August 17,2009

CCI Says it Bribed Company Officials in China, CNOOC says "Not Us!"

By CSC staff, Shanghai

Control Components Inc. (CCI), a California-based designer and manufacturer of service control valves used in power generation and the nuclear and oil and gas industries, has pled guilty in a US court to many years of securing contracts in countries around the world, including China, Korea, and Malaysia, by bribing officials and employees of their state-owned and domestic companies.

 

The US Department of Justice has released documents in which CCI admitted bribing employees of six Chinese state-owned enterprises. The companies named include PetroChina, China Petroleum Materials & Equipment Corporation (CPMEC), Dongfang Electric Corporation, China National Offshore Oil Corporation (CNOOC), Jiangsu Nuclear Power Corporation, and Guohua Electric Power.

 

Among the six companies named, two of them, PetroChina and CPMEC, are subsidiaries of China National Petroleum Corporation (CNPC). A CNPC insider said big oil and gas fields were important CCI clients. "Although there are also control component manufacturers in China, enterprises here still need to import high-end control components."


So far, CNOOC has been the only company among the six to respond publicly to the news. The company declared last Friday that it had found no evidence of any bribe-taking by its staff from CCI or any other agents.

 

CNOOC said that after hearing of the charges against CCI it had established five investigative teams inside the company to check all the records for business relations with CCI and other agents from 2002 to 2009. CNOOC declared that, according to its investigation, the whole process met with the company's sourcing requirements and no violations were found in the process.

 

CNOOC says it has been in frequent contact and collaborating with CCI during its investigation. According to CCI's parent company, IMI, a multi-national engineering firm headquartered in Birmingham, UK, the bribes were wired to the personal banking accounts of CCI employees or their friends and relatives. No present evidence shows that any of this money went to CNOOC employees, nor is there proof that CNOOC employees demanded bribes.

 

In a letter to CNOOC on June 22, IMI said, "Apparently, it is very likely that the money was taken by these CCI ex-employees and their partners." It is reported that IMI's lawyers have informed the US Justice Department that those who received this money were former CCI employees or their friends or relatives, not CNOOC staff.

 

The story has been headline news in China. The case has drawn special attention as it has coincided with the Rio Tinto espionage case.

 

Several cases of bribery by multinational companies, Siemens, for example, have been uncovered in the past few years. Zhang Enzhao, ex-governor of China Construction Bank was jailed in such a case. The government has no response mechanism for such issues, and overseas traveling expenses of officials have not been included in the government's public disclosure.

 

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