WASHINGTON (AP) — Jurors have seen grenade launchers, M4 rifles and secretly recorded videos of military suppliers working on a deal to funnel money to an official of an African nation they wanted to buy their weapons.
Now, after a six-week trial, the 12 jurors in federal court here are deliberating the guilt or innocence of the businessmen arrested in the first undercover sting operation designed to enforce a 1977 law against foreign bribery.
Enacted during the Watergate era, the Foreign Corrupt Practices Act had fallen into infrequent use. But enforcement has ballooned since the last years of the George W. Bush administration, as more companies do business abroad and senior corporate officials have had to certify financial statements under laws passed in response to corporate accounting scandals.
The four men on trial are among 22 businessmen charged in a sweeping investigation, most of them arrested last year as they were gathering for a trade show in Las Vegas where they anticipated picking up checks for their military hardware from Gabon's defense minister.
But no officials from the central African nation were really involved in the deal. Instead, it was brokered by undercover FBI agents and a cooperator from the industry who helped persuade his colleagues to sign onto the deal that would land them under indictment.
The sting produced the largest group of individuals ever charged for FCPA-related violations and is part of an increase in prosecutions that began in the Bush administration and has grown under the Obama administration. In 2004-05, the Justice Department charged seven people under the law and collected more than $27 million in criminal fines. In 2009 and 2010, the department charged more than 50 people and collected nearly $2 billion.
Although Securities and Exchange Commission investigations in the mid-1970s led to the law, Justice officials say bribery is still an issue today and have about 15 lawyers committed to prosecuting violations. They cite World Bank estimates that more than $1 trillion in bribes are paid each year, or roughly 3 percent of the world economy.
"When U.S. businesspersons, foreign executives and even foreign officials know that they risk liability under the FCPA and related statutes, behavior changes," Assistant Attorney General Lanny Breuer said in a speech last month to the World Bank. "In addition to motivating U.S. and foreign corporations to change the way they do business — something that I believe is already happening — the threat of liability can help corporations resist corrupt demands from foreign officials, which can lead the officials themselves to alter their practices."
The department's recent prosecutions have covered bribery across the globe, including Latin America, Africa and the Middle East, and the defendants have included corporations as well-known as Daimler AG, BAE, Siemens and Johnson and Johnson. The Houston-based firm Kellogg Brown & Root pleaded guilty to a decade-long scheme to bribe a range of Nigerian officials to get contracts worth more than $6 billion to build liquefied natural gas facilities.
In May, the department got the first-ever jury conviction against a corporation in an FCPA case — previous corporate prosecutions had ended in agreements to plead guilty. Azusa, Calif.-based electrical utility supplier Lindsey Manufacturing, two of its executives and a broker were convicted of scheming to bribe officials at Mexico's state-owned utility company. Prosecutors said the bribes included a Ferrari Spyder sports car worth nearly $300,000, a $1.8 million yacht and payments of more than $170,000 toward one official's credit card bills.
In the case before the Washington jury, the FBI's first use of an undercover sting to enforce the act has become the heart of the defense case. Defense attorneys have been critical of the FBI's reliance on the informant, Richard Bistrong, an executive of a Florida body armor company with a checkered past. Prosecutors acknowledged he was a criminal and a "scoundrel."
Defense attorneys have labeled Bistrong a sociopathic liar with a devious mind and a history of bribery, embezzlement, tax evasion, drug use and solicitation of prostitutes. They say he was able to persuade federal agents to let him plead guilty to a single bribery count for more than $4.4 million in bribes to officials at the United Nations and overseas.
Bistrong lured the defendants to a Florida hotel room in May 2009 to meet a broker and offer them a chance to be part of a $15 million deal to outfit Gabon's presidential guard from head to toe in new gear. The catch was that they would have to prepare two invoices — one written out to the broker for the real value of the deal and the other written out to the Gabonese government with a 20 percent commission added for the broker and the defense minister. The black-and-white hidden camera footage shown in court recorded Bistrong repeatedly stressing that half the 20 percent commission — or $1.5 million — would go to the defense minister.
But defense attorneys say he never used words like "bribe" or "kickback" to make clear the payment was illegal. Their clients each could face sentences of up to 10 to 15 years if convicted.
"They used a gotcha technique," defense lawyer Matthew Menchel told jurors in closing arguments. "It's not enough to use innocent sounding words and say, 'Hey, everybody should know this is against the law.'"
Prosecutor Laura Perkins said the investigators relied on Bistrong to help build their case because people won't openly discuss such corrupt deals with outsiders they don't know. She said the defendants clearly knew that sending $1.5 million in public money to line a defense minister's pocket was wrong.
"The word is not what makes it wrong," she told jurors. "It is the payment itself regardless of what you call it."
The defendants and the positions they held during the sting are:
—Briton Pankesh Patel of Quartermaster's Ltd., a company based in the United Kingdom that sells military and law enforcement uniforms.
—John Benson Wier III of St. Petersburg, Fla., president of SRT Supply Inc., which sells tactical and ballistic equipment.
—Andrew Bigelow of University Park, Fla., managing partner and director of government programs for Heavy Metal Armory, which sells machine guns, grenade launchers and other firearms.
—Lee Tolleson of Mountain Home, Ark., director of acquisitions and logistics for ALS Technologies, a company that sells law-enforcement and military equipment.
U.S. District Judge Richard Leon has divided the defendants in the sting case into four groups for trial, with the other three groups yet to face a jury. Four other defendants have pleaded guilty.
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