Supply Chain

Armor Probe Followed by Firings

Improper payments alleged at a subsidiary of the body-armor supplier.
Stephen Taub and Dave CookMay 3, 2007

Armor Holdings disclosed that certain employees, agents, and distributors were fired or have resigned after an internal investigation into alleged improper payments at its Armor Products International subsidiary.

In January, the company — formerly American Body Armor & Equipment — received a written request for information from the Office of Internal Oversight Services of the United Nations. The request concerned IHC Services, a U.N.-approved vendor intermediary retained by Armor Products International in 2003 to help prepare a proposal to supply body armor for U.N. personnel and peacekeeping forces.

That August, Armor Products International was awarded the contract, which runs through July of this year. The subsidiary worked with IHC on other U.N. contracts as well.

According to the Armor’s SEC filing, IHC was suspended by the U.N. in 2005; the filing cited published accounts of the ties between IHC and “a former U.N. procurement official who has pled guilty to various federal offenses involving misconduct while in his position at the U.N.”

After receiving the request for information from the U.N.’s oversight office, in February a special committee of Armor’s board began an investigation “into the circumstances surrounding the U.N. contract” and the company’s compliance with laws including the Foreign Corrupt Practices Act. The investigation “primarily concerned alleged improper payments” as well as related accounting issues.

The company added that it is cooperating with the Department of Justice and the Securities and Exchange Commission.

Armor also stated that it is implementing appropriate corrective actions and does not expect to make material adjustments to previously issued financials.