WikiLeaks founder Julian Assange (Getty)
The Justice Department has opened an investigation into who leaked thousands of classified documents on the war in Afghanistan to the website Wikileaks, the Attorney General said Wednesday.
“The Justice Department is working with the Department of Defense with regard to an investigation concerning who the source of those leaks might be,” Attorney General Eric Holder said at a news conference at the U.S. Embassy in Cairo, according to Bloomberg. “Whether there will be any criminal charges brought depends on how the investigation goes.”
Over the weekend, Wikileaks, a website that publishes leaked documents, published a trove of 91,000 classified U.S. military documents pertaining to the U.S. war in Afghanistan from 2004 through 2010.
“I deplore the release of classified information,” Holder said. “It’s not in the interest of the United States to have that kind of information leaked.”
Holder is in Africa this week. On Sunday, he visited Kampala, Uganda, where he met with leader of the African Union. Yesterday, the Attorney General met with Egyptian law enforcement officials, including Egypt’s Public Prosecutor Abdel Meguid Mahmoud, Minister of the Interior General Habib Ibrahim al-Adly, Minister of Justice Mamdouh Merei and Minister of Legislative and Parliamentary Affairs Dr. Mufid Mahmoud Shehab.
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TUESDAY, JULY 27, 2010
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FORMER CEO OF THE MORGAN CRUCIBLE CO. FOUND GUILTY OF CONSPIRACY TO OBSTRUCT JUSTICE
WASHINGTON — A federal jury in Philadelphia today convicted Ian P. Norris, the former CEO of The Morgan Crucible Company plc, a United Kingdom corporation, of conspiring with others to obstruct justice, the Department of Justice announced.
In 2004, a federal grand jury indicted Norris, a citizen of the United Kingdom, on one count of fixing prices of carbon brushes and other carbon products, one count of conspiring to obstruct justice, and two counts of obstructing justice in connection with the Department of Justice’s antitrust investigation of price fixing in the carbon products industry. Norris was extradited to the United States in March 2010 on the three obstruction charges. The jury returned a guilty verdict today on the conspiracy to obstruct justice count and not guilty verdicts on the witness tampering count and the count of corruptly persuading others to destroy or conceal documents. Sentencing has been scheduled for Nov. 2, 2010.
The department said that Norris conspired with his subordinates to obstruct the grand jury’s investigation. Morgan Crucible employees conspired with Norris to create a false script that employees of both Morgan Crucible and a competitor were to follow when questioned in the investigation. Also, a document destruction task force was formed to collect and destroy or conceal documents from the grand jury, the department said.
“The Antitrust Division uncovered this elaborate and egregious obstruction of justice scheme,” said Christine Varney, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “Today’s verdict holds Norris accountable for his actions and sends a message that corporate leaders must promote a culture of law abiding conduct within their companies or be prepared to face stiff prison sentences. The Antitrust Division will remain vigilant in protecting the integrity of its criminal investigations from obstruction in order to effectively carry out its mandate to protect American businesses and consumers from price-fixing cartels.”
Carbon products are used to transfer electrical current in automobiles, trains, public transit vehicles and consumer products and are used in pumps and compressors to contain liquids and gases.
Including today’s conviction, more than $11 million in criminal fines have been obtained and four executives and two companies have pleaded guilty or have been convicted as a result of the department’s antitrust investigation of price fixing in the carbon products industry.
The Morgan Crucible Company plc, based in Windsor, England, pleaded guilty in 2002 to one count of tampering with witnesses and one count of document destruction. The company paid a $1 million criminal fine.
A former subsidiary of the company, Morganite Inc., which was based in Dunn, N.C., pleaded guilty in 2002 to fixing prices of carbon brushes and other carbon products and paid a $10 million fine.
