Former Chief Executive Officer of Lufthansa Subsidiary BizJet Pleads Guilty to Foreign Bribery Charges
The former president and chief executive officer of BizJet International
Sales and Support Inc., a U.S.-based subsidiary of Lufthansa Technik AG
with headquarters in Tulsa, Oklahoma, that provides aircraft maintenance,
repair and overhaul services, pleaded guilty today for his participation
in a scheme to pay bribes to foreign government officials.
Assistant Attorney General Leslie R. Caldwell of the Justice Department's
Criminal Division, U.S. Attorney Danny C. Williams Sr., of the Northern
District of Oklahoma and Assistant Director in Charge Valerie Parlave
of the FBI's Washington Field Office made the announcement.
"The former CEO of BizJet, Bernd Kowalewski, has become the third
and most senior Bizjet executive to plead guilty to bribing officials
in Mexico and Panama to get contracts for aircraft services," said
Assistant Attorney General Caldwell. "While Kowalewski and his fellow
executives referred to the corrupt payments as 'commissions' and
'incentives,' they were bribes, plain and simple. Though he was
living abroad when the charges were unsealed, the reach of the law extends
beyond U.S. borders, resulting in Kowalewski's arrest in Amsterdam
and his appearance in court today in the United States. Today's guilty
plea is an example of our continued determination to hold corporate executives
responsible for criminal wrongdoing whenever the evidence allows."
"I commend the investigators and prosecutors who worked together
across borders and jurisdictions to vigorously enforce the Foreign Corrupt
Practices Act," said U.S. Attorney Williams. "Partnership is
a necessity in all investigations. By forging and strengthening international
partnerships to combat bribery, the Department of Justice is advancing
its efforts to prevent crime and to protect citizens."
Bernd Kowalewski, 57, the former President and CEO of BizJet, pleaded
guilty today in federal court in Tulsa, Oklahoma, to conspiracy to violate
the Foreign Corrupt Practices Act (FCPA) and a substantive violation of
the FCPA in connection with a scheme to pay bribes to officials in Mexico
and Panama in exchange for those officials' assistance in securing
contracts for BizJet to perform aircraft maintenance, repair and overhaul services.
Kowalewski was arrested on a provisional arrest warrant by authorities
in Amsterdam on March 13, 2014, and waived extradition on June 20, 2014.
Kowalewski is the third BizJet executive to plead guilty in this case.
Peter DuBois, the former Vice President of Sales and Marketing, pleaded
guilty on Jan. 5, 2012, to conspiracy to violate the FCPA and a substantive
violation of the FCPA and Neal Uhl, the former Vice President of Finance,
pleaded guilty on Jan. 5, 2012, to conspiracy to violate the FCPA. Jald
Jensen, the former sales manager at BizJet, has been indicted for conspiracy
as well as substantive FCPA violations and money laundering and is believed
to be living abroad. Charges were unsealed against the four defendants
on April 5, 2013.
According to court filings, Kowalewski and his co-conspirators paid bribes
directly to foreign officials to secure aircraft maintenance repair and
overhaul contracts, and in some instances, the defendants funneled bribes
to foreign officials through a shell company owned and operated by Jensen.
The shell company, Avionica International & Associates Inc., operated
under the pretense of providing aircraft maintenance brokerage services
but in reality laundered money related to BizJet's bribery scheme.
Bribes were paid to officials employed by the Mexican Policia Federal
Preventiva, the Mexican Coordinacion General de Transportes Aereos Presidenciales,
the air fleet for the Gobierno del Estado de Sinaloa, the air fleet for
the Gobierno del Estado de Sonora and the Republica de Panama Autoridad
Aeronautica Civil.
Further according to court filings, the co-conspirators discussed in e-mail
correspondence and at corporate meetings the need to pay bribes, which
they referred to internally as "commissions" or "incentives,"
to officials employed by the foreign government agencies in order to secure
the contracts. At one meeting, for example, in response to a question
about who the decision-maker was at a particular customer organization,
DuBois stated that a director of maintenance or chief pilot was normally
responsible for decisions on where an aircraft went for maintenance work.
Kowalewski then responded by explaining that the directors of maintenance
and chief pilots in the past received "commissions" of $3,000
to $5,000 but were now demanding $30,000 to $40,000 in "commissions."
Similarly, in e-mail correspondence between Uhl, DuBois, Kowalewski, and
several others, Uhl responded to a question about BizJet's financial
outlook if "incentives" paid to brokers, directors of maintenance,
or chief pilots continued to increase industry wide, stating that they
would "work to build these fees into the revenue as much as possible.
We must remain competitive in this respect to maintain and gain market
share."
On March 14, 2012, the department announced that it had entered into a
deferred prosecution agreement with BizJet, requiring that BizJet pay
an $11.8 million monetary penalty to resolve charges related to the corrupt
conduct. That agreement acknowledged BizJet's voluntary disclosure,
extraordinary cooperation, and extensive remediation in this case. In
addition, the department announced on March 14, 2012, that BizJet's
indirect parent company, Lufthansa Technik AG, entered into an agreement
with the department in which the department agreed not to prosecute Lufthansa
Technik provided that Lufthansa Technik satisfies its obligations under
the agreement for a period of three years.
This case is being investigated by the FBI's Washington Field Office
with substantial assistance form the Oklahoma Field Office. The department
has worked closely with its law enforcement counterparts in Amsterdam,
Mexico and Panama, and has received significant assistance from Germany
and Uruguay. The Criminal Division's Office of International Affairs
has also provided assistance. This case is being prosecuted by Assistant
Chief Daniel S. Kahn and Trial Attorney David Fuhr of the Criminal Division's
Fraud Section and Assistant U.S. Attorney Kevin Leitch of the Northern
District of Oklahoma.
Additional information about the Justice Department's FCPA enforcement
efforts can be found at
www.justice.gov/criminal/fraud/fcpa.