[Updated: 28 July 2006 at bottom of page]
Press release from U.S. Department of Justice
General Electric Pleads Guilty In Defense Fraud Case
To: National Desk
Contact: U.S. Department of Justice, Press Office, 202-514-2007
CINCINNATI, July 22 /U.S. Newswire/ --
The Department of Justice today announced that the General Electric Co. has pleaded guilty to charges of defrauding the federal government of $26.5 million in the sale of military equipment to Israel.
The department said that General Electric at the same time had agreed to pay $69 million in fines, penalties, and damages for committing the offenses.
United States Attorney D. Michael Crites of the Southern District of Ohio said General Electric's guilty plea involved funds diverted from the U.S.-financed F-16 jet engine program with the Israeli Air Force from 1984 to 1990.
Crites said General Electric pleaded guilty to offenses that included diversion of millions of dollars to former Israeli Air Force (IAF) brigadier general Rami Dotan to influence Dotan to assist General Electric in securing favorable treatment in connection with the F-16 program contracts. Funds were also diverted for other projects and for the personal benefit of the then manager of international government sales for General Electric Aircraft Engines. Dotan and the sales manager were longstanding friends, and Dotan was General Electric's principal contact with the IAF. Tn 1984, when the conspiracy began, Dotan was in charge of the IAF's Propulsion Branch, and became IAF Quartermaster General. He was arrested by the Israeli police, court martialed, and sentenced in 1991 by an Israeli military tribunal to 13 years imprisonment.
General Electric pleaded guilty to a four-count information charging: conspiracy to defraud the United States and to commit offenses against the United States (Title 18, United States Code, Section 371); violation of the Foreign Corrupt Practices Act of 1977, by failure to make and keep accurate books and records (Title 15, United States Code, Sections 78m(b)(2)(A) and 78ff(a)); false claims against the United States (Title 18, United States Code, Section 287); and engaging in monetary transactions in criminally derived property, in violation of the Money Laundering Control Act of 1986 (Title 18, United States Code, Section 1957). It was the first time a defense contractor had been charged with money laundering. Pursuant to the plea agreement filed today, General Electric paid a criminal fine of $9.5 million.
The information said General Electric, Dotan, and others conspired to create false billings for fictitious IAF projects in order to divert funds to their own personal use and to unapproved IAF projects. The false billings were submitted under contracts financed by a U.S. government program that provides financial aid to certain foreign countries to purchase products and services for military uses.
The diversions were effected in part by covertly siphoning funds from U.S. government-funded projects subcontracted to Ingbir Engineering and Maintenance Co. of Tel Aviv, Israel, in which Dotan had a secret financial interest, the information said. At Dotan's direction, Ingbir Engineering was selected for all subcontract work in Israel on a jet engine support contract Israel had awarded to General Electric.
From 1984 through 1990, General Electric regularly made payments to a New Jersey corporation purporting to act as Ingbir Engineering's U.S. agent, the information said. That corporation transmitted approximately $23.8 million to Ingbir Engineering, and approximately $3.7 million was withheld as a secret fee, the information said. This fee was actually a device for diverting funds for the benefit of Dotan and the GE sales manager, and most of these funds were transferred to a network of European bank accounts controlled by Dotan and the sales manager, the information said.
Diversions were also effected through a scheme whereby, in 1989 and 1990, General Electric paid a total of approximately $7.875 million to supposedly finance flight tests of a jet engine model sold under a U.S. government-funded contract between General Electric and Israel. Approximately $7;425,000 was transmitted to the network of European bank accounts controlled by Dotan and the GE sales manager.
General Electric employees created false documentation attesting that the payments to the agent's corporation represented funding for flight tests. General Electric also implemented a plan to recover the cost of these payments from sales of the engines. This cost and the plan to recover it through the engine sales were not disclosed to Israel or the U.S. government, which provided funding for the engine procurement.
In addition, the information said, funding for unapproved uses was generated through the following schemes involving fictitious projects, sold under a U.S. government-funded contract:
A. General Electric purportedly sold to Israel two jet engine data collection devices called portable test units, but no such units were designed or manufactured. Instead, in 1984, 1985 and 1987, General Electric remitted approximately $1,561,960 for uses by Dotan and others not authorized for U.S. government funding, and retained the balance of the approximately $4 million collected from Israel.
