution agreement to settle with the Justice Department. It agreed to pay US$5.7 million, including a US$3.7 million civil fine and US$2 million representing illicit gains and interest, to settle with the SEC.

Investigators accused Armor of violating the Foreign Corrupt Practices Act (FCPA) in 2001 and 2003 by funneling through a sales agent sums it knew would be forwarded to a UN official who could help it win contracts by providing information about competitor’s bids. The SEC said this led to US$1.6 million of improper profit and US$7.1 million of improper revenue.

Armor was also accused of violating accounting rules by keeping off its books US$4 million of commissions it had paid agents to seek business from foreign governments.
“The important process of selecting body Armor for peacekeepers should not be affected by which company pays the best bribes,” SEC enforcement chief Robert Khuzami said in a statement.

Brian Roehrkasse, an Armor spokesman, said that “Armor and BAE Systems have cooperated extensively with the government since this conduct was first reported in April 2007”, and that the settlements close the matter without any FCPA litigation. He said that Armor began investigating the bribery issue in 2007 following a whistleblower tip and voluntarily reported potential violations to the government years ago.

One of the Armor employees involved in the bribery scandal was Richard Bistrong, a vice president for international sales, according to the government. The Justice Department said Bistrong and other executives arranged for the UN agent to receive more than US$200 000 in commission for the 2001 and 2003 contracts.

Last year Bistrong pleaded guilty to charges related to bribing UN and Dutch officials to win body Armor and pepper spray contracts, and is awaiting sentencing. As part of his plea deal, he has agreed to work for federal authorities ‘in an undercover role’.

As part of this role, he assisted a sting in which 22 people in the military industry were charged with attempting to bribe an undercover agent posing as an official from Gabon.