Additional Valve Company Executive Pleads Guilty to Conspiracy to Violate the FCPA

03 February 2009 Publication

In February 2009, the Department of Justice ("DOJ") announced that Richard Morlok pleaded guilty to conspiracy to violate the FCPA. According to the criminal information, Morlok was the Finance Director for Company A (an unnamed co-conspirator company organized under U.S. law with its principal place of business in the U.S. and in the business of designing and manufacturing service control valves for use in the nuclear, oil and gas, and power generation industries worldwide). As described in the information, Morlok oversaw the company's Finance Department and had responsibility for approving certain commission payments and signing off on wire transfers to recipients of the payments. During his tenure, he authorized, approved and caused Company A employees and agents to make approximately $630,000 in payments to individuals employed by state-owned enterprises in China, Korea, Romania, and Saudi Arabia for the purpose of assisting Company A in obtaining and retaining business. Some of the payments were made through U.S. bank accounts. According to the information, payment recipients had the authority either to award contracts or to influence the technical specifications of an order in a manner favorable to Company A. Company A earned approximately $3.5 million in profits from the tainted contracts.

Morlok faces a maximum of fives years in prison and he has agreed to cooperate with the DOJ's ongoing investigation. In a related FCPA enforcement action in January 2009, Mario Covino, the former Director of Worldwide Factory Sales for Company A, also pleaded guilty to conspiracy to violate the FCPA based on a similar charge.