A complicated legal case involving corrupt payments by a previous subsidiary of Linde North America Inc. has officially been closed by the US Department of Justice (DOJ).
In the case, Linde will have to disgorge a total a $11.2m – over half of which represents the benefits received by Spectra Gases, Inc. from improperly obtained sales of boron gas from November 2006 through December 2009.
The DOJ issued the Declination to both Linde North America and Linde Gas North America LLC in the lawsuit which concerned violations of the Foreign Corrupt Practices Act.
The corrupt payment case dates back over a decade to October 2006 when Linde first acquired New Jersey-based company Spectra Gases.
One month later in November 2006, Spectra Gases purchased certain assets from the National High Technology Centre (NHTC) of the Republic of Georgia, including a boron column used to produce boron gas.
Prior to Linde’s acquisition of the company and in advance of the column purchase, three high-level executives who were the principal shareholders and managers of Spectra Gases agreed to share any profits earned from the sale of boron gas as a bribe to be selected by the NHTC as the eventual purchaser of the column.
To effectuate the corrupt agreement and funnel monies to the NHTC officials, the corrupt parties formed two new companies through which the boron column was operated – Spectra Investors, LLC and Spectra Gases Georgia.
The net result saw the NHTC officials own 51% of Spectra Investors whilst Spectra Gases owned the other 49%. Each party then received approximately 75% and 25% of the profits generated by the boron column, respectively.
As a result, Linde inadvertently made corrupt payments to high-level officials at the NHTC for approximately three years, as the Spectra Executives continued to manage the company until December 2009 following Linde’s acquisition pursuant to a so-called ‘Earn-Out’ arrangement.
Linde dissolved Spectra Gases and became its successor-in-interest after three years – a development that was prior to Linde’s discovery of the corrupt conduct.
After uncovering the corrupt arrangements, Linde withheld $10m of said ‘Earn-Out’ payment, as well as further payments to companies owned or controlled by the NHTC officials.
Linde is now required to disgorge a total of $11.2m, of which $6.4m stems from Spectra Gases’ improper sales of boron gas.
The other $1.4m represents the profit received by Linde from the improperly obtained sales after the dissolution of Spectra Gases and $3.4m constitutes corrupt proceeds owed to the companies owned or controlled by the NHTC officials, which Linde withheld upon discovery of the corrupt conduct.
The Department’s decision to close the investigation revolves around Linde’s due diligence in the matter, including its voluntary, self-disclosure of the situation and its agreement to disgorge all Spectra Gases profits that it received from improper conduct. Notably, it is also the first Declination issued by the Department of Justice in the era of the Trump Administration.
A spokesperson at Linde said that the company been notified that the US DOJ has closed its investigation and declined to prosecute the matter further.
”Linde voluntarily self-disclosed this conduct at issue to the Department of Justice and cooperated fully throughout the government’s investigation,” the company said in a statement. ”We remain committed to 100% legal compliance and ethical engagement in all business practices.”