Former VP BEV in jail
2011-09-13 11:55 ET - Street Wire
by Mike Caswell
Robert Griffiths, the former vice-president of U.S. sales for Bennett Environmental Inc., has received 50 months in jail in the United States for his role in a scheme to obtain $43-million worth of government contracts through bribes. (All figures are in U.S. dollars.) The sentence, handed down by New Jersey Judge Susan Wigenton on Monday, Sept. 12, also includes a $4.6-million restitution order.
The charges stemmed from a scheme to bribe a U.S. government contractor that was awarding subcontracts for soil remediation. Prosecutors claimed that Mr. Griffiths provided employees of the contractor kickbacks in the form of cash payments, cruises and event tickets. In return, he received information about the bids of Bennett's competitors. Using these numbers, he was able to fashion bids for Bennett that ensured it received contracts without having to significantly undercut its competition. Mr. Griffiths pleaded guilty to the charges in July, 2009, and acknowledged that he faced up to 20 years in jail.
Mr. Griffiths's sentence comes six months after one of his former co-workers, Zul Tejpar, received three years of probation for the scheme. Prosecutors claimed that Mr. Tejpar, who was the company's vice-president of business development, transferred hundreds of thousands of dollars in kickbacks over a three-year period.
The case began on July 6, 2009, when prosecutors in the District of New Jersey filed a three-count criminal information sheet against Mr. Griffiths. The sheet identified him as a resident of Toronto who was responsible for Bennett's U.S. sales between 2001 and 2004. Prosecutors also listed several co-conspirators, the only one of which it named was Mr. Tejpar.
The sheet described how in 2000 the U.S. government was looking at cleaning up the Federal Creosote Superfund Site, a 53-acre parcel that had been used to treat railroad ties with coal tar creosote from 1910 to the 1950s. Coal tar creosote is a wood preservative that can cause skin irritation and respiratory problems. In 2001 and 2004 the government awarded two contracts totalling $180-million to a prime contractor to clean up the site.
One of the requirements of the bid was that the prime contractor would give work to subcontractors such as Bennett based on a fair bidding policy. At least three subcontractors had to submit competitive bids before a deal would be awarded. In some instances, the process was done through sealed bids, with the lowest bidder winning the work.
According to prosecutors, Mr. Griffiths helped rig the process through kickbacks worth at least $1.1-million. They included cruises in the Mediterranean and the Caribbean, wine, flat screen TVs, and laptop computers. The Mediterranean cruise was a 10-day event, which cost approximately $75,000, and included Mr. Griffiths and several executives of the prime contractor. The information sheet also listed cash transfers totalling $504,480. As a result of the kickbacks, Bennett was able to obtain $43-million worth of government work, according to prosecutors.
The government also charged Mr. Griffiths with obstruction of justice after he lied about the bidding process during an interview with the Ontario Securities Commission and the U.S. Securities and Exchange Commission. In 2004, the SEC began investigating Bennett over its receipt of the Federal Creosote contract. As part of that investigation, Mr. Griffiths voluntarily agreed to an interview with the SEC and the OSC in Ontario. During that interview, he told investigators that he had never received any advance information on the value of the bids placed by competitors.
OSC ban
The jail term comes five years after the OSC handed Mr. Griffiths a 15-year ban from trading or acting as an officer or director of a public company. The regulator said he sold 45,600 shares between September and December, 2003, when he knew that there was a dispute concerning the Federal Creosote contract. The government had required the company to rebid on a portion of a soil remediation plan, and the company had not disclosed this when Mr. Griffiths sold his shares.
As part of the same case, the OSC banned Bennett's founder, John Bennett of Vancouver, for 15 years. It also fined him $300,000 (Canadian). That ban was in addition to a 10-year ban the SEC levied on him for the same conduct. In the SEC case, he settled without a hearing, and did not admit to any wrongdoing. Mr. Bennett was not charged in the criminal matter, nor was there any indication he was aware of the activities of Mr. Griffiths.