CreativeWorks Systems, Inc. Comments on Wall Street Journal Article Regarding DOJ’s Decision to Drop FCPA Investigation of Allied Defense

Press Release   •   Aug 28, 2013 19:06 EDT

New York, NY

On August 28, news and technology blog commented on a recent Wall Street Journal news piece by Christopher M. Matthews, regarding the Department of Justice’s (DOJ) decision to drop the long-running Foreign Corrupt Practices Act (FCPA) investigation into the, now-defunct ammunition manufacturer, Allied Defense Group Inc.

According to the Wall Street Journal news article, “Allied Defense, an ammunition manufacturer, received a subpoena from the Justice Department in January 2010 after an employee of a subsidiary was arrested in connection with a massive foreign bribery sting operation. The Securities and Exchange Commission subsequently opened its own investigation.”

Until last November, U.S. authorities were investigating whether Allied Defense Group (ADG) had committed a violation of the FCPA, a law that bars American Companies from making improper payments to foreign government officials in order to gain some sort of business advantage abroad. However, even after the investigation was dropped, ADG had to pay a significant fine.

Josh Cole and his team of researchers at analyzed the aforementioned news story and underscored the value having a group of experts develop a FCPA compliance program to protect a company from FCPA liability. Cole pointed out that a well-constructed and implemented FCPA compliance program can help avoid, identify and remediate any possible FCPA violations in a timely manner.

“The interesting thing about this particular case is that FBI agents posed as representatives of the Gabonese Government to entrap, ADG’s former employee, Mark Frederick Morales, as well as other executives in the defense products industry,” said Cole. “The FBI created an elaborated scheme, in which the disguised agents were supposed to receive a $1.5 million bribe to secure a $15 million contract in Gabon.” team of researchers believes that the consequences of this FCPA probe have shown why it’s necessary to employ an impartial firm to conduct due diligence investigations as part of a structured compliance program. While Morales and the other defendants were exonerated last year, ADG still had to hold to $43 million that could not be distributed to the shareholders until the investigation was resolved.

The Wall Street Journal news article concluded by stating that, “Allied Defense has been unable to complete its dissolution processes and make final distributions to stockholders until the probes are completed. Allied Defense said Wednesday that process wouldn’t be complete until later this year;” a situation that has prevented Chemring Group PLC of finalizing its acquisition of ADG.

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