Guralp Systems Limited: The Corporate Declination

The Guralp Systems Limited FCPA case produced a Justice Department corporate declination on August 20, 2018. A corporate declination means the Justice Department decided not to prosecute the company under the Foreign Corrupt Practices Act.

The Justice Department’s letter identified Guralp’s payments to the director of the Earthquake Research Center at the Korea Institute of Geoscience and Mineral Resources as the conduct under investigation. It said Guralp’s disclosure and cooperation assisted the director’s prosecution for money laundering. His criminal trial covered payments from two seismological suppliers, one based in California and one in England. That trial account describes the combined scheme; its total bribes and unallocated transactions concern both suppliers, rather than Guralp alone.

The letter said the Justice Department closed its inquiry despite evidence of FCPA violations arising from Guralp’s payments to the director. It credited Guralp’s voluntary disclosure, cooperation and significant remedial efforts, and cited a parallel investigation by the United Kingdom’s Serious Fraud Office. It also said Guralp had committed to accepting responsibility for the same conduct with that agency.

For someone inside an equipment supplier, those connections matter. The person recommending a product to a public customer may also be receiving money from the seller, while the invoice tells a much less revealing story.

The Public Official Behind the Equipment Recommendations

The Justice Department’s July 18, 2017 account of the criminal trial described the director of the Earthquake Research Center at the Korea Institute of Geoscience and Mineral Resources. According to the trial evidence, between at least 2009 and 2015 the director demanded and received more than $1 million in combined bribes from the two seismological companies in exchange for unfair business advantages in South Korea.

The trial evidence showed what the companies obtained. The director advocated the purchase and use of their equipment by his institute and other South Korean customers. He also supplied market intelligence and confidential information about competitors and the institute’s bidding process.

That combination reaches into both sales and public procurement. A recommendation can steer the customer toward a supplier, while confidential bidding information gives that supplier a view its competitors do not have. We see the unfairness in that combination: the official who could help shape demand was also selling information about the competition.

For a sales or technical employee, the recommendation and the information may appear in different conversations. Connecting them to the same paid official explains the commercial value of the relationship. In this criminal case, the department described both as benefits the suppliers received for their payments.

Cash and a Personal American Bank Account

The director instructed the companies to pay him in cash or wire money to his personal account in Glendora, California, according to the criminal trial account. The evidence traced further transfers to his investment account in New York City and spending back in South Korea, where he lived and worked. The customer relationship, the receiving account and the eventual use of the money crossed different borders.

The same trial evidence showed fictitious invoices bearing a false New Jersey address. That gives the payment trail a concrete point of comparison: the address on the bill, the beneficiary of the transfer and the public position of the person receiving it. An invoice approved as a business expense can look very different when those records are read together.

The department also reported that the director received more in bribes than in salary from the institute during the relevant period. His public job supplied the influence, while the suppliers provided the larger income. That says more about the relationship than any tidy description on an invoice.

The Emails Explained Why the Payments Were Hidden

The criminal trial evidence included instructions to company representatives to delete emails or leave them unanswered. The director also asked them to keep his arrangements from colleagues at the institute. Those requests connected the payments to an effort to keep the public institution from seeing what its director was doing.

The department reproduced an email the director sent to a company representative in 2014. His own explanation makes the conflict plain:

The instruction to hide the relationship gives the payment records another meaning. A finance employee may see the invoice and account, while a sales employee sees the request to keep the customer institution uninformed. Together, those views can explain both what was paid for and why the participants wanted it concealed.

The Invoice and the Actual Service

A separate case involving Panasonic Avionics shows how the description of a paid relationship can diverge from the work. In the admitted statement of facts accompanying its deferred prosecution agreement, Panasonic described an internal audit’s search for consulting deliverables. The audit’s explanation went beyond missing paperwork:

Panasonic’s admitted facts also described a different consultant passing along confidential customer discussions and a competitor’s pricing. The parallel is the commercial information behind the payment. An insider may recognize the value of a confidential customer email even when the accounts describe the recipient as a consultant.

We connect the services named on the invoice to the work requested and the information delivered. In the seismic equipment trial, the department described fictitious invoices alongside recommendations and confidential bidding information. In Panasonic’s admissions, the audit and the communications showed different ways a paid relationship served the supplier.

What an Insider Can Connect

The evidence an insider holds connects the business decision to the payment and the people who knew about it. In the earthquake research director’s criminal case, that meant equipment advocacy, confidential bid information, cash or wires, fictitious invoices and instructions to conceal communications.

The commercial roles explain why one employee may see only part of the arrangement. Sales staff know who supplies customer intelligence, finance staff see payment approvals and beneficiaries, and audit or compliance staff may see the questions raised afterward. The Justice Department and Securities and Exchange Commission’s FCPA Resource Guide examines the company, intermediary and government relationships behind these transactions. Our work brings those views together around the actual decision the payment was meant to influence.

Whistleblower Rewards Depend on the Case

Which foreign-bribery whistleblower program fits your information is a question we work through with you. We connect the reward opportunity under the SEC or Justice Department program to the evidence of what the payments bought.

In a separate government-fraud case under the False Claims Act, a whistleblower can receive 15% to 30% of what the government recovers. The conduct you saw determines the questions we need to answer with you.

You Know What the Payment Bought

If you know who supplied the bid information, approved the invoice or asked that a customer be kept in the dark, speak with our whistleblower experts. We build the case around the commercial decisions you understand and bring in FCPA whistleblower lawyers who know how to connect foreign supplier payments to public influence. We stay beside you as that inside knowledge becomes the foundation of your case.