In an illustration of the extraterritorial reach of the Foreign Corrupt Practices Act (FCPA), Alain Riedo, a Swiss citizen and the general manager of Maxwell Technologies S.A. (Maxwell), a Swiss subsidiary of a US public company, was criminally charged with violating anti-bribery, book and records, and internal control provisions of the FCPA. According to the indictment filed in the Southern District of California, Riedo, along with unidentified co-conspirators and agents, allegedly conspired to, and made, corrupt payments to Chinese government officials and falsely recorded those payments on Maxwell books and records in an effort to retain business, prestige and increased compensation. Riedo worked for Maxwell, which manufactured and sold high-voltage/high-tension capacitors (HV/HT) in several countries, including China. From October 2002 through May 2009, Riedo allegedly conspired with a senior officer of the US parent company, a manager of the Swiss subsidiary and a Chinese national acting as Maxwell’s agent, and caused up to $2 million in bribes to be paid to Chinese government officials in order to obtain HV/HT sales contracts. According to the indictment, the bribery scheme entailed giving prospective customers quotes for HV/HT sales at prices that included a “secret mark-up” of approximately 20 percent. Invoices were prepared reflecting the marked-up prices and the agent in China kicked back the marked-up portion to employees at Chinese state-owned electric utility manufacturers. The indictment alleges that Riedo falsely recorded the inflated payments in Maxwell books, records and accounts as “commissions, sales expenses, or consulting fees.” Thereafter, Riedo allegedly electronically transmitted this erroneous financial information to Maxwell’s parent company in California, which resulted in errors in the parent’s publicly filed consolidated financial statements and other Securities and Exchange Commission filings, including false sub-certifications of the financials.
Riedo—who, according to the indictment, was separated from the company shortly after the alleged conspiracy ended—faces nine counts. No charges were filed against the companies. In fact, the indictment alleges that Riedo and the Chinese agent subverted the corporate compliance program by falsely representing in an internal FCPA questionnaire that they were not aware of any FCPA violations.
United States v. Alain Riedo, No. 13-cr-3789 JM (S.D. Cal. October 15, 2013).
