March 3, 2014
In what can only be described as a somewhat sobering announcement, the U.S. Department of Justice (DoJ) announced earlier today that a former prime contractor manager has been sentenced to serve 14 years in prison in an ongoing bid-rigging, fraud and kickback case. According to the DoJ, this is the longest sentence ever imposed in the U.S. involving an antirust crime.
In describing the case, in which one Canadian defendant currently faces extradition to the U.S., the DoJ said:
“After a two week jury trial, ending on Sept. 30, 2013, McDonald was convicted of engaging in separate bid-rigging, kickback and fraud conspiracies with three subcontractors at two New Jersey Superfund sites – Federal Creosote in Manville, N.J., and Diamond Alkali in Newark, in return for kickbacks of more than $1.5 million. He was also convicted of engaging in an international money laundering scheme, major fraud against the United States, committing two tax violations and obstruction of justice. The various conspiracies took place at different time periods from approximately December 2000 until approximately April 2007. McDonald was initially charged in an indictment returned on Aug. 31, 2009.
According to evidence presented at trial, McDonald accepted kickbacks from sub-contractors in exchange for the award of sub-contracts at Federal Creosote. McDonald provided co-conspirators at Bennett Environmental Inc., a Canadian-based company that treats and disposes of contaminated soil, with bid prices of their competitors, which allowed them to submit the highest possible bid prices and still be awarded the sub-contracts.
McDonald also accepted kickbacks in exchange for the award of sub-contracts at the Federal Creosote and Diamond Alkali sites from the owner of JMJ Environmental Inc., a wastewater treatment and chemical supply company, and the co-owner of National Industrial Supply LLC, an industrial pipe supplier. He also participated in a conspiracy with the owner of JMJ and co-conspirators to rig bids and allocate sub-contracts for wastewater treatment supplies and services at Federal Creosote.”
Bid-rigging in Canada
In Canada, like the U.S., bid-rigging is subject to criminal fines and imprisonment (under section 47 of the Competition Act, subject to fines in the discretion of the court, imprisonment for up to 14 years, or both). In this regard, Canada’s Competition Bureau has recently achieved several record bid-rigging fines ($5 million and $30 million in relation to the ongoing global auto-parts cartel investigation – for my earlier posts, see: here and here).
The Bureau has, however, also recently faced some setbacks enforcing Canada’s bid-rigging laws, including challenges involving the required elements of the bid-rigging offences under section 47 that require that there be a “request for bids or tenders” (in the R. v. Dowdall and R. v. Al Nashar cases). For a good comment of these two cases see: Bid-Rigging in Canada: Recent Developments.
Also, while Canada’s Competition Bureau has indicated an increased desire to seek individual penalties in criminal competition cases, imprisonment still remains atypical for cartel and bid-rigging offences in Canada, with imprisonment more likely for other types of competition law related fraud, such as deceptive marketing and deceptive telemarketing.
For more about Canadian bid-rigging law see: bid-rigging.
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I am a Toronto competition and advertising lawyer offering business and individual clients efficient and strategic advice in relation to competition/antitrust, advertising, Internet and new media law and contest law. I also offer competition and regulatory law compliance, education and policy services to companies, trade and professional associations and government agencies.
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