Eight executives of international corporations that make rubber marine hose have been arrested and charged with conspiracy, the U.S. Department of Justice said.
The men conspired to rig bids, fix prices and allocate markets for U.S. sales of marine hose in violation of the Sherman Antitrust Act, according to the two criminal complaints handed down May 2 in U.S. district courts in Miami and Fort Lauderdale, Fla.
Marine hose is used to transfer oil between tankers and storage facilities and/or buoys, according to the complaints. It comes in sizes between 6 and 24 inches in diameter, can either float on the water or extend beneath its surface and is used extensively by both major oil companies and the military.
A DOJ spokeswoman said authorities arrested in Houston:
* Peter Whittle, owner of the United Kingdom-based consulting firm PW Consulting (Oil and Marine) Ltd.;
* Bryan Allison, managing director, and David Brammar, sales and marketing director, of the Grimsby, England, firm Dunlop Oil & Marine Ltd., a unit of ContiTech A.G., a Continental A.G. division;
* Jacques Cognard, oil and marine manager, and Christian Caleca, president of the industrial hose business unit of Trelleborg Industrie S.A.S. in France. The business is a division of Sweden's Trelleborg A.B.;
* Vanni Scodeggio, business unit manager for Parker ITR S.L.R. in Italy, a division of Parker Hannifin Corp.; and
* Francesco Scaglia, product manager at Manuli Rubber Industries S.p.A. in Italy.
Misao Hioki, a marine hose sales executive for Tokyo-based Bridgestone Corp., was arrested separately in San Francisco, the DOJ spokeswoman said.
The complaints were based on the affidavits of Thomas H. Errion II, a special agent with the Defense Criminal Investigative Service within the U.S. Department of Defense. DCIS cooperated with the DOJ Antitrust Division, the Federal Bureau of Investigation and the Naval Criminal Investigative Service, the complaints said.
Errion in turn based much of his investigation on information received from ``a foreign-based manufacturer of marine hose,'' according to the court documents. This company and two employees who participated in the conspiracy agreed to cooperate with investigators in turn for immunity from prosecution, although they will still have to pay restitution to clients victimized by the scheme, the complaints said.
The complaints said the scheme began in 1999 and continued into the present.
There is no indication yet as to when the DOJ will reveal the identity of the cooperating company and its employees, the spokeswoman said.
Goodyear was served a subpoena in the investigation, but said it doesn't believe it or any of its executives are a target of the probe. The firm's Goodyear Engineered Products division is a major producer of marine hose.
Yokohama Rubber Co. Ltd., responding to an inquiry about numerous reports by publications in Japan that the company had been raided, would only say it will cooperate with authorities.
According to the information Errion gleaned from the cooperating company, the men charged with conspiracy are accused of paying a consultant to coordinate the plan. The ``coordinator'' is a former executive of a marine hose manufacturing firm and now owns a consulting company, the complaints claim.
The legal document doesn't name the coordinator. Peter Whittle is the only person arrested in the case who is identified as the owner of a consulting firm.
The men are accused of providing the coordinator with information they received on upcoming marine hose contracts. The coordinator then designated which firm would win each job in turn, according to pre-agreed rules and pre-allocated market shares, the documents said.
The company designated to submit a winning bid was called the ``champion,'' the complaints said, and a coordinator determined how much each company should bid to assure the champion won the contract. Each member of the cartel paid the coordinator about $50,000 a year, for a total of about $300,000, the court documents said.
The cooperating company gave investigators a large number of e-mail and facsimile communications documenting the activities of the coordinator and the other members of the conspiracy, the DOJ said.
The documents said customers of the hose include firms involved in off-shore extraction and transportation of petroleum products; major oil companies such as Shell, ExxonMobil and Chevron; and the U.S. Department of Defense, which also buys hose for use at military bases.
If the complaints are true, the motives of such a conspiracy would be greed and arrogance, according to a legal expert who asked to remain anonymous. People who enter such activity ``just think they are impervious,'' he said.
There is no timetable yet as to how and when the case will proceed, the DOJ spokeswoman said. All eight men have made court appearances, she said, and the courts set a $500,000 bond on each, as well as other conditions such as surrendering their passports, wearing tracing devices and agreeing to live for the duration of the case in semi-permanent housing, such as corporate apartments instead of hotels.
Scodeggio had met all conditions of release and was free on May 3, the spokeswoman said. A Bridgestone statement said Hioki had also been released, and a Trelleborg news release said Cognard and Caleca no longer are being held.
Trelleborg said company officials are cooperating with the investigation and handing over all materials investigators requested. The manufacturer said it has a very clear and well-communicated policy to adhere to applicable competition laws.
Bridgestone said federal authorities had taken documents from Bridgestone Industrial Products America Inc.'s offices in New York, Houston and Ranch Santa Margarita, Calif.