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Jakarta Post

Smith & Wesson bribery scandal involves National Police officers

  • Yuliasri Perdani

    The Jakarta Post

Jakarta   /   Thu, July 31, 2014   /  09:29 am

The Indonesian Corruption Watch (ICW) has called for an investigation into an alleged attempt by US gunmaker Smith & Wesson to bribe officials at the National Police.

The US Securities and Exchange Commission (SEC) first revealed the case on Monday when it announced that it would impose a US$2.03 million penalty on the company.

The SEC found that employees and representatives of the Massachusetts-based firm had engaged in a pervasive effort to win overseas contracts by '€œoffering, authorizing or making illegal payments or providing gifts meant for officials in five countries, including in Indonesia.'€

A SEC investigation found that in 2009, Smith & Wesson had authorized its third-party agent in Indonesia to make improper payments to the country'€™s police officials in an attempt to win a contract.

In response to the SEC report, ICW legal researcher Donal Fariz urged the Corruption Eradication Commission (KPK) to look into the scandal.

'€œThe National Police may face a conflict of interest by handling the case. So, it is better to entrust the investigation with the KPK. The KPK needs to ask for the detailed report [from the SEC] on the police officials who were involved in the scandal,'€ he said on Wednesday in a telephone interview.

Bribery attempts during a tender, as Donal said, were nothing new in Indonesia. The transparency of tenders within the National Police has yet to improve following the revelation of the graft-ridden Rp 198.7 billion ($17.16 million) driving simulator contract case involving former traffic police chief Insp. Gen. Djoko Susilo.

A press release made available on the SEC website did not identify the alleged corrupt Indonesian officials, but detailed how the bribe attempt was carried out.

'€œ[Smith & Wesson'€™s third party] agent indicated he would provide a portion of that money to Indonesian officials under the guise of legitimate firearm lab testing costs. He said Indonesian police officials expected to be paid additional amounts above the actual cost of testing the guns,'€ the SEC writes in the release.

Smith & Wesson employees authorized the bribes at the National Police in 2009, under the leadership of Gen. Bambang Hendarso Danuri. However, the deal eventually fell through.

National Police spokesperson Brig. Gen. Boy Rafli Amar declined to comment on the report, but reiterated that the police had implemented an e-procurement system to ensure transparency in the tender.

'€œThe case is being handled by US authorities. The National Police are not in a position to comment on that. Every tender within the force is supervised by many parties and comply with the applicable regulations,'€ he said.

Aside from Indonesia, Smith & Wesson in 2008 is said to have facilitated bribes of $11,000 worth of cash and free guns to Pakistan police officials in 2008. The company ultimately won a contract to sell 548 pistols to the force for a profit of $107,852.

According to a SEC investigation, the company also made similar bribery attempts in Turkey, Nepal and Bangladesh, but failed to secure sales deals.

Smith & Wesson had agreed to pay the $2.03 million to settle the SEC charges, but did not admit or deny the SEC findings, AFP reported. The settlement resolved civil charges that Smith & Wesson were facing from the federal Foreign Corrupt Practices Act (FCPA).

The company has also halted pending international sales, terminated its international sales staff and bolstered its internal controls after the conduct came to light, according to the SEC. The company agreed to report on its FCPA compliance efforts for two years.

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