Pemex sues Siemens, SK Engineering for $1.5 billion over bribery claims

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Pemex (AP) Pemex (AP)
SummaryPemex's lawsuit marks a rare instance of a company owned by a foreign government.

look at the case, but was denied earlier this week.

Alcoa Inc (AA.N) agreed to pay $85 million in October to resolve a bribery-related case brought in the United States by Aluminium Bahrain ALBH.BH, a settlement that may have inspired the Pemex lawsuit. Alcoa has not yet resolved any related action from the U.S. Justice Department or the Securities and Exchange Commission.

A settlement under the Foreign Corrupt Practices Act usually signified the end of a matter for a company, but the recent cases suggest companies could face new types of post-settlement action, according to Michael Koehler, a law professor at Southern Illinois University and expert on the foreign bribery law.

"An FCPA enforcement action in many cases now is not the end of the day but in many respects, the opening of a whole new day in terms of potential civil causes of action," he said.

COST OVERRUNS

In its lawsuit, Pemex said its investigation showed that the Conproca joint venture partners bribed Pemex officials in connection with its refinery modernization project in the Cadereyta region of Mexico, which it sought bids for in 1996.

Pemex contends that bribes caused cost overruns that were a "significant component" of an arbitration with Conproca, according to the court papers.

Conproca, which has been seeking to recover $530 million in the arbitration with Pemex, filed a lawsuit, also in New York federal court, in December 2011 seeking to confirm an award on liability.

In the arbitration, Conproca asserted claims for payment for work done beyond the scope of the contract and for costs arising out of delays and disruptions caused by Pemex. The lawsuit remains pending.

Pemex said in its lawsuit that a criminal investigation in Mexico "has been substantiated, and is moving forward to uncover the full extent of the corruption."

The case is Petroleos Mexicanos v. Conproca, S.A. De C.V., U.S. District Court, Southern District of New York, 12-9070.

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