In addition, three subordinates of Norris previously pleaded guilty to obstruction charges. Jacobus Johan Anton Kroef, the former Chairman of the Industrial and Traction Division of The Morgan Crucible Company plc, pleaded guilty in 2003 to witness tampering. Robin D. Emerson, former pricing coordinator at Morganite Electrical Carbon Ltd. of Swansea, U.K., pleaded guilty in 2003 to corruptly persuading another person to destroy or conceal documents in connection with the investigation. F. Scott Brown, the former Global President and a member of the Board of Directors of Morgan Advanced Materials and Technology Inc. (MAMAT), now headquartered in Greenville, S.C., pleaded guilty in 2003 to aiding and abetting document destruction in connection with the investigation. Morganite Electrical Carbon Ltd. and MAMAT are subsidiaries of The Morgan Crucible Company plc.
The conspiracy count carries a maximum penalty of five years in prison and a $250,000 fine.
Trial attorneys Lucy McClain, Richard Rosenberg, and Kimberly Justice of the Antitrust Division’s Philadelphia Field Office prosecuted the case.
A federal jury in Philadelphia on Tuesday convicted a British national of one count of conspiring to obstruct justice, after he spent years fighting extradition to the U.S. on price-fixing allegations.
Ian Norris, former chief executive of carbon products manufacturer Morgan Crucible Co., at home in Buckinghamshire, U.K., in 2005. (Getty)
But Ian P. Norris, 67, the former chief executive of United Kingdom carbon products manufacturer The Morgan Crucible Company plc, was found not guilty of two other obstruction charges. The jury acquitted him of attempting to sway grand jury witness testimony and of intending to cause the destruction of records.
The case was closely watched as a test of the U.S.’s ability to extradite foreign nationals to face criminal antitrust charges.
“We are gratified that the jury acquitted Mr. Norris on all counts alleging obstruction of justice as well as attempted obstruction of justice,” Norris’s attorneys, Christopher M. Curran and J. Mark Gidley of White & Case LLP, said in a statement.
They added: “We are disappointed by the jury’s conviction of Mr. Norris on the conspiracy count (24 hours after the jury announced an “impasse” on this count). But based upon juror interviews, we believe that the jury was confused. We intend to act quickly to overturn the sole count of conviction.”
Assistant Attorney General Christine Varney, who heads the Justice Department’s Antitrust Division, said in a statement: “Today’s verdict holds Norris accountable for his actions and sends a message that corporate leaders must promote a culture of law abiding conduct within their companies or be prepared to face stiff prison sentences.”
Click here to read the Justice Department news release.
The original charge against Norris was lodged in 2004, when a federal grand jury indicted him on charges of price fixing and obstruction of justice. But the case stalled as Norris fought extradition from the U.K.
After vigorously contesting extradition, Norris won a 2008 ruling in England that blocked his removal to the U.S. on the price-fixing charges. The U.K., however, permitted his extradition on the obstruction of justice allegations, and he arrived in the U.S. in March for trial.
The Justice Department had accused Norris of conspiring with his employees to create a fake script for them to use when questioned in the investigation.
The company and three of its employees pleaded guilty in 2002 to tampering with witnesses and destroying documents, and the company paid a $1 million criminal fine.
A former U.S. subsidiary of the firm also pleaded guilty that year to price fixing charges and paid a $10 million fine.
Trial attorneys Lucy McClain, Richard Rosenberg, and Kimberly Justice of the Antitrust Division’s regional office in Philadelphia prosecuted the case.
This story has been updated.
Vincent H. Cohen Jr., a former federal prosecutor who moved to private practice in 2003, has rejoined the D.C. U.S. Attorney’s office as Principal Assistant U.S. Attorney, U.S. Attorney Ron Machen announced Monday.
Vincent Cohen (Schertler & Onorato)
Cohen, most recently a partner at the law firm of Schertler & Onorato LLP, previously served as an Assistant U.S. Attorney in D.C. from 1997 to 2003.
“Vince Cohen is an extremely talented attorney who has the unique ability to assess a case from all the different angles,” Machen said in a statement. “He understands the gravity of the decisions we make and how they affect the lives of the residents of this city and he is committed to strengthening the bond between our office and the community. He will be a tremendous asset for the District of Columbia.”
