More Charges Announced in Ongoing Investigation into Bid Rigging and Fraud Targeting (DoD in SK)

[nitpicker]

https://www.justice.gov/opa/pr/more-charges-announced-ongoing-investigation-bid-rigging-and-fraud-targeting-defense

Department of Justice
Office of Public Affairs

FOR IMMEDIATE RELEASE
Wednesday, March 20, 2019

More Charges Announced in Ongoing Investigation into Bid Rigging and Fraud Targeting Defense Department Fuel Supply Contracts for U.S. Military Bases in South Korea

Two Additional Companies Agree to Plead Guilty and Enter into Civil Settlements; Indictment Against Seven Individuals Unsealed

South Korea-based companies Hyundai Oilbank Co. Ltd. and S-Oil Corporation have agreed to plead guilty to criminal charges and pay a total of approximately $75 million in criminal fines for their involvement in a bid-rigging conspiracy that targeted contracts to supply fuel to United States Army, Navy, Marine Corps, and Air Force bases in South Korea, the Department of Justice announced today. Hyundai Oilbank and S-Oil have agreed to plead guilty to an antitrust charge contained in a superseding indictment that was unsealed today.

The superseding indictment also charges seven individual defendants — associates, managers, and executives of companies that conspired to rig bids for fuel supply contracts — for participating in this bid-rigging conspiracy and in a scheme to defraud the U.S. government.

In separate civil resolutions, Hyundai Oilbank and S-Oil have agreed to pay a total of approximately $52 million to the United States for civil antitrust and False Claims Act violations related to the bid-rigging conspiracy. These settlements reflect the important role of both Section 4A of the Clayton Act and the False Claims Act to ensure that the United States is fully compensated when it is the victim of anticompetitive conduct.
(snip)

The Criminal Case:

Today, the Department of Justice unsealed a three-count superseding indictment from the U.S. District Court for the Southern District of Ohio that was returned in September 2018. According to the superseding indictment, the Defense Logistics Agency and the Army and Air Force Exchange Service are two U.S. Defense Department agencies that contract with South Korean companies to supply fuel to the numerous U.S. military bases throughout South Korea.

Count One charges Hyundai Oilbank, S-Oil, and the seven individual defendants with participating in a combination and conspiracy to suppress and eliminate competition during the bidding process for these fuel supply contracts. The individual defendants, all residents and citizens of South Korea, are Hee-Soo Kim, Tae Ho Cho, Jiwon Kang, Young-Ho Yoon, Byung Kuk Kim, Byungik Moon, and Eul-Jin Hyung.

Count Two charges Hyundai Oilbank, S-Oil, and the seven individual defendants with participating in a conspiracy to defraud the United States by impairing, obstructing, and defeating the lawful function of the procurement processes for the fuel supply contracts. As part of its plea agreement with Hyundai Oilbank and S-Oil, the Antitrust Division agreed to move to dismiss Count Two against Hyundai Oilbank and S-Oil upon sentencing.

Count Three charges Hee-Soo Kim with tampering with a witness by use of intimidation, threats, or corrupt persuasion, with the intent to hinder, delay, and prevent communication with a law enforcement officer of the United States.

Hyundai Oilbank and S-Oil have agreed to cooperate with the Justice Department’s ongoing criminal investigation. The plea agreements are subject to court approval.

The investigation began based on a tip to the Defense Logistics Agency Inspector General (IG) Hotline. The IG office developed the information, interviewed the complainant, and then referred the case to the Defense Criminal Investigative Service.

The Civil Case:

The Department’s Antitrust Division today filed a civil antitrust complaint in the U.S. District Court for the Southern District of Ohio, and at the same time filed proposed settlements that, if approved by the court, would resolve the lawsuit against Hyundai Oilbank and S-Oil for their anticompetitive conduct targeting the U.S. military in South Korea.

As a result of this conduct, the United States Department of Defense paid substantially more for fuel supply services in South Korea than it would have had Hyundai Oilbank and S-Oil competed for the fuel supply contracts. Under Section 4A of the Clayton Act, the United States may obtain treble damages when it has been injured by an antitrust violation. The proposed settlement provides that Hyundai Oilbank pay $39.1 million and S-Oil pay $12.98 million to the United States to resolve the civil antitrust violations. In addition to the payments, Hyundai Oilbank and S-Oil have agreed to cooperate with the ongoing civil investigation of the conduct and to abide by antitrust compliance program requirements. The amount paid by each defendant exceeds the amount of the individual overcharge and reflects the value of defendants’ cooperation commitments and the cost savings realized by avoiding extended litigation.

The payments will also resolve civil claims that the United States has under the False Claims Act against Hyundai Oilbank and S-Oil for making false statements to the government in connection with their agreement not to compete. The Civil Division has entered into separate settlement agreements with the companies to resolve these claims.
(snip)