Former Pacific Consolidated Industries (PCI) executive Leo Winston Smith has been arrested on charges of violating the FCPA, money laundering, and tax offenses. Smith allegedly took part in a plan to bribe a United Kingdom Ministry of Defence official with the intent of obtaining high-value contracts with the U.K. Royal Air Force.

From 1993 to 2003, Smith reportedly conspired to make bribe payments in excess of $300,000 in an effort to secure the $11 million contracts. PCI won the contracts, and the deal netted Smith over $500,000 in commissions, which he then failed to report on his 2003 tax return.

Commentary: Pacific Consolidated Industries is pinning this on Smith and may avoid criminal charges itself as as a company.

That could be hard to imagine considering that (1) the payments had been going on for 10 years (2) Smith was a friggin’ co-founder of the company who had been there for 25 years (3) the payments were sent directly via wire from PCI bank accounts to English and Spanish bank accounts of the project manager who was allegedly being bribed and (4) PCI didn’t report the payments on its 2003 Federal Tax Return (um, apparently no one over there knew anything about the books and records provision of FCPA).

The reason why PCI may go free is that it is in the hands of new owners – the new owners who bought the company in late 2003, discovered this hidden payments, and SELF-REPORTED IT TO DOJ.