U.S. Firm Admits to Bribing Officials to Win Contracts in Goa and Guwahati

Saturday, July 18, 2015
The bribes were discovered and reported to the authorities by the company itself

A U.S. construction management company, Louis Berger, has agreed to pay $17.1 million in criminal fines to resolve charges that it bribed officials in 4 countries, including India where it won two water developmental projects in Goa and Guwahati.

The firm paid bribes of $976,630 for its Goa project, including to a minister whose name has not been disclosed.

Two of its former executives – Richard Hirsch of the Philippines, and James McClung of the UAE – pleaded guilty to the bribery charges. McClung previously served as senior vice president responsible for the firm’s operations in India and Vietnam.

Sentencing hearings for Hirsch and McClung are scheduled this November.

The Goa project was a five-year government contract to expand and build water and sewerage facilities. Louis Berger was part of the consortium that won the contract, which included two Japanese firms and an Indian partner.

The consortium developed a project management information system and plan, evaluated bids, reviewed design and construction plans, and ensured that work was completed on time and within budget, the company says on its website.

U.S. prosecutors, in their 11-page chargesheet, alleged that Louis Berger maintained a detailed diary and accounts of the bribes it paid to Indian officials.

On August 26, 2010, “a consortium partner prepared a payment tracking schedule stating that the company had paid USD976,630 in bribes in connection with the Goa Project to date,” federal prosecutors told a court in New Jersey.

Prosecutors claimed that on August 17, 2010, a consortium partner sent an e-mail to James McClung with an attachment that included an entry: “Paid by [an agent of the company] to minister on behalf of agent”.

But the Goa minister was not identified in the complaint, and no titles or designation other than the minister’s were mentioned. It was not clear if all of the nearly 1 million dollars went to the minister or it was spread among others.

According to court documents, the company through its employees and agents, used terms like “commitment fee,” “counterpart per diem,” “marketing fee” and “field operations expenses” as code words to conceal the true nature of the bribes paid.

These bribes were discovered and reported to the authorities by the company itself as a result of an internal investigation of billing on overseas government contracts between 1998 and 2010.

Berger said in a statement Friday that it had launched massive efforts to reform the company since 2010, and reported to authorities the bribes it paid to officials in India, Indonesia, Vietnam and Kuwait, amounting to $3.9 million.

“Today’s settlement is the critical final milestone in our reform, as it was important for us to take responsibility for the historic actions of former managers and close the chapter on the company’s pre-2010 era,” said CEO Nicholas J Masucci.

In India since 1998, Louis Berger has offices in Gurgaon, Mumbai, Chennai and Hyderabad.

- Karan Singh

To Learn More:

US firm admits to bribing unnamed Goa minister, rigging contracts (by Yashwant Raj, Hindustan Times)

US firm Louis Berger paid USD 976,000 bribe to win Indian water project (PTI)

Louis Berger takes responsibility for actions of former managers in final US Government settlement (LouiseBerger.com)

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