Cohen replaces Channing Phillips, who served as Principal Assistant U.S. Attorney from 2004 through 2009. Phillips left the U.S. Attorney’s office in May to take a newly created position at Justice Department headquarters as Deputy Associate Attorney General for Diversity.
The 39-year-old Cohen, who attended Syracuse University for both undergrad and law school, was recently named one of the “Nation’s Best Advocates: 40 Lawyers Under 40″ by the National Bar Association.
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Eleven years after the government pledged to begin storing nuclear waste for commercial nuclear plants, the Department of Energy decided to scrap its planned repository at Yucca Mountain, Nevada — leaving the Justice Department with dozens of lawsuits on its hands.
Michael Hertz, Deputy Assistant Attorney General for the Civil Division (photo by Channing Turner / Main Justice)
Michael Hertz, Deputy Assistant Attorney General for the Justice Department’s Civil Division, told lawmakers on the House Budget Committee Tuesday that the government may be liable for billions of dollars if it doesn’t follow through on its promise to build a disposal site to store nuclear waste.
“DOE’s most recent estimate of potential liability … was as much as $13.1 billion,” Hertz said. “This estimate does not fully account for the government’s defenses or the possibility that plaintiffs will not be able to prove the full extent of their claims, and they were created before the administration’s 2009 announcement that it would not proceed to build a repository at Yucca Mountain.”
Under the Nuclear Waste Policy Act of 1982, the government agreed to collect and store nuclear waste from nuclear energy companies beginning in 1998. The next year, it entered into 76 contracts — most with commercial entities — to accept quarterly payments in exchange for waste disposal.
But the government has yet to accept any waste from nuclear companies, and that delay has led 72 utility companies to file suit in the U.S. Court of Federal Claims for partial breach of contract.
The DOJ’s Civil Division has been defending the government in those cases, Hertz said, but with the Yucca Mountain plans stalled, there’s no end in sight.
“Until we begin performing under the contract, until we begin picking up waste … we will keep incurring damages,” Hertz said.
Litigation costs for the government — which currently stand at $29 million in attorney costs, $111 million in expert funds and $52 million in litigation support — will continue to compound because utilities companies must file new cases every six years to comply with the statute of limitations, Hertz said.
And these cases could even extend until after the Department of Energy starts accepting waste, now projected for 2020, Hertz said.
In addition, the government has already accepted $2 billion in liability for judgments and settlements entered between 1998 and 2009. The amount could change as cases are appealed or remanded, he added.
Barring settlements, the number of cases brought against the government could also increase as additional damages accrue, Hertz said.
The majority of cases involve damages claimed by utility companies, but several plaintiffs have also filed lawsuits that attempt to reverse the Energy Department’s decision to abandon Yucca Mountain. South Carolina and Washington state are among those now contesting Energy Secretary Steven Chu’s authority to withdraw the repository’s licensing application in In Re Aiken County.
Undersecretary of Energy Kristina Johnson defended the administration’s decision to withdraw from Yucca and instead form a blue ribbon commission to investigate alternatives.
The commission would examine scientific advancements in the understanding of nuclear waste and provide a draft of solutions in about a year, with a final report due six months after that, Johnson said.
“Yucca Mountain, as a site, is off the table,” Johnson said.
The Energy Department’s latest analysis (pdf) of the Yucca Mountain project, issued in July 2008, estimated the lifetime cost at $96 billion.
“I’m deeply troubled — very troubled — by this,” said Rep. Betty McCollum (D-Minn.). “It is irresponsible to abandon the study of Yucca Mountain as a viable option, particularly after $100 billion has already been spend on the project.”
Hertz’s full testimony is embedded below:
Testimony of Michael Hertz on Yucca Mtn. House Budget. 7.27.10
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The Justice Department’s top antitrust official told members of a House panel Tuesday that her first year on the job has been “remarkable,” detailing the cases her unit has handled thus far and suggesting that, taken together, the cases paint a portrait of an aggressive team of regulators who are not afraid to go to court.
