United States v. Crawford Enterprises, Inc.
| Decision Date | 03 September 1986 |
| Docket Number | Civ. No. H-83-6418.,Crim. No. H-82-224 |
| Citation | 643 F. Supp. 370 |
| Parties | UNITED STATES of America, Plaintiff, v. CRAWFORD ENTERPRISES, INC., et al., Defendants. PETROLEOS MEXICANOS, Plaintiff, v. CRAWFORD ENTERPRISES, INC., et al., Defendants. |
| Court | U.S. District Court — Southern District of Texas |
Kenneth R. Wynne, Bracewell & Patterson, Houston, Tex., for plaintiff.
William F. Pendergast, U.S. Atty., George Kelt, Asst. U.S. Atty., for movant U.S.
Richard N. Carrell, Fulbright & Jaworski, Houston, Tex., for Crawford Enterprises, Inc., Crawford Disc, Inc., Crawford Intern., Inc., Crawford Enterprises Mfg., Inc., a/k/a International Process Fabricators, Inc., Crawford-Miller Intern., Inc., and Donald G. Crawford.
David T. Maddox, Calvin, Dylewski, Gibbs, Maddox, Russell & Shanks, Houston, Tex., David Boies, Cravath, Swaine & Moore, New York City, for Ruston Gas Turbines, Inc.
James A. Goold, Kirkland & Ellis, Chicago, Ill., for International Harvester.
Ronald J. Blask, Blask, Cruver & Evans, Houston, for other defendant.
Daniel J. Hurson, Washington, D.C., C. Leland Hamel, Houston, Tex., for James R. Smith.
Morton L. Susman, Weil, Gotshal & Manges, Houston, Tex., for Crawford Enterprises, Inc.
Herbert J. Miller, John J. Cassidy, William H. Jeffress, Jr., Jonathan Sallet, Randall J. Turk, Washington, D.C., for Donald G. Crawford.
James F. Neal, Nashville, Tenn., for William E. Hall.
Theo W. Pinson, III, Houston, Tex., for Andres I. Garcia.
Charles J. Sullivan, Houston, Tex., for George S. McLean.
Edward McDonough, Dan Kasprzak, Larry Lynn, McDonough & Horne, Houston, Tex., for Al Lee Eyster.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
A reconvened contempt hearing was held before this Court on June 9, 1986. The evidence now having been closed, this Court enters the following findings and conclusions pursuant to Fed.R.Civ.P. 52(a).
1. Defendants Crawford Enterprises, Inc. (CEI) and Donald G. Crawford (movants herein) were charged by an indictment filed October 2, 1982, with multiple violations of the Foreign Corrupt Practices Act. In essence, the indictment charged that CEI and Crawford had obtained contracts for the multi-million dollar purchase of gas compression equipment from Petroleos Mexicanos (Pemex) during 1977-79 through bribery of certain Pemex officials.
2. The defendants denied knowledge of any improper payments to Pemex officials, and vigorously contended that the awards of contracts were made in full compliance with the Pemex competitive bidding process; that the defendant's offers were superior to those of all other bidders taking into consideration the equipment offered, the price, and the promised delivery dates; and that the technical staff of Pemex's purchasing and production departments recommended the awards to the defendants after consideration of all bids on their merits.
3. The documents necessary for the defendants to prove their defense at trial could be found only in the files of Pemex, located principally in Mexico City. Pemex, an instrumentality of the Mexican government, was cooperating with the United States Justice Department in the investigation and prosecution of these defendants. Thus, voluntary cooperation from Pemex was not easily obtained.
4. Judge George C. Cire (now deceased), before whom the criminal trial was pending, on the defendants' motion, issued letters rogatory to Pemex on August 5, 1983, seeking production of documents relating to the procurements specified in the indictment, other procurements on which the defendants submitted bids (both successfully and unsuccessfully), Pemex purchasing procedures, and other matters. (Def.Exh. 6.) By December 1983, with the scheduled trial less than two months away, no resonse had been received from Pemex to the letters rogatory.
5. In the meantime, on October 28, 1983, Pemex filed a civil action in this Court against C.E.I., Mr. Crawford and others seeking recovery of some $135 million in alleged damages based upon allegations similar to those in the pending indictment. That civil action remains pending at this time.
