Louis Berger pays $17.1 million to settle corruption charges in the US

The construction consultancy Louis Berger International has reached a $17.1 million settlement with United States authorities after a case in which two of its former bosses, including one Dubai-based executive, pleaded guilty to corruption charges.

The practice of bribing public officials in return for work in South East Asia and the Middle East is said to have started in 1998 and lasted until 2010.

According to the US justice department, former bosses Richard Hirsch, 61, of Makati in the Philippines and James McClung, 59, of Dubai, began paying bribes initially in Indonesia and Vietnam, and later in India and Kuwait, in return for picking up government contracts.


The company and some of its employees are said to have paid $3.9m in bribes to foreign officials, and to have attempted to conceal payments either as “commitment fees” or through third-party vendors.

Mr Hirsch and Mr McClung have each pleaded guilty to one count of conspiracy to violate the US Foreign Corrupt Practices Act (FCPA) and one substantive count of violating the act. They now face a sentencing hearing on November 9.

Louis Berger International, which has its regional headquarters in Abu Dhabi, has said that it has “fought long and hard in transforming the culture” of the company since the cases first came to light in 2010.

Following the justice department’s announcement, the chairman Nicholas Masucci said: “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.”

A spokeswoman for the company said it had “self-investigated and self-reported inappropriate business activities to the US government as we uncovered them”.

She added: “We separated the managers engaged in inappropriate conduct from the company when evidence of improprieties came to light. The company has actively supported the US government in its investigation of the culpable individuals and their activities.”

The spokeswoman added that Louis Berger has since spent more than $25m on global restructuring and reforms since the case first came to light, and that the justice department had “acknowledged the company’s reform efforts”.

These efforts have included installing a new chief financial officer and regional management teams in the Middle East and throughout Asia. New accounting and procurement systems have also been introduced.

“Louis Berger did what companies are expected to do to reform,” the spokeswoman said. “We have addressed the problems of our past honestly and transparently. In fact, some of the senior executives central to our reform programme have been asked to speak on ethics, compliance and corruption reform in the United States as a model on how companies transform themselves.”

Louis Berger is a consultancy with more than 6,000 engineers working for it and revenues of more than $1bn, according to its website. It has been operating in the Middle East for 50 years and its projects in the region include managing the Al Mubarak Air Base in Kuwait, as well as overseeing the Jamal Abdul Nasser Street and Jahra Road improvements in Kuwait City.

It is also working with the construction consultant Hill International as a project manager on three of the six lines being built for the Riyadh Metro and with Egis as project manager for the Doha Metro.

In the UAE, Louis Berger is project-managing the new Warner Bros theme park planned for Yas Island.

mfahy@thenational.ae

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