Six Former Executives of California Valve Company Charged In $46 Million Foreign Bribery Conspiracy

WASHINGTON, April 8 /PRNewswire-USNewswire/ -- Six former executives of an Orange County, Calif.-based valve company were charged today in connection with a conspiracy to secure contracts by paying bribes to officials of foreign state-owned companies as well as officers and employees of foreign and domestic private companies, Acting Assistant Attorney General Rita M. Glavin of the Criminal Division, U.S. Attorney Thomas P. O'Brien of the Central District of California and Joseph Persichini Jr., Assistant Director in Charge of the FBI's Washington Field Office, announced. The contracts resulted in net profits to the company of approximately $46.5 million.

According to the indictment, the defendants allegedly engaged in a bribery conspiracy from approximately 1998 through 2007. In the period from 2003 through 2007, the defendants caused the valve company to pay approximately $4.9 million in bribes, in violation of the Foreign Corrupt Practices Act (FCPA), to officials of foreign state-owned companies and approximately $1.95 million in bribes, in violation of the Travel Act, to officers and employees of foreign and domestic privately owned companies. The alleged corrupt payments were made to foreign officials at state-owned entities including Jiangsu Nuclear Power Corp. (China), Guohua Electric Power (China), China Petroleum Materials and Equipment Corp., PetroChina, Dongfang Electric Corporation (China), China National Offshore Oil Corporation, Korea Hydro and Nuclear Power, Petronas (Malaysia), and National Petroleum Construction Company (United Arab Emirates). According to court documents, the valve company designs and manufactures service control valves for use in the nuclear, oil and gas, and power generation industries worldwide.

In total, the indictment alleges that from approximately 2003 through 2007, the defendants and others caused the valve company to make approximately 236 corrupt payments in more than 30 countries, which resulted in net profits to the valve company of approximately $46.5 million from sales related to those corrupt payments.

The six former executives charged in the indictment are:

• Stuart Carson, 70, of San Clemente, Calif., the former chief executive officer of the valve company, is charged with one count of conspiracy to violate the FCPA and the Travel Act, and two counts of violating the FCPA;

• Hong (Rose) Carson, 45, of San Clemente, Calif., the former director of sales for China and Taiwan of the valve company and Stuart Carson's wife, is charged with one count of conspiracy to violate the FCPA and the Travel Act, five counts of violating the FCPA, and one count of destruction of records in connection with a matter within the jurisdiction of a department or agency of the United States;

• Paul Cosgrove, 61, of Laguna Niguel, Calif., the former director of worldwide sales for the valve company, is charged with one count of conspiracy to violate the FCPA and the Travel Act, six counts of violating the FCPA and one count of violating the Travel Act;

• David Edmonds, 56, of San Clemente, Calif., the former vice president of worldwide customer service at the valve company, is charged with one count of conspiracy to violate the FCPA and the Travel Act, three counts of violating the FCPA and two counts of violating the Travel Act;

• Flavio Ricotti, 47, of Italy, the former vice-president and head of sales for Europe, Africa and the Middle East, is charged with one count of conspiracy to violate the FCPA and the Travel Act, one count of violating the FCPA and three counts of violating the Travel Act; and

• Han Yong Kim, 47, of Korea, the former president of the valve company's Korean office, is charged with one count of conspiracy to violate the FCPA and the Travel Act, and two counts of violating the FCPA.

The conspiracy count carries a maximum penalty of five years in prison and a fine of the greater of $250,000 or twice the value gained or lost. The FCPA counts each carry a maximum penalty of five years in prison and a fine of the greater of $100,000 or twice the value gained or lost. The Travel Act counts each carry a maximum penalty of five years in prison and a fine of the greater of $250,000 or twice the pecuniary gain or loss. The destruction of records count carries a maximum penalty of 20 years in prison and a fine of $250,000.

In related cases, two defendants previously pleaded guilty to conspiring to bribe officers and employees of foreign state-owned companies on behalf of the Orange County valve company. On Jan. 8, 2009, Mario Covino, the former director of worldwide factory sales for the valve company, pleaded guilty to one count of conspiracy to violate the FCPA and admitted to causing the payment of approximately $1 million in bribes to officers and employees of several foreign state-owned companies. On Feb. 3, 2009, Richard Morlok, the former finance director for the valve company, pleaded guilty to one count of conspiracy to violate the FCPA and admitted to causing the payment of approximately $628,000 in bribes to officers and employees of several foreign state-owned companies. Sentencing for both Covino and Morlok is scheduled for July 20, 2009.

The case is being prosecuted by Assistant Chief Hank Bond Walther and Trial Attorney Andrew Gentin of the Criminal Division's Fraud Section and Assistant U.S. Attorney Douglas McCormick of the U.S. Attorney's Office for the Central District of California. The case was investigated by the FBI's Washington Field Office, and its team of special agents dedicated to the investigation of foreign bribery cases.

An indictment is merely an accusation and the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.

SOURCE U.S. Department of Justice