Linde North America: The Corporate Declination

Linde’s acquisition of Spectra Gases brought a foreign-bribery arrangement into the business it had bought. In its June 2017 declination letter, the Justice Department described payments connected to equipment purchased from a Georgian state-owned entity and the profits produced by that equipment. Linde agreed to the letter’s facts and conditions, and the department closed its investigation of the company. The FCPA case turns on who benefited from the acquired operation and what Linde did when it discovered the arrangement.

The transaction concerned a boron column used to produce boron gas. The sellers’ officials helped select the purchaser, then shared in the profits through companies and a management agreement. For an insider looking at an acquisition, the useful question is what the purchase agreement and the recurring payments reveal about the same business relationship.

The Agreement Behind the Boron Column Purchase

The letter says Linde acquired New Jersey-based Spectra Gases in October 2006. Before that acquisition, three senior Spectra executives agreed to share profits from boron-gas sales with officials at Georgia’s National High Technology Center and an intermediary connected to them. The officials’ assistance in securing Spectra’s selection as purchaser was the return for that profit sharing.

The National High Technology Center was state-owned and controlled. Its officials therefore stood on both sides of the arrangement described in the letter: they could help determine who obtained the equipment, and they would benefit from the equipment’s future earnings. The asset purchase and the later distribution of profits belong in the same account of the transaction.

The Spectra executives had been the company’s principal shareholders and managers. They continued managing it after Linde’s acquisition under an earn-out arrangement. That arrangement tied a further acquisition payment to the business’s performance, giving the profits generated by the acquired operation another financial consequence inside the transaction.

Two Companies and a Management Agreement

The letter identifies Spectra Investors, a New Jersey company, as the purchaser of the boron column. Spectra Gases Georgia was wholly owned by Spectra Investors and operated the column. Those company relationships explain how ownership of the equipment and operation of the business were connected.

Spectra Investors entered a management agreement with a company owned and operated by the officials and their intermediary. The letter says that company purported to provide services, although the investigation found no evidence that services were performed. It received a share of Spectra Investors’ profits under the agreement.

The remaining profits were distributed through ownership interests. The officials’ side held a majority interest in Spectra Investors, while Spectra Gases held the balance. Combining the management agreement with the ownership distributions directed most of the column’s profits to the officials’ side, according to the letter.

We see the practical contradiction: a management agreement explained a payment for services, while the investigation found no evidence of those services. Someone inside the operation could know who actually ran the equipment, what the management company did, and why its invoice or profit allocation was approved. Those details connect the contractual description to the business activity behind it.

What the Acquisition Payment Meant

The letter describes profits received by Spectra Gases before its dissolution and profits received by Linde afterward. Linde dissolved Spectra Gases in January 2010 and became its successor. The earlier profits were a driving force in determining the earn-out payment to the former Spectra executives.

That connection matters to an employee who understands the acquisition accounts. The operating profits affected both what the purchased business earned and what its former owners could receive under the acquisition arrangement. The letter’s account makes the earn-out records part of the payment story, alongside the management agreement and distributions to the officials’ companies.

When Linde discovered the corrupt arrangement, it withheld an earn-out payment and placed the money in a segregated account pending its investigation. It also withheld further payments to companies owned or controlled by the officials. The decision to stop those payments connected the company’s internal findings to the money still within its control.

Why the Justice Department Closed the Investigation

The Justice Department credited Linde’s voluntary disclosure, internal investigation and cooperation. The letter also identified improvements to the compliance program and internal accounting controls. Linde’s response included disciplinary action against employees involved in the conduct and termination of the management agreement.

The department also considered Linde’s withholding of payments tied to the conduct and its agreement to give up the profits described in the letter. These were stated reasons for the corporate decision, alongside cooperation and remediation. A corporate declination records the department’s decision about the company under the letter’s conditions.

The document distinguishes the profits received by Spectra Gases from those received by Linde after the subsidiary’s dissolution. That separation keeps the payment obligation tied to the entity and period that produced it. The letter sets obligations; it does not itself establish a later collection or a whistleblower award.

For an employee with knowledge of an acquired business, the relevant history may cross the closing date. The earlier agreement can explain a continuing payment, and the later investigation can show when management learned what that payment represented. We work with insiders to connect those decisions through the company’s records.

What the Payment Records Can Show

When we assess a Foreign Corrupt Practices Act concern, we follow the payment trail: who authorized the money, who received it and which official controlled the business decision. Payment approvals and accounting entries show how the money moved through the company’s systems. Internal audit findings and reports to management can show what the company was told about the transaction.

The Journal of Forensic & Investigative Accounting’s 2017 paper A Teaching Case Using the Elements of the Foreign Corrupt Practices Act connects payments intended to influence business decisions with the accounting records and controls used to monitor company transactions. That connection is where we work with an insider: what the payment bought, how the books described it and who understood the difference.

The Information Behind a Whistleblower Case

Our experts assess the foreign-bribery conduct you know and the whistleblower program that fits it. We work with you and whistleblower lawyers who handle Foreign Corrupt Practices Act matters.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. That separate law addresses fraud against the U.S. government, while foreign-bribery reporting uses agency enforcement and award programs.

You Know the Business Behind the Payment

If you know who approved a payment, who benefited and what management knew, speak with our whistleblower experts about the transactions you understand from inside the business. We work alongside you to connect those decisions to the money and build your strongest case, bringing in whistleblower lawyers who handle Foreign Corrupt Practices Act matters.