FBI After Airlines; Another Executive Indicted

An Atlanta grand jury returned an indictment today against an executive of Martinair Holland N.V. for participating in a conspiracy to fix and coordinate certain surcharges on air cargo shipments to and from the United States, the Department of Justice announced yesterday.

The indictment, returned today in U.S. District Court in Atlanta, charges Maria Christina “Meta” Ullings, senior vice president of Cargo Sales and Marketing of Martinair based in Amsterdam, with allegedly conspiring with others to suppress and eliminate competition by fixing and coordinating certain surcharges, including fuel surcharges, charged to customers located in the United States and elsewhere for international air shipments to and from the United States from at least as early as January 2001 until at least February 2006.

According to the indictment, Ullings and co-conspirators carried out the conspiracy by communicating and agreeing upon certain surcharges to be charged for shipments to and from the United States. As part of the conspiracy, Ullings and co-conspirators allegedly monitored the surcharge agreements and accepted payments at noncompetitive rates.

Ullings is charged with price fixing in violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million fine. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

A total of 17 airlines and eight executives, including Ullings, have been charged in the Justice Department’s ongoing investigation into price fixing in the air transportation industry. To date, more than $1.6 billion in criminal fines have been imposed and four executives have been sentenced to serve prison time. Charges are pending against four executives, including Ullings.

The airlines that have pleaded guilty, or have agreed to plead guilty, as a result of the department’s ongoing investigation into the air transportation industry are: British Airways Plc, Korean Air Lines Co. Ltd., Qantas Airways Limited, Japan Airlines International Co. Ltd., Martinair Holland N.V., Cathay Pacific Airways Limited, SAS Cargo Group A/S, Société Air France, Koninklijke Luchtvaart Maatschappij N.V. (KLM Royal Dutch Airlines), EL AL Israel Airlines Ltd., LAN Cargo S.A., Aerolinhas Brasileiras S.A., Cargolux Airlines International S.A., Nippon Cargo Airlines Co. Ltd., Northwest Airlines LLC, and Asiana Airlines Inc. Additionally, on September 2, 2010, Polar Air Cargo LLC was charged in this investigation and is scheduled to enter a guilty plea and be sentenced on October 15, 2010.

Airline executives who have pleaded guilty as a result of the investigation are Bruce McCaffrey of Qantas, Keith Packer of British Airways, Franciscus Johannes de Jong of Martinair, and Timothy Pfeil of SAS Cargo. On Aug. 12, 2009, Jan Lillieborg, a citizen and resident of Sweden and former vice president of global sales for SAS Cargo, was indicted for allegedly participating in a conspiracy to suppress and eliminate competition by allocating customers and coordinating surcharge increases for international air shipments to and from the United States. On August 26, 2010, Joo Ahn Kang, former president of Asiana, and Chung Sik Kwak, former vice president of the Americas region of Asiana, both citizens and residents of the Republic of Korea, were indicted for allegedly participating in a conspiracy to suppress and eliminate competition by fixing passenger airfares for travel between the United States and Korea. Trial dates have yet to be scheduled for these individuals.

A corporation can be indicted even though it is not technically a “person.” An entity can be held liable just like an individual, even though that has not always been the case. When the government goes after a corporation and the corporation enters a guilty plea, the government may request the corporation waive attorney client and work product privileges, make employees and agents available for debriefing, disclose results of internal investigations within the corporation, file appropriate certified financial statements, agree to governmental or third party audits, and most significantly, require the corporation to identify culpable individuals.

Douglas McNabb and other members of the firm practice and write extensively on matters involving Federal Criminal Defense, Interpol Litigation, International Extradition and OFAC Litigation.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.

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