Mike Koehler, author of the FCPA Professor blog, reported today that the U.S. Department of Justice (DOJ) has announced the arrest of John Joseph O’Shea for his alleged role in the bribery of Mexican government officials to secure contracts with Mexico’s Comision Federal de Electricidad (CFE) in violation of the U.S. Foreign Corrupt Practices Act (FCPA).

O’Shea was the General Manager of a Sugar Land, Texas-based subsidiary of Swiss electrical engineering company ABB Ltd. (NYSE: ABB).  According to the indictment, the Texas subsidiary, which provides products and services to electrical utilities, allegedly paid money to a Mexican company that served as a sales representative for ABB on two CFE contracts worth approximately $81 million.  The Mexican company was run by Fernando Maya Basurto, a Mexican citizen who pleaded guilty last week to conspiracy to violate the FCPA and U.S. money laundering laws.

O’Shea and Basurto allegedly arranged for CFE officials to receive payments totaling as much as 10% of the revenue that ABB received from CFE.  The indictment seeks O’Shea’s forfeiture of approximately $3 million.

According to the FCPA Professor, “the improper payments were concealed through a series of financial transactions, first to U.S. bank accounts in the name of Basurto and certain of his family members, then through false invoices received from Basurto in the names of the intermediary companies, and then to the ‘foreign officials’”. 

The FCPA Professor notes that a Mexican company and a Panamian company may, in addition to ABB and its U.S. subsidiaries, be subject to DOJ enforcement action as “agents of domestic concerns” under U.S. Code §§ 78dd-2(a) and 78dd-2(h)(1).