September 2, 2014
September 2, 2014 — The Foreign Corrupt Practices Act (FCPA) is a powerful weapon to stop corporations from attempting to win or retain business abroad by making bribe payments to or bestowing lavish gifts on foreign government officials or their family members. Aimed at the problem of foreign bribery, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 allows for substantial financial rewards to insider informants who blow the whistle on FCPA violations
Smith & Wesson Allegedly Bribed Foreign Officials To Win Firearms Contracts In Islamist Countries
Smith & Wesson Holding Corporation, the U.S. maker of firearms, has agreed to pay $2 million to settle an investigation by the SEC
into the company’s FCPA violations. The SEC charged that Smith & Wesson employees and representatives authorized and engaged in paying bribes to foreign officials in an effort to secure contracts for firearm products to military and law enforcement agencies abroad.
Smith & Wesson, a Massachusetts company, was eager to break into markets abroad, such as Indonesia, Pakistan and other foreign countries. Between 2007 and 2010, Smith & Wesson’s international sales representatives allegedly worked to gain new business by showering government officials with illegal bribes and gifts in violation of the FCPA
In 2008, Smith & Wesson hired a third-party agent in Pakistan and authorized him to make a gift to Pakistani police officials of guns worth more than $11,000. After the officials’ receipt of the gift, Smith & Wesson was awarded a contract to provide more than 500 pistols to the Pakistani police, netting the gun manufacturer a profit in excess of $100,000.
In 2009, Smith & Wesson allegedly made improper payments to its third-party agent in Indonesia, a portion of which the agent would forward to Indonesian officials. The bribe money would purportedly be applied to cover the cost of legitimate firearm lab testing and to pay off the officials. Smith & Wesson officials allegedly authorized and made the illegal payment, but the company never closed the contract in Indonesia.
In addition, Smith & Wesson authorized improper payments to third-party agents for the purpose of bribing foreign officials in Turkey, Bangladesh and Nepal. As in Indonesia, however, Smith & Wesson did not close any contracts.
Smith & Wesson consented to pay a $1.906 million penalty, $107,852 in disgorgement and $21,040 in prejudgment interest. The gun manufacturer did not admit or deny the SEC’s findings. When the violations were revealed, Smith & Wesson canceled impending sales to the countries before they were made final and fired its entire international sales force.
Whistleblowers Notify Government About FCPA Violations
While Waters & Kraus is not handling this particular FCPA case, we are representing whistleblowers in similar matters involving foreign bribery violations. If you have comparable claims against your employer or another business, email us
or call our qui tam attorneys at 855.784.0268 to learn more about our practice and how we can collaborate with the government to redress illegal foreign bribery schemes. Our experienced lawyers, such as Loren Jacobson
and Caitlyn Silhan
in the firm’s Texas office, are devoted to working to level the playing field in international business operations.