IAP Worldwide pays $7.1 Million in foreign bribe case

Defense and government contracting company IAP Worldwide Services  will pay a $7.1 million penalty and entered into a non-prosecution agreement with the Department of Justice to end a government investigation into whether the company bribed Kuwaiti officials to secure a government contract.

James Michael Rama, a former vice president of IAP, also pleaded guilty before U.S. District Court Judge James Cacheris of the Eastern District of Virginia to one count of conspiracy to violate the anti-bribery provisions of the FCPA for his involvement in the bribery scheme. His sentencing will take place on Sept. 11.

In 2004, Kuwait’s Ministry of the Interior (MOI) initiated the Kuwait Security Program (KSP), a project intended to provide nationwide surveillance capabilities for several Kuwaiti government agencies primarily through the use of closed-circuit television. The project was divided into two phases: a planning and feasibility period called “Phase I” and an installation period called “Phase II.”

According to admissions made in the NPA and a plea agreement IAP and Rama schemed to ensure that IAP worked as the consultant for Phase I so that it could tailor the requirements for the Phase II contracts to IAP’s strengths, which would give the company an advantage in the Phase II bidding. Both IAP and Rama admitted executives and senior employees of IAP, including Rama, set up a shell company called “Ramaco” to bid on Phase I, in part to conceal IAP’s role in crafting the Phase II requirements and its conflict of interest in connection with securing the Phase II contract. Ultimately, Ramaco secured the Phase I contract for approximately $4 million.

Admissions made in the NPA and Rama said that Rama and IAP agreed that half of that amount ($1.8 million) would be diverted to a consultant who would pay bribes to Kuwaiti government officials to assist IAP in obtaining and retaining the Phase I contract and to obtain the Phase II contract. IAP and Rama admitted that they disguised the payments by transferring funds Ramaco received to an IAP bank account and then to the consultant through a series of accounts and intermediaries.

Jeffrey Newman represents whistleblowers