Two executives of the Commonwealth Bank have been indicted by a US federal grand jury in a case of bribery involving IT services company ServiceMesh which was based in Santa Monica, California.
The indictment alleges that Eric Pulier, founder and chief executive of ServiceMesh, was behind the fraud and paying US$2.5 million to two executives at Commonwealth Bank.
In exchange for this amount, the US Department of Justice alleges that the two bank executives facilitated US$10.4 million in contracts for software sales to CBA in late 2013 and January 2014.
The bank's contracts triggered what is known as an "earnout" payment as part of a sale deal with IT giant Computer Services Corporation, which led to it paying an additional US$98 million to shareholders of ServiceMesh. Of this, about US$30 million went to Pulier.
{loadposition sam08}Also charged was former CBA IT manager John Waldron for allegedly helping approve contracts with ServiceMesh in exchange for approximately US$1.9 million in bribes which was paid to him mostly through a shell company in New Zealand.
"Warrants for the arrest of Pulier, 50, of Los Angeles, and Waldron, 47, of Sydney have been issued," the announcement by the US Department of Justice said. "Pulier is expected to surrender to authorities in the coming days. Waldron remains in Australia facing related charges brought by Australian authorities."
The indictment describes a complicated scheme. Pulier allegedly agreed to pay bribes to Waldron and another CBA IT executive, Keith Hunter, for their assistance in obtaining contracts to help boost the revenue earned by ServiceMesh.
The contracts were needed to push ServiceMesh revenues over US$20 million – the threshold that triggered CSC paying the incentive bonus. CSC paid ServiceMesh shareholders, of which Pulier was the largest, an Earnout payment of US$98 million in March 2014.
Some part of Pulier’s ServiceMesh shares were held by a company called TechAdvisors. The indictment alleges that after TechAdvisors received its earnout payment, Pulier caused TechAdvisors to transfer US$4.8 million to a purported non-profit company named Ace which was later renamed The Ace Foundation.
Ace was headed by a childhood friend of Pulier, who transferred US$2.5 million to accounts held by Waldron and Hunter in Australia, New Zealand and the US.
ServiceMesh was sold to NASDAQ-listed CSC in 2013.