Multimillion-Dollar Kickback Scheme Alleged
2/10/2014 5:41:00 PM,
BALTIMORE - Foreign power companies paid a former utility executive millions in kickbacks to secure more than $2 billion worth of contracts, prosecutors said Monday.
Asem Elgawhary, the former principal vice president of Bechtel Corp. and general manager of the Power Generation Engineering and Services Company (PGESCo), faces charges of fraud and money laundering in an indictment returned by a Maryland grand jury.
Prosecutors said 72-year-old Elgawhary hid his payments in off-shore bank accounts, gave false information to his former employer and destroyed evidence.
The scheme allegedly went on from 1996 to 2011, as Bechtel assigned Elgawhary to be the general manager at PGESCo, a joint venture between Bechtel and a state-owned and state-controlled electricity company (EEHC).
"PGESCo assisted EEHC in identifying possible subcontractors, soliciting bids and awarding contracts to perform power projects for EEHC," according to a statement from the Justice Department. "The charges allege that Elgawhary used his position at PGESCo to provide preferential treatment to three power companies attempting to secure projects with EEHC in exchange for kickbacks from those power companies and their third-party consultants. The court documents allege that the power companies and their consultants paid more than $5 million in kickbacks into various off-shore bank accounts under the control of Elgawhary, including various Swiss bank accounts. In return, the power companies secured more than $2 billion in lucrative contracts."
Prosecutors said Elgawhary falsely represented to Bechtel executives and members of the PGESCo board of directors in Maryland "that he had no knowledge of any fraud or suspected fraud at PGESCo and that there were no violations or possible violations of law or regulations whose effects were material and should have been considered for disclosure in PGESCo's financial statements."
Elgawhary used money from one of his Swiss bank accounts to buy a $1.78 million home in Maryland for two close family members, according to the indictment. He allegedly tried to pass the money off as the proceeds of an unsecured loan from another relative's marketing company.
Prosecutors say Elgawhary falsely claimed that he maintained only one foreign bank account and denied that he received any income from any foreign bank account.
"Elgawhary also allegedly failed to report any of the kickbacks as income for the tax years 2008 through 2011," the Justice Department said.
The mail and wire fraud charges in the eight-count indictment each carry a maximum penalty of 20 years in prison and a fine of the greater of $250,000 or twice the value gained or lost.
The conspiracy-to-commit-money-laundering count carries a maximum penalty of 20 years in prison and a fine of the greater of $500,000 or twice the value of the property involved in the transaction.
The tax count carries a maximum penalty of three years in prison and a fine of $5,000.