Company resolves improper business activities in 2010 and prior with nine-month JICA suspension
MORRISTOWN, N.J. — Louis Berger today announced, as part of its post-2010 reform program, it has accepted a nine-month sanction from the Japan International Cooperation Agency (JICA) for improper payments conducted by former manager James McClung and his management team on two water projects in India in 2010 and prior.
“Louis Berger proactively undertook the investigative efforts that brought these historic issues to light as part of a broad corporate reform program starting in 2010,” said D. James Stamatis, Louis Berger chief executive officer. “Since that time, we’ve worked to resolve these issues with each of the relevant authorities and funding agencies.” The sanction is the outcome of the company’s July settlement with the U.S. Department of Justice to resolve the same issues on the JICA-funded water projects with the U.S. government. While the formal JICA sanction only impacts the Louis Berger Group, the operating company that initially signed the two water contracts, Louis Berger is voluntarily recusing all its operating entities from bidding on JICA-funded projects during the nine-month sanction term.
“Coming forward with these historic issues has had business and reputational consequences, but resolving transgressions of past managers openly and transparently was a necessary step in our corporate reform,” said Stamatis. “We are pleased that JICA has recognized our commitment to transparency through our efforts to self-identify and voluntarily self-report the improper business activities as part of our expansive post-2010 reform program.”
The company voluntarily submitted to an independent internal investigation, led by outside forensic accountants and legal counsel who specialize in uncovering corruption. McClung and all of the managers associated with these issues were separated from the company as a result of the independent internal investigation, and the company has actively supported further U.S. and Indian authorities’ investigations into their activities. In July, McClung pled guilty in U.S. court for his role in the improper payments and is scheduled for sentencing on November 5.
“Louis Berger is a different company today than it was prior to 2010,” said Stamatis. “We’ve invested half a decade and more than $25 million into reforming our company.”
In its announcement, JICA acknowledged the company’s voluntary independent investigation, self-reporting and extensive corporate reforms undertaken since 2010 as a key contributing factor to the nine-month sanction timeframe. Key elements of Louis Berger’s comprehensive post-2010, $25+ million reform program include:
- New ownership: The corporation restructured and expanded its ownership and has implemented an Employee Stock Ownership program.
- New leadership: In addition to separating McClung and his management team from the company, the firm added new corporate managers in key positions, including chief financial officer and controller, and completely revamped its regional management teams throughout India and Asia.
- New organization: Louis Berger restructured the corporation to ensure greater centralized oversight and control of overseas business activities.
- New systems, policies and controls: The corporation introduced financial systems and enhanced processes and policies (261 new internal controls) to provide greater tracking and oversight for financial transactions and business processes.
- New global compliance and ethics programs: Louis Berger established an independent compliance and ethics department under the oversight of an independent audit committee, introduced a global helpline through which employees can report potentially non-compliant activities, and implemented a global code of business conduct. New investments also have funded annual worldwide compliance, ethics and anti-corruption training for all employees.
“Transparency and accountability are the hallmarks of a sustainable business, and we are a much more efficient, responsible and transparent company today than we were five years ago,” said Stamatis. “We will continue to monitor and improve our existing compliance system while delivering quality work to our clients with the level of integrity they expect.”
About Louis Berger
Louis Berger is a $1 billion global professional services corporation that helps infrastructure and development clients solve their most complex challenges. We are a trusted partner to national, state and local government agencies; multilateral institutions; and commercial industry clients worldwide. By focusing on client needs to deliver quality, safe, financially-successful projects with integrity, we are committed to deliver on our promise to provide Solutions for a better world.
Louis Berger operates on every habitable continent. We have a long-standing presence in more than 50 nations, represented by the multidisciplinary expertise of nearly 6,000 engineers, economists, scientists, managers and planners.