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Former Execs Avoid Hard Time

Two former telecommunications executives who admitted bribing employees of state-owned companies in Africa and concealing the payments have avoided prison in exchange for their cooperation in an ongoing FBI investigation.

The Justice Department said yesterday that Roger Michael Young, 48, of Washington, D.C., a former managing director of ITXC Corporation, has been sentenced to five years probation, including three months home confinement, three months in a community confinement center, and a $7,000 fine. He pleaded guilty in July 2007 to violating the Foreign Corrupt Practices Act and the Travel Act.

Former ITXC Vice President Steven J. Ott, 49, of Princeton, N.J., who also pleaded guilty, was sentenced in July this year to five years probation, including six months in a community confinement center and six months home confinement. He was fined $10,000.

Young and Ott faced up to five years in prison and fines of $250,000. The DOJ said both were granted a reduced sentence based on their cooperation with an investigation the FBI is conducting into the foreign bribery scheme. They were sentenced by U.S. District Court Judge Garrett E. Brown of New Jersey.

A third defendant in the case, Yaw Osei Amoako, 55, of Hillsborough, N.J., pleaded guilty in September 2006. He was sentenced in August 2007 to 18 months in prison followed by two years of supervised release, and a $7,500 fine.

ITXC was a publicly-held VOIP company based in Princeton, N.J. It was acquired by Canada's Teleglobe International Holdings Ltd. in May 2004 (Teleglobe was itself acquired by Tata's VSNL in July 2005). Between August 2001 and May 2004, the three executives paid $267,468.95 in bribes to foreign officials in Nigeria, Rwanda and Senegal in order to obtain contracts for ITXC to transmit telephone calls to those countries. ITXC made $11,509,733 in net profits from contracts obtained through the bribery. Ott was ITXC's vice president for global sales, Young was its managing director for the Middle East and Africa, and Amoako was the regional director for sales in Africa.

In April 2008, the Securities and Exchange Commission settled a civil enforcement action against all three. It charged them with violating the antibribery provisions of the FCPA and concealing and falsely reporting the illegal payments. In the settlement, they each consented to the entry of a final judgment permanently enjoining them from violating and aiding and abetting violations of the FCPA. Amoako also agreed to pay $188,453 in disgorgement and prejudgment interest because he took kickbacks for some of the bribes he paid to the foreign officials.

View the DOJ's Sept. 2, 2008 release here.

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Full post as published by The FCPA Blog on September 02, 2008 (boomark / email).