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By David S. Hilzenrath,
The e-mail read like something out of a spy novel — “PLEASE DESTROY AFTER READING” — and it contained confidential information from the United Nations.
It was allegedly part of a plot to win U.N. contracts by bribing a U.N. official.
The government charged Armor Holdings on Wednesday with participating in a bribery scheme that helped it supply $7.1 million in body armor for use by U.N. forces.
The company agreed to pay $16 million in parallel settlements with the Justice Department and the Securities and Exchange Commission.
It was another in a series of federal cases suggesting that international corporations often jockey for advantage by paying bribes— and that the strategy can be successful. At least until they get caught.
Robert Khuzami, the SEC’s enforcement director, issued a statement deploring the practice. “The important process of selecting body armor for peacekeepers should not be affected by which company pays the best bribes,” he said.
According to the government, from 2001 to 2006, an Armor Holdings subsidiary and people acting on its behalf made corrupt payments to a U.N. procurement official. More than $200,000 went to a middleman, and part of that was to be forwarded to the U.N. insider, the government said.
In return, the unnamed U.N. official provided the prices included in closed bids submitted by other competitors, the government said.
The Armor subsidiary provided a signed but otherwise blank bidding document so that an intermediary could fill in the prices after learning the competing bids. The Armor subsidiary was also accused of cooking its books to disguise the corrupt payments.
The bribery yielded profits of $1.6 million, the government said.
One of the company employees involved was Richard Bistrong, a vice president for international sales, the government said. Bistrong pleaded guilty last year to related charges and is awaiting sentencing. As part of his plea deal, he agreed to work for federal authorities “in an undercover role.”
He played a key undercover role in a federal sting in which 22 defendants in the business of supplying military and law enforcement equipment were charged with trying to bribe an African official. It came to be known as the “SHOT Show” case because arrests were made at a Las Vegas gun convention by that name.
A mistrial was recently declared in the prosecution of some of the defendants.
A lawyer for Bistrong declined to comment.
U.N. spokesman Farhan Haq said he thinks the U.N. official involved in the alleged bribery scheme has been convicted of a crime and is in prison.
Armor Holdings has been acquired by defense contractor BAE Systems. Armor began investigating the matter in 2007 based on a whistleblower tip, BAE spokesman Brian Roehrkasse said. Armor fired Bistrong and voluntarily reported potential violations to the government years ago, he said.
In a separate case that also related to the Foreign Corrupt Practices Act, BAE’s parent company, BAE Systems, pleaded guilty last year to conspiring to defraud the U.S. government. It agreed to pay a $400 million fine.
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