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Louis Berger Int’l VPs Sentenced for 12-Year Procurement Fraud Scandal

Exposing a 12-year contracting scheme, the District of New Jersey has sentenced two Louis Berger International VPs for one count of conspiracy to violate the FCPA and one substantiative count of violating the FCPA.  James McClung, 60, and Richard Hirsch, 62, received one year in prison and two years probation, respectively, for their role in paying over $3.9 million in collective bribes to foreign officials for construction contracts in India, Indonesia, Vietnam, and Kuwait

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Two former senior executives of Louis Berger International were sentenced for bribing officials for more than a decade to win contracts in India, Indonesia, Vietnam, and Kuwait.

James McClung, 60, of Dubai was sentenced Thursday to a year and a day in jail.

Richard Hirsch, 62, of Makaati, Philippines was sentenced  to two years probation and fined $10,000.

They appeared before federal judge Mary Cooper in New Jersey.

McClung and Hirsch were Louis Berger senior vice presidents.

McClung was in charge of the company’s operations in India and Vietnam. Hirsch oversaw Indonesia, Thailand, and the Philippines.

New Jersey-based Louis Berger is a construction management company.

In July last year, McClung and Hirsch each pleaded guilty to one count of conspiracy to violate the Foreign Corrupt Practices Act and one substantive count of violating the FCPA.

Also last July, Louis Berger International Inc. resolved FCPA violations by paying a $17.1 million criminal penalty. It entered into a deferred prosecution agreement that required an independent compliance monitor for three years.

On Friday, the DOJ said Hirsch and McClung were among the company’s employees who orchestrated $3.9 million in bribe payments to foreign officials to win government contracts.

They tried to hide the payments by calling them “commitment fees,” “counterpart per diems,” and other payments to third-party vendors.

The bribery occurred from 1998 through 2010.

“McClung cooperated with the government’s investigation by identifying other executives at LBI who had knowledge of bribery,” the DOJ said.

Some of the information McClung provided helped the DOJ prosecute Louis Berger’s former CEO, Derrish Wolff.

Wolff, now 80, pleaded guilty to accounting fraud in late 2014. He was sentenced in May 2015 to 12 months of home confinement and fined $4.5 million.

The DOJ said Wolff conspired to defraud the U.S. Agency for International Development in connection with contracts worth billions of dollars over a nearly 20-year period.

Louis Berger billed USAID on cost-reimbursable contracts for overhead and other indirect costs at falsely inflated rates. The contracts included hundreds of millions of dollars for reconstruction work in Iraq and Afghanistan.

In a statement emailed to the FCPA Blog in July 2015, Louis Berger chairman Nicholas Masucci said: “The DOJ has acknowledged the extensive global reforms undertaken at Louis Berger since 2010. . . . [The FCPA settlement] is the critical final milestone in our reform, as it was important for us to take responsibility for the historic actions of former managers and close the chapter on the company’s pre-2010 era.”

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