Val LewtonToday, October 2, is the first Friday in October so I begin my annual month of Friday HorrorFest Film highlights. This year I wanted to highlight the films of one of the great unknowns of horror films, Val Lewton. Lewton, a writer from New York who went out to Hollywood in the mid-1930s, was not an actor or director but a Producer for the old RKO Studios. . He had a stint at MGM working as a publicist and assistant to David O. Selznick, the Producer of Gone With the Wind, which he worked on as an uncredited writer, “including writing the famous scene where the camera pulls back to reveal hundreds of wounded soldiers at the Atlanta depot.”

Lewton left Selznick to work at RKO as a Producer. At RKO he was given three guidelines, (1) each film had to come in under a US$150,000 budget, (2) each was to run under 75 minutes, and (3) Lewton’s supervisors would supply the film titles. For his first movie, he was presented with the title The Cat People; he came in under budget at $137,000 and the film netted $4MM; making it the top film sales for RKO in 1942. Thereafter he was given a free hand but he was still given each film’s title. The thing I love about Lewton’s horror work is that it based on atmosphere and what you do not see to deliver its great terror. Lewton produced six films for RKO that I will be exploring in this months HorroFest 2015 Celebration series.

Lewton has been called by Martin Scorsese the “Man in the Shadows” and that seems like an appropriate introduction to today’s topic; which was the stunning announcement that Andres Truppel, the former Chief Financial Officer (CFO) of Siemens S.A. Argentina, had pled guilty to the nearly decade long bribery scheme engaged in by the company and its employees in the corruption of Argentinian officials around what the Department of Justice (DOJ) Press Release called, “a contract worth approximately $1 billion to create state-of-the-art national identity cards (the Documento Nacional de Identidad or DNI project).” Although the project was cancelled in 2001, the company then engaged in a lengthy corruption scheme to recover its costs through bribing judges and others in the Argentinian judicial system. Truppel pled guilty to “conspiring to violate the anti-bribery, internal controls and books and records provisions of the Foreign Corrupt Practices Act (FCPA); and to commit wire fraud.”

Truppel had been fighting extradition to the US from his home country of Argentina and had also contested the US court’s jurisdiction over his person. I guess he lost both of those claims since he pled guilty. According to the Criminal Compliant filed in 2011, Truppel was a part of a cabal which led the bribery effort to secure the national identity card contract and then, after it was withdrawn, “Even after that point, members of the conspiracy continued to pursue the profits that Siemens had expected to gain from the project. They did so through additional bribes and corrupt conduct, including the pursuit of a fraudulent arbitration in Washington, D.C. against the Argentine government, demanding nearly $500 million while actively hiding the corruption from the tribunal.”

According to the DOJ Press Release, Truppel made some very damning admissions during his guilty plea. Truppel admitted, “that he engaged in a decade-long scheme to pay tens of millions of dollars in bribes to Argentine government officials in connection with the DNI project, which was worth more than $1 billion to Siemens. Truppel admitted that he and his co-conspirators concealed the illicit payments through various means, including using shell companies associated with intermediaries to disguise and launder the funds, and by paying $7.4 million as part of a hedging contract with a foreign currency company incorporated in the Bahamas. In addition, Truppel admitted that he and his co-conspirators paid nearly $1 million to a former official in Argentina’s Ministry of Justice that was used to bribe an Argentine government official. Truppel also admitted that he used a $27 million contract between a Siemens entity and a company called MFast Consulting AG that purported to be for consulting services to conceal bribes to Argentine officials.”

Truppel was not sentenced and there was no date provided for his sentencing. It can only be surmised at this point that he must be cooperating with federal authorities and that his final sentence may well depend, in large part, on his continued cooperation with the US government.

It seems rather stunning that Truppel would make such a guilty plea at this point in time. As noted in the FCPA Blog, “Seven of the eight defendants in the U.S. criminal case were also charged by the SEC with civil FCPA offenses. Two have settled the SEC charges and a third, Herbert Steffen — a former chief executive officer of Siemens Argentina — won dismissal in federal court. In February 2013, Judge Shira Scheindlin in Manhattan threw out the SEC’s civil FCPA enforcement action against Steffen. Judge Scheindlin said he didn’t have sufficient minimum contacts with the United States to subject him to the SEC’s personal jurisdiction.” Additionally one of the defendants, “Uriel Sharef, a former member of the Siemens AG central executive committee and a managing board member. He was also charged in the U.S. criminal indictment. There is no report of him appearing in the U.S. criminal case. Sharef, a dual citizen of Israel and Germany, settled civil charges with the SEC in October 2012. He agreed to pay a $275,000 civil penalty.”

The Siemens FCPA enforcement action has eerie echoes to the Volkswagen (VW) emissions testing scandal that has engulfed the company over the past month. Siemens claimed to have robust ethical culture yet had set up an entire separate structure to pay bribes, for which the company paid the highest FCPA fine and penalty ever of $800MM back in 2008. VW purported to sell the worlds best performing green diesel auto while having installed a defeat device to fake emissions tests results. Given the DOJ’s new focus on individuals to prosecute for white collar crimes and the Truppel guilty plea which demonstrates how doggedly the DOJ can be when bringing guilty individuals to justice, if I were a VW executive anywhere near the current scandal, I would be very concerned about a long stay in Hotel Fed.

The most appropriate lesson from Val Lewton may well be that even if you are in the shadows of the VW emission-testing scandal, you may well be in the light of day for the DOJ.

This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at tfox@tfoxlaw.com.

© Thomas R. Fox, 2015

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