Louis Berger a New Jersey based construction management firms having their offices in India is presently facing criminal proceedings for bribing Indian officials for several crores of rupees to win the contracts of two major water development projects in Goa and in Guwahati respectively. According to the news source from PTI “A New Jersey-based construction management firm has been charged with bribing Indian officials several crores of rupees to win two major water developmental projects in Goa and in Guwahati, The bribery of $976,630 for a Goa project by Louis Berger included payments to a minister, details of which have not been disclosed by the US Department of Justice”.
The entire issue of bribery to the minister from India came into the light on the backdrop of conviction of two executives from US based firm “Louis Berger” who were facing the trial for bribing Indian officials to acquire the contracts in Goa and other states. The company has agreed to pay $17.1 million towards the fine to resolve charges that it bribed officials in India, Indonesia, Vietnam and Kuwait to secure government construction management contracts. Two of its former executives – Richard Hirsch (61) of Philippines, and James McClung (59) of the UAE – pleaded guilty to the bribery charges. According to the available information McClung served the company as senior vice president responsible for the operations in India and Vietnam. Sentencing hearings for Hirsch and McClung are scheduled for November 5, 2015.
The Indian government in association with government of Japan initiated 5 year Goa Water Supply and Sewerage Project to expand, rehabilitate and build water sewerage facilities. Louis Berger was part of a consortium for the project in Goa. The consortium included two Japanese firms and an Indian partner. According to the information revealed on the company’s website the team had developed a project management information system and plan, evaluated bids, reviewed design and construction plans and ensured quality work was done on time and within budget. Federal prosecutors, in their 11-page charge sheet, alleged that Louis Berger maintained a detailed diary and account of bribery made to Indian officials.
On August 26, 2010, “a consortium partner prepared a payment tracking schedule stating that the company had paid $976,630 in bribes in connection with the Goa project to date,” federal prosecutors told a court in New Jersey. On August 17, 2010, a consortium partner sent an e-mail to James McClung, stating, “As discussed I enclose the details as provided by [third-party intermediary]. I have also added the details of amounts paid to [the Company] as of date by [the consortium partner] in the same sheet.” The attachment included an entry, “Paid by [an agent of the company] to minister on behalf of agent,” said federal prosecutors.
According to court documents, the company, through its employees and agents, together with others, used terms like “commitment fee,” “counterpart per diem,” “marketing fee” and “field operations expenses” as code words to conceal the true nature of the bribe payments and utilized cash disbursement forms and invoices which did not truthfully describe the services provided of the purpose of the payment. Louis Berger has offices in India since 1998 at various locations including Gurgaon, Mumbai, Chennai and Hydrabad. “Along with several consortium partners, the company won two water development projects in Goa and Guwahati. The company paid bribes to win both of these contracts,” federal prosecutors alleged.
According to court documents, the company through its employees and agents and its consortium partners kept track of the bribe payment by a circulating spreadsheet among themselves showing the proportionate share of each bribe that they had paid to the foreign officials overseeing their work on the Goa and Guwahati projects. This revelation gives the insight into the systematical functioning bribery system in India and since it has been already proved by the US courts and the conviction of Louise Berger executives confirms the fact that Indian ministers were paid the bribe by the company for issuing the contracts to them in which Goa is also involved. Imaging if more such cases starts coming up in India then what will be the quantum of this bribery. Please do leave your comments and suggestions at the end of this article.