Armor Holdings, Inc., a military, security, and law enforcement equipment manufacturer, has agreed to pay a total of approximately $16 million to settle FCPA enforcement actions brought by the Department of Justice (“DOJ”) and the Securities and Exchange Commission (“SEC”).
- From 2001 to 2006, a subsidiary of Armor Holdings paid a third party (the “UN Agent”) more than $200,000 in “sales commissions” in the belief that a portion of the money would be provided to a UN procurement officer. The UN procurement officer had provided non-public, confidential bid information to the UN Agent, who then used the confidential information to assist in submitting the lowest priced tenders, which resulted in the procurement of UN contracts for the purchase of body armor worth an aggregate of $6 million.
- In addition, notwithstanding warnings from internal and external accounting professionals, Armor Holdings falsely recorded the nature and purpose of these payments and further failed to record $4.4 million in payments to agents and other intermediaries in its books and records.
- Pursuant to the two-year non-prosecution agreement into which it entered with the DOJ, Armor Holdings agreed to pay a $10.29 million penalty, continue to implement rigorous internal controls, report to the DOJ on its compliance efforts every six months for the duration of the agreement, and otherwise cooperate fully with the DOJ.
- Armor Holdings also agreed to disgorge $5.7 million to settle the SEC’s pending civil action against it.
- In 2007, Armor Holdings was acquired by BAE Systems, Inc., an indirect wholly owned U.S. subsidiary of UK-based BAE Systems, PLC. The DOJ elected not to impute culpability to BAE for Armor Holdings’s conduct.
- The DOJ’s non-prosecution agreement uncharacteristically does not require Armor Holdings to retain a corporate compliance monitor.
- The DOJ elected to enter into the non-prosecution agreement in light of Armor Holdings’s cooperation with the DOJ and SEC; the fact that the conduct at issue occurred prior to BAE’s acquisition of the company; and the remedial conduct that Armor Holdings undertook in the wake of the conduct at issue, including termination of culpable employees and the implementation of internal controls to preempt future FCPA violations.