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New Jersey-Based Construction Consultancy Louis Berger Allegedly Bribed Goa Minister For Landing Plum Contract

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Several Indian officials — including a minister — could be under the scanner after a New-Jersey based construction management company was charged for bribing officials to win two major water developmental projects in Goa and in Guwahati. While the name of the Indian officials are yet to be disclosed by the US Department of Justice, the bribe amount is reported to be just under $1 million dollars (about Rs 6 crore rupees in the current exchange rate).

Executives of the American firm — Louis Berger International Inc — allegedly bribed Indian officials to secure the Goa project, paying around $976,630. Two of its former executives - Richard Hirsch (61) of Philippines, and James McClung (59) of the UAE - pleaded guilty to the bribery charges. The sentencing hearings for Hirsch and McClung are scheduled for November 5 this year. McClung previously served as senior vice president responsible for the firm's operations in India and in Vietnam.

The company has agreed to pay $17.1 million criminal fine to resolve charges that it bribed officials in India, Indonesia, Vietnam and Kuwait to secure government construction management contracts.

Reports suggested that these bribes were discovered during an internal investigation done by the company, which then reported it to the authorities.

The company took responsibility of the actions of its former managers in an official statement.

“The DOJ has acknowledged the extensive global reforms undertaken at Louis Berger since 2010,” said Nicholas J. Masucci, Louis Berger chairman. “2010 was a pivotal year in our company’s history. It marked a clear departure from the past as we assumed new management, new processes and comprehensive system reforms that are the core of our global operations today. Today’s 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.”

Goa Project

The Indian and Japanese government joined hands for a five-year project to improve Goa's water supply and sewerage by expanding, rehabilitating, and building water and sewerage facilities.

Louis Berger was part of a consortium for the project that included two Japanese firms and an Indian partner.

The team developed a project management information system and plan, evaluated bids, reviewed design and construction plans, and ensured quality work was done on time and within budget, the company says on its website.



Federal prosecutors, in their 11-page chargesheet, alleged that Louis Berger maintained a detailed diary and account of bribery made to Indian officials.

On August 26, 2010, "a consortium partner prepared a payment tracking schedule stating that the company had paid $976,630 in bribes in connection with the Goa project to date," federal prosecutors told a court in New Jersey.

On August 17, 2010, a consortium partner sent an e-mail to James McClung, stating, "As discussed I enclose the details as provided by [third-party intermediary]. I have also added the details of amounts paid to [the Company] as of date by [the consortium partner] in the same sheet."

The attachment included an entry, "Paid by [an agent of the company] to minister on behalf of agent," said federal prosecutors.

According to court documents, the company, through its employees and agents, together with others, used terms like "commitment fee," "counterpart per diem," "marketing fee" and "field operations expenses" as code words to conceal the true nature of the bribe payments and utilised cash disbursement forms and invoices which did not truthfully describe the services provided of the purpose of the payment.

Louis Berger has offices in India since 1998, currently in Gurgaon, Mumbai, Chennai and Hyderabad.

"Along with several consortium partners, the company won two water development projects in Goa and Guwahati. The company paid bribes to win both of these contracts," federal prosecutors alleged.

According to court documents, the company through its employees and agents and its consortium partners kept track of the bribe payment by a circulating spreadsheet among themselves showing the proportionate share of each bribe that they had paid to the foreign officials overseeing their work on the Goa and Guwahati projects.

Guwahati Water Project

According to reports, Louis Berger is in charge of the technical monitoring of a water supply project that is still in process in Guwahati, and is likely to be completed next year. The project aims to provide round-the-clock water supply to residents in the city, and the Japan International Cooperation Agency (JICA) is financially assisting the implementation. Louis Berger here is a consultant for the Guwahati Metropolitan Development Authority (GMDA).

(with PTI inputs)



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