Bloomberg News

Armor Holdings to Pay $16 Million to Settle Bribery Claims

July 13, 2011

(Updates with details of settlement from sixth paragraph.)

July 13 (Bloomberg) -- Armor Holdings Inc., the military- truck maker now a subsidiary of BAE Systems Plc, agreed to pay $16 million to resolve U.S. claims it bribed a United Nations official to win contracts connected to peacekeeping missions.

The company will pay $10.3 million to resolve criminal allegations and $5.7 million to settle related civil claims, the Justice Department and Securities and Exchange Commission said in separate statements today. The violations of the Foreign Corrupt Practices Act, which began as early as 2001, took place before BAE bought the company in 2007, prosecutors said.

In 2001 and 2003, Armor employees set up sham consulting contracts to funnel bribes to a UN procurement official in exchange for information about competitors’ bids to provide body armor for peacekeeping troops, according to the complaint. Armor won about $6 million in contracts through the corrupt payments for a profit of about $1 million, the Justice Department said.

“Armor and BAE Systems have cooperated extensively with the government since this conduct was first reported in April 2007,” BAE spokesman Brian Roehrkasse said in a statement. As a result of Armor’s “disclosure, cooperation, and extensive remediation, the DOJ and SEC have entered into settlements that close the matter without any FCPA prosecution or litigation.”

Criminal Allegations

The criminal probe by the Justice Department was settled with a non-prosecution agreement that cited the company’s cooperation and internal investigation in the case. In settling the SEC claims, Armor didn’t admit or deny the allegations.

The Justice Department said Richard Bistrong, who worked in Armor’s international sales unit, and another unidentified executive arranged for the UN agent to receive more than $200,000 in commissions for the 2001 and 2003 contracts. Bistrong pleaded guilty last year to bribing UN and Dutch officials to win body armor and pepper-spray contracts.

Bistrong played a central role in a separate U.S. sting operation in which he recorded telephone and in-person meetings with 22 security company executives alleged to be seeking corrupt deals with an agent posing as a representative of Gabon. The first of four cases stemming from that investigation ended in a mistrial earlier this month.

Brady Toensing, Bistrong’s lawyer, declined to comment.

The SEC case is Securities and Exchange Commission v. Armor Holdings Inc., 1:11-cv-01271, U.S. District Court, District of Columbia (Washington).

--With assistance from Tom Schoenberg in Washington. Editors: Fred Strasser, Peter Blumberg

To contact the reporter on this story: Joshua Gallu in Washington at

To contact the editor responsible for this story: Michael Hytha at Lawrence Roberts at

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