The Department of Justice’s (“DOJ”) Procurement Collusion Strike Force (“PCSF”) chalked up several more prosecutions soon after we reported its first-ever international resolution — a guilty plea from Belgium-based G4S Secure Solutions NV (“G4S”) on June 25, 2021. The PCSF appears to have moved efficiently, securing four indictments within four days of announcing the G4S plea. The indictment alleges that the five defendants engaged in criminal antitrust violations related to rigging and fixing bids for security services contracts at U.S. military installations in Belgium. This enforcement action is another indication of PCSF’s follow-through on promises to target and eradicate fraud and collusion in public procurement across industries and now across borders.
The Alleged Conspiracy
On the heels of G4S’s guilty plea, the June 29, 2021 Indictment charges a second Belgium-based security services company, Seris Security NV (“Seris”), and three Belgian nationals who were executives at G4S and Seris: Danny Vandormael (former Seris CEO); Peter Verpoort (former Seris Director of Guarding & Monitoring); and Jean Paul Van Avermaet (former G4S CEO).
The government alleges that Seris and the individual executives coordinated price increases, submitted artificially determined, non-competitive, inflated bids; and refrained from bidding for certain contracts.1 The indictment details specific examples of the alleged meetings and communications used to coordinate the alleged criminal activity, such as hotel breakfast meetings, emails, phone calls, text messages, and encrypted messages.2 More specifically, the indictment provides that Mr. Verpoort emailed three alleged co-conspirators listing contracts “that are important in 2020” for discussion at a December 2019 meeting, and Mr. Vandormael sent encrypted messages seeking confirmation that alleged co-conspirators would bid at artificially high prices and remember the “vice versa” arrangement among the bidding companies.3 These detailed allegations reveal the extent of the DOJ’s investigatory tool box — PCSF prosecutors clearly collected a variety of communications evidence, including from encrypted messaging apps, cell phones, individual calendars, and email in the course of building their allegations of criminal antitrust violations.
The contracts at issue were squarely within PCSF’s global sights, providing security services to the United States through not only the Department of Defense (“DOD”), but also the Communications and Information Agency (“NCI Agency”) of the North Atlantic Treaty Organization (“NATO”). Further pleadings and court proceedings may reveal more about the investigative strategy — based on details in both the G4S plea and this new indictment, at least one of the alleged conspirator companies and various individuals have yet to be charged. If the third company is a successful leniency applicant, its identity may not be publicly revealed and culpable employees who cooperate with PCSF’s investigation may receive immunity from prosecution.
PCSF’s Global Enforcement Effort Doubles Down
One of PCSF’s areas of focus for 2021 is PCSF: Global — partnering with international investigative and enforcement authorities to root out collusion in procurement activities impacting U.S. interests and dollars abroad. “PCSF: Global [is] an effort to build connections with enforcement counterparts and tackle potential collusion in bids for the staggering amount of U.S. funds spent abroad.”4 The Belgian investigation is the first illustration of the PCSF: Global mission in action, and the PCSF shows no indication of slowing down. Indeed, in its 2022 budget request, DOJ seeks a $2.1 million dollar increase in dedicated funding for PCSF, including to bolster PCSF’s staffing numbers.
Why This Matters
Companies that do business with the U.S. government should be on high alert worldwide, as the PCSF zeroes in on potential antitrust violations in procurement. We have been reporting and presenting on the expansion of the PCSF since its inception in November 2019 and into the Biden administration, and continue to do so as the PCSF grows into a formidable network of criminal antitrust enforcers and investigative partners. Just as the government, through the PCSF, is training agents to ferret out collusion among government contractors worldwide, companies should be training officers and employers how to recognize and avoid business practices that trigger criminal antitrust concern. Employees likely to come into contact with competitors — through trade association activities, for example — should be well-versed in antitrust pitfalls and best practices.
Internal transparency and effective communication are also key considerations given the Antitrust Division’s unique Leniency Program. As we noted in a prior alert, companies that are the first to report potential misconduct may be eligible to earn significant mitigation credit, up to immunity for the company and culpable employees. Every employee should know where and how to report possible misconduct internally so that the Company can promptly investigate, remediate, and assess legal options as necessary. It remains to be seen whether the leniency program played a role in the Belgian security services charges, as only two of the three companies investigated have been charged. G4S’s plea agreement calls for a $15 million fine, as well as ongoing cooperation with the government in its investigation; G4S’s plea hearing is set for July 16, 2021.
1 Indictment at ¶ 17, United States v. Seris Security NV, No. 1:21-cr-00443-TSC (D.D.C. filed June 29, 2021), https://www.justice.gov/opa/press-release/file/1408166/download.
2 Id. ¶ 18.
4 Antitrust Division Spring Update 2021: PCSF Expansion and Early Success, Dep’t of Justice (Mar. 24, 2021), DOJ.