Christine Varney (photo by Andrew Ramonas / Main Justice)
Assistant Attorney General Christine Varney, who has led the Antitrust Division since April 2009, told lawmakers that her section’s assertive posture helps it resolve concerns about mergers in ways suitable to both parties.
“We are committed to going to court to block those mergers that will substantially reduce competition,” Varney said, according to prepared remarks. “The commitment to litigate enhances our ability to negotiate settlements that simultaneously enable any pro-competitive aspects of a deal to go forward yet also prevent harm to consumers.”
The Justice Department approved a merger between ticket giant Ticketmaster and concert promoter Live Nation earlier this year, for example, only after the firm agreed to spin off one ticketing unit, license some of its software, and refrain from a host of practices the DOJ determined could be anti-competitive.
The Antitrust Division also sued dairy giant Dean Foods in January, seeking to undo its 2009 purchase of some milk processing plants in Wisconsin. That deal was not subject to antitrust scrutiny before it closed because it did not meet the size threshold for a regulatory review.
“[W]e are doing all we can to ensure that our markets are open and fair,” Varney said at today’s oversight hearing, which was held in front of the House Judiciary courts and competition subcommittee.
Committee Chairman John Conyers (D-Mich.), who said anti-competitive practices are “roaring down the runway,” argued that antitrust issues have grown more technical and complex.
“Antitrust enforcement is critical to the capitalist system,” Conyers said. “Free and competitive markets are the foundation of an economy like ours. When the markets fail, the economy fails.”
Lamar Smith of Texas, the ranking Republican on the committee, said he supports the strong defense of antitrust laws, but called on antitrust leaders to be transparent and reasonable on enforcement.
“American businesses need to have clear rules of the road in order to compete effectively against each other and in world markets,” Smith said.
Additional reporting by Aruna Viswanatha.
The Senate Judiciary Committee is scheduled to vote on another U.S. Attorney nominee at its meeting Thursday.
The panel is slated to consider William Ihlenfeld II , who was nominated by President Barack Obama on May 27 to lead the Northern District of West Virginia U.S. Attorney’s Office.
The partner at Ihlenfeld Law Office, PLLC, in Wheeling, W.Va., would replace acting U.S. Attorney Betsy Jividen. She has lead the office since former U.S. Attorney Sharon L. Potter stepped down in September 2009.
Read more about Ihlenfeld here.
The committee also will consider on Thursday the nominations of John F. Walsh for U.S. Attorney in Colorado and John Vaudreuil for U.S. Attorney in the Western District of Wisconsin.
The panel has yet to schedule votes for another 11 would-be U.S. Attorneys. The committee has approved 60 of Obama’s U.S. Attorney nominees, 57 of whom have won Senate confirmation. There are 93 U.S. Attorney posts.
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The United Nations is poised to approve a new Canadian director to its internal watchdog unit, the Wall Street Journal reported Monday.
The Journal did not identify the new director of the unit, which is tasked with rooting out corruption at the agency, but said U.N. Secretary General Ban Ki-moon nominated a Canadian woman to the post on Friday. The General Assembly is expected to approve the appointment this week.
The unit’s previous director, Inga-Britt Ahlenius, left earlier this month after accusing Ban of undermining her office and leading the secretariat into a “process of decay.”
Meanwhile, Ban has initiated an internal investigation in response to Ahlenius’ allegations, Russian news agency RIA Novosti reported Monday.
A source from within the U.N. Secretariat’s office told the news agency that Ban has ordered an internal investigation that will focus on the transparency of U.N. activities and the organization’s ability to resist corruption.
A document prepared by Vijay Nambiar, the director of Ban’s office, that was distributed to U.N. employees Monday said the probe would “study the ability of the U.N. to conduct an investigation about its own business”.
The U.S. Securities and Exchange Commission charged General Electric Co., the world's biggest maker of medical imaging equipment, with violations of the Foreign Corrupt Practices Act. (Getty)
General Electric Co. will pay $23.4 million to settle charges brought by the U.S. Securities and Exchange Commission that it paid kickbacks to the Iraqi government to win lucrative supply contracts, the agency said Tuesday.
