January 17, 2012
Berg & Androphy won exoneration of a U.S. executive accused of Foreign Corrupt Practices Act (FCPA) violations
Berg & Androphy won exoneration of a U.S. executive accused of Foreign Corrupt Practices Act (FCPA) violations and a cover-up of payments made to officials of a Mexican state-owned electric utility after a jury trial in Houston federal court. U.S. District Judge Lynn N. Hughes granted a defense motion for acquittal of John O’Shea, the former general manager of Sugar Land, Texas-based ABB Inc., finding Mr. O’Shea not guilty of all substantive FCPA charges. The motion was granted at the closing of the federal prosecutors’ case and the jury was dismissed. The Government had accused Mr. O’Shea of authorizing corrupt payments to officials of Comisión Federal de Electridad (CFE) through a Mexican sales agent, Esimex, in exchange for an ABB contract to provide utility products and services.
Partners Joel M. Androphy and Sarah M. Frazier of Berg & Androphy’s Houston office represent Mr. O’Shea. In announcing his ruling, Judge Hughes said he found that the Government’s chief witness, an Esimex principal awaiting sentencing on conspiracy charges, could not tie Mr. O’Shea to the alleged crimes. The judge found that O’Shea’s conduct, including efforts to renew an ABB-Esimex contract, was reasonably explained by lawful motives. The Court also expressed concern that the Government had granted immunity to Esimex’s founder, Fernando Basurto, Sr., allowing him to disclose selective information to the Government, while refusing to grant immunity to an important defense witness even six to seven years after the facts at issue. Basurto Sr. did not testify; the Government relied instead on his son’s testimony.
Joel M. Androphy said, “Deflecting blame for bribery in corruption-ridden countries onto unknowing business executives is both Cervantian and unfair. My hope is that our victory for Mr. O’Shea will encourage others wrongfully accused under the FCPA to fight the charges against them.”
Sarah M. Frazier added, “We were prepared to try this case to verdict and show the public through expert testimony and Mr. O’Shea’s own testimony that these charges were unfounded and that he is an honest man caught up in a terrible situation.”
The prosecution arose out of an ABB contract to create a “smart grid” for Mexico’s aging electricity transmission infrastructure. In September 2010, the DOJ announced that Switzerland-based ABB Ltd., and two subsidiaries paid $58 million in criminal and civil penalties, disgorgement and interest, and that ABB Inc. pleaded guilty to two FCPA counts.
The case is U.S. v. John Joseph O’Shea, No. H:09-cr-629, in the U.S. District Court for the Southern District of Texas, Houston Division.