Pipeline company charged with bid rigging

On Tuesday, March 13, 2007, a Denver federal grand jury indicted B&H Pipeline Company and two of its executives in an alleged natural gas pipeline bid-rigging conspiracy, according to the U.S. Department of Justice.The DOJ’s Antitrust Division charges that B&H vice president Jon Paul Smith and marketing manager Landon Martin conspired with each other and another company and one other person to rig a pipeline bid to BP America Production Company to transport gas from wells in Colorado’s Upper San Juan Basin.

The indictment also charges Smith with trying to get a witness to lie to federal investigators.

B&H is based in Eunice, N.M. It is a subsidiary of InfrastruX Group, a national infrastructure construction services company. InfrastruX spokeswoman Jana Smith says, “InfrastruX and its counsel conducted its own research into this matter and we believe that the charges are completely without merit. We intend to vigorously contest those charges from the government … InfrastruX and its counsel did a thorough investigation and uncovered no evidence of illegality.”

This case is the second to arise from investigations of natural gas pipeline contractors in the San Juan Basin, according to the Justice Department. On July 11, 2006, Flint Energy Services Inc. and Kenneth L. Rains, a Flint executive, both agreed to plead guilty to conspiring to constrain trade by rigging bids also for BP America Production Company. On October 30, 2006, Flint was sentenced to pay a criminal fine of $150,000. Rains has not yet been sentenced.

Bid rigging carries a maximum fine of $100 million for a corporation. The penalty for an individual can be as stiff as 10 years in prison, a $1 million fine, or both. Witness tampering has a maximum penalty for an individual of 10 years in prison, a $250,000 fine, or both.

As InfrastruX’s Smith notes, an indictment is only a charge by the government, which still needs to be proven in court.