B. General Electric purportedly sold to Israel a jet engine test facility called an enclosed jet engine test cell and a collection of equipment for this facility referred to as the test cell measurement kit, but neither was ever built or delivered. Israel paid General Electric approximately $6.85 million for the non-existent enclosed test cell, and, in 1988 and 1990, General Electric remitted to Ingbir's purported agent approximately $2.35 million for undisclosed and unapproved uses. Israel also paid General Electric approximately $614,450.55 for the non-existent test cell measurement kit.
C. General Electric purportedly sold to Israel kits to retrofit jet engine test cells so that they would be compatible with an additional configuration of the F110-GE-100 jet engine, but no such kits were ever built or delivered. General Electric nevertheless billed and collected from Israel approximately $3,996,500 for the sale of the non-existent kits, in 1988 and 1989. This scheme was devised to generate funding for the development of the F110-GE-100A jet engine. At the time, General Electric planned to sell this engine to Israel pursuant to a contract that had not yet been awarded. This use of funds was neither disclosed to nor approved by Israel or the U.S. government which funded the contract under which the kits were purchased.
In the course of these diversion schemes, General Electric violated part of the Money Laundering Control Act, which prohibits a person from engaging in any monetary transaction over $10,000 if that person knows the funds involved are derived from a criminal offense and if the funds are derived from any of a number of crimes specified in the statute. The listed crimes include wire fraud.
All of the fraudulent schemes charged in the pleadings involved violations of the accounting provisions of the Foreign Corrupt Practices Act of 1977 (FCPA). The FCPA, among other things, requires every company which issues stock to the public to make and keep books, records, and accounts, which, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company.
The investigation was conducted by the Department of Justice Criminal Division (the Money Laundering section and Fraud Section), the United States Attorney for the Southern District of Ohio, the Department of Justice Civil Division (the Commercial Litigation Branch), the Federal Bureau of Investigation, the Defense Criminal Investigative Service, the Internal Revenue Service Criminal Investigation Division, and the Defense Contract Audit Agency. The guilty plea was entered into in conjunction with General Electric's agreement to settle civil claims in United States ex. rel. Taxpayers Against Fraud, a nonprofit-corporation, and Chester L. Walsh vs. General Electric Co., a New York corporation, Civil Action No: C-1-90-792 (U.S.D.C. S.D. OH). To settle the civil action, General Electric has agreed to pay $59.5 million in civil penalties and damages.
The statement of facts filed with the court said that General Electric provided substantial cooperation in the investigation.
Now for the LAUGH
and it gets more funny by the moment:
Although the above link has not been changed, the content at "General Electric" was changed. Here is the original content:
Integrity editor's note:
The "Spirit & The Letter" is the GE integrity policy, and each GE employee signs a pledge to adhere to it when they join the company.
Chairman & CEO Jeff Immelt's Message to Employees
As GE learns and grows in the 21st century, three traditions of our company become more important. Along with commitment to performance and thirst for change, we must always display total, unyielding integrity.
This is a company of integrity. It's a company of standards. Our worldwide reputation for honest and reliable business conduct, built by so many people over so many years, is tested and proven in each business transaction we make.
Today's GE is far more dynamic, globally directed and customer-driven than ever before. We are playing offense - trying new things to build our business success - our quality products and services; our forthright relations with customers, suppliers and each other; and, ultimately, our winning competitive record. But the GE quest for competitive excellence begins and ends with our commitment to lawful and ethical conduct. As a global company, we must create and follow a set of global rules.
Each person in the GE community makes a personal commitment to follow our Code of Conduct. Guiding us in upholding our ethical commitment is a set of GE policies on key integrity issues. All GE employees must comply not only with the letter of these policies but also their spirit.
I, and all GE leaders, have the additional responsibility of nurturing a culture in which compliance with GE policy and applicable law is at the very core of our business activities. It is, and must be, the way we work.
The stakes are high in today's business environment, and, especially while skepticism of corporate activities persists, we must meet and surpass requirements and expectations.
We must preserve and strengthen for those who will follow us what has been the GE foundation for success for more than 100 years - the GE commitment to integrity.
Jeffrey R. Immelt
CEO and Chairman of the Board
AND JUST SO THERE IS NO DOUBT, HERE IS THE ORIGINAL SCREEN SHOT:::