6. On December 1, 1983, C.E.I. and Crawford served upon Pemex, pursuant to leave of Court granted under Rule 17(c), Federal Rules of Criminal Procedure, a subpoena duces tecum requiring production of the same materials earlier sought by the letters rogatory. (Df.Exh. 1.) Pemex moved for a protective order on the ground, inter alia, that compliance would be unduly burdensome. The motion was heard by Judge Cire on December 20 (Def. Exh. 5), and was granted only to the extent that the time for compliance was enlarged. By order dated December 30, 1983, Judge Cire directed:
7. On January 13, 1984, the defendants (again with leave of court) served upon Pemex a supplemental subpoena duces tecum seeking six additional categories of documents (Def.Exh. 2). Another order was entered by Judge Cire on January 17, 1984, directing full compliance with both subpoenas through production of the offices of Pemex's local attorneys in Houston, with copying to take place at the defendants' expense. (Def.Exh. 4.)
8. Between January and April, 1984, Pemex produced thousands of pages of documents, primarily from Pemex's Houston office, in response to these two subpoenas and court orders. (Tr. 4-1-85, at pp. 91-93, 125.) The bulk of these documents, while responsive to certain paragraphs of the subpoena, did not concern the critical bidding process. (Id. at 92, 144.) A lesser number of documents were produced from the Mexico City office of Pemex, including a small number of documents concerning the biddings. (Id. at 145.) On March 6 and 8, 1984, defense counsel served Pemex's attorneys with letters (Def.Exhs. 8 and 9) detailing the documents which had been subpoenaed but not produced by Pemex, including most of the critical bid documentation.
9. During the following six weeks, Pemex supplied further documents which were again reviewed and analyzed by the defense staff, but the requests for the bidding and award documents again were largely unfulfilled. (Tr. 4-1-85, pp. 97-103.) By letter to Pemex's counsel dated May 2, 1984, defense counsel detailed the limited production made since the letters of March 6 and 8, and again demanded the missing documents. The letter further stated (Df.Exh. 10):
In the event that any of the requested documents no longer are in Pemex's possession, custody or control, please indicate whether they were (i) removed from Pemex's files without Pemex's authorization, and if so when and by whom, (ii) transferred to another agency or division within the Mexican government, or (iii) destroyed, either by fire or otherwise.
10. Following receipt of this letter, Pemex produced no further documents responsive to the December and January subpoenas, nor did it respond to the request for explanation of the missing documents contained in the May 2 letter. (Tr. 4-1-85, pp. 55-56.) Accordingly, the defendants filed on June 8, 1984, a Motion to Compel Pemex to Comply with Court-Ordered Production (Def.exh. 31). Pemex did not respond to this motion in any manner whatsoever.
11. On July 17, 1984, Judge Cire granted the defendants' motion and once again ordered "that Pemex comply without further delay with this Court's previous order to produce all documents specified in the attachment to defendants' Rule 17(c) subpoenas." (Df.Exh. 5.) Pemex did not produce any further documents in response to this order, nor did it serve or file any accounting of the reasons for the absence of the unproduced documents.
12. When Judge Cire became critically ill, Chief Judge John V. Singleton transferred the criminal case to his docket and continued to preside over it. After Judge Cire's death Judge Singleton also transferred the civil case to his docket.
13. The trial date of the criminal case against C.E.I. and Crawford, having been continued while the government took an interlocutory appeal to the Fifth Circuit from a pretrial order, was ultimately rescheduled to begin April 8, 1985. On February 13, 1985, the defendants, in a final effort to obtain the documents necessary to their defense, moved for an order to show cause why Pemex should not be held in contempt. Pemex opposed the motion, asserting that it had produced all the subpoenaed records in its possession, custody or control, and giving as the explanation for its "incomplete" documentation the following: "The only inference which can be drawn by the state of Pemex's documentation is that Crawford was somehow involved with the former Pemex employees in `covering their tracks.'" (Pemex Response to Motion for Order to Show Cause, filed 2-21-85, p. 2).
14. An Order to Show Cause was issued by this Court on March 13, 1985, and the hearing began on April 1, 1985. At this hearing, Pemex's counsel stated (Tr. 4-1-85, p. 51):
What our evidence will be is not that every document that ever existed responsive to the descriptions in those subpoenas have been produced, but rather every blessed one that we can find now after the most diligent thorough kind of search possible has been produced.
Pemex claimed at the April 1 hearing, for the first time in the record of these proceedings, that a substantial number of the requested documents had been destroyed by fire in 1982, and repeated the contention that documents may have been removed from Pemex's files without authorization. (Tr. 4-1-85, pp. 166-167.)
15. At the hearing, the movants offered evidence through the testimony of John Sherman and Philip Evans, and the exhibits admitted in evidence, that (1) it was the custom and practice of Pemex to receive or prepare and to retain the types of...
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