Defense Contractor Pays $7.1 Million Fine for Bribing Kuwaiti Officials
22nd June 2015
A Florida defense and government contracting company, IAP Worldwide Services Inc. (“IAP” or the “Company”), agreed to pay a $7.1 million penalty to resolve the U.S. Government’s (“Government”) investigation into an alleged conspiracy to bribe Kuwaiti officials in order to secure a government contract.
A former vice president of IAP also pleaded guilty on June 16, 2015 for his involvement in the bribery scheme. James Michael Rama, 69, of Lynchburg, Virginia, pleaded guilty before a U.S. District Court Judge of the Eastern District of Virginia to one count of conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA).
In 2004, Kuwait’s Ministry of the Interior (MOI) started the Kuwait Security Program (KSP), a project that was intended to provide national surveillance capabilities for several Kuwaiti government agencies primarily through the use of closed-circuit television.
According to admissions made by Rama and the Company, IAP and Rama schemed to make sure that IAP worked as the consultant for the first phase so that it could manipulate the requirements for the second phase of the contract to IAP’s strengths, which would give the Company an advantage in the bidding of the second phase.
The Government stated that in February 2006, Rama and other executives and senior employees of IAP, set up a shell company called “Ramaco” to bid on first phase of the project. This was to conceal IAP’s role in drafting the second phase requirements and its conflict of interest in connection with securing the Phase II contract.
Rama and IAP agreed to divert $2 million of the $4 million to a consultant who would pay bribes to Kuwaiti government officials to help IAP in retaining the phase one work and to obtain the phase two work.
IAP and Rama admitted that they paid the consultant approximately $1.8 million between September 2006 and March 2008 and disguised the payments to the consultant by transferring funds Ramaco received to an IAP bank account and then to the consultant through a series of accounts and intermediaries. Their understanding was that some or all of the funds would be used to bribe Kuwaiti government officials.