In a complaint filed in federal court in Washington, D.C., the SEC accused four GE subsidiaries of paying Iraqi government agencies $3.6 million in kickbacks to win contracts to supply medical and water purification equipment under the United Nations-run Oil-for-Food program. GE acquired two of the units — Nycomed Imaging A.S. and Ionics Italba S.r.l — after the conduct described in the complaint occurred.
The Justice Department closed its parallel investigation into the matter without bringing any criminal charges, GE said in a statement announcing the settlement.
“GE is committed to the highest standards of conduct in all transactions in all of the jurisdictions where we do business throughout the world,” the company said. “This conduct did not meet our standards.”
Between 2000 and 2003, according to the SEC, GE and the subsidiaries it acquired provided cash, computer equipment, medical supplies and services to the Iraqi health and oil ministries in order to obtain 18 contracts.
The SEC charged the company with failing to accurately account for the bribes on its books, which is a violation of the Foreign Corrupt Practice Act.
The Justice Department dropped its investigation because prosecutors believed the case against GE wasn’t as strong as the other Oil-for-Food cases brought by the agency, according to a person familiar with the case. Those cases were prosecuted as mail fraud violations, but it would have been difficult to prove such charges against GE, the person said. In contrast, books and records violations have a lower evidentiary threshold.
The two companies that were subsidiaries of GE at the time of the contracts — Marquette-Hellige and OEC-Medical Systems AG — concealed about $2 million in kickbacks by inflating the commission of the agents who brokered the deals with the Iraqi government, the SEC complaint said.
Nycomed, a subsidiary of Amersham plc, which GE acquired in 2004, entered into nine contracts with Iraqi Ministry of Health and paid about $750,000 in kickbacks, according to the complaint. The kickbacks were hidden by a 10 percent increase in the commission of the company’s Jordanian sales agent.
At one point, a U.N. official asked the company about the large commission, touching off a round of panicked emails between a marketing coordinator in Norway and the employees handling the inquiry, the complaint said.
Ionics, a subsidiary of Ionics Inc., which GE acquired in 2005, paid $795,000 in kickbacks and earned $2.3 million in profits from five contracts to sell equipment to the Iraqi Oil Ministry. Four of the five contracts were negotiated with side letters documenting the kickbacks, which were concealed in fake line items and by boosting sales commissions.
The SEC has brought 15 cases against companies implicated in the Oil-For-Food investigation, netting some $204 million in fines and disgorgement of illegal profits. The cases followed a scathing government report issued in 2005 about the $1.8 billion corruption scandal.
“Bribes and kickbacks are bad business, period,” said Robert Khuzami, Director of the SEC’s Division of Enforcement. “This case affirms that law enforcement is active across the globe – offshore does not mean off-limits.”
The SEC’s Tracy L. Price and Robert I. Dodge conducted the investigation. Joseph Warin at Gibson Dunn & Crutcher LLP represented GE in the settlement.
The SEC complaint is embedded below.
With additional reporting by Joe Palazzolo and Christopher M. Matthews.
Joshua Hochberg (McKenna Long & Aldridge LLP)
Former Fraud Section chief Joshua R. Hochberg was appointed to examine the bankruptcy of Washington Mutual Inc., a Justice Department office that overseas bankruptcy cases announced Monday.
U.S. Bankruptcy Judge Mary Walrath, who is presiding over the case in Wilmington, Del., told the parties last week to name an examiner to review the bank’s reorganization and related claims.
Hochberg, who is a partner at McKenna Long & Aldridge LLP, previously served as the court-appointed examiner in the bankruptcies of commodities broker Refco and real estate investment firm DBSI.
WaMu went bankrupt in September 2008, when the Federal Deposit Insurance Corp took over its banking unit and sold it to JPMorgan Chase & Co. for $1.9 billion.
