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  • Latest conviction in PDVSA bribery case

    On July 16, 2018, Luis Carlos De Leon-Perez, a dual U.S.-Venezuelan citizen, pleaded guilty to one count of conspiracy to violate the FCPA and one count of conspiracy to commit money laundering. De Leon’s convictions relate to allegations that he bribed officials at Venezuela’s state-owned oil company, Petroleos de Venezuela S.A. (PDVSA), and laundered money for bribes to other company employees. FCPA Scorecard provided earlier coverage of this case here.

    De Leon admitted to soliciting and directing bribes from two U.S. citizens, including Cesar David Rincon Godoy, in exchange for securing payment priority for their companies from PDVSA and for awards of PDVSA contracts. De Leon also admitted to conspiring with these individuals to launder and conceal the proceeds of the scheme through a series of financial transactions, including wire transfers to offshore accounts. Sentencing is scheduled for September 24, 2018.

    De Leon’s conviction underscores how wide investigations can become as the DOJ continues pulling threads and obtaining guilty pleas. The DOJ has charged 15 defendants in the PDVSA cases, 12 of whom have pleaded guilty to date, including De Leon. DOJ also credited the assistance of the Swiss Federal Office of Justice and the Spanish Guardia Civil.

    DOJ FCPA Anti-Money Laundering Bribery Petroleos de Venezuela

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  • Global bank pays $76.7 million to settle hiring practices case

    A global bank and its Hong Kong subsidiary reached a settlement with the DOJ and the SEC related to its alleged practice of “awarding employment to friends and family of Chinese officials” to win business. The subsidiary agreed to pay a $47 million criminal penalty as part of a non-prosecution agreement with the DOJ. It also agreed to continue to cooperate in any ongoing investigations. The DOJ noted that the subsidiary had not self-reported the conduct or properly disciplined the employees involved, although it did receive partial credit for cooperating with the investigation once it began. 

    The parent bank agreed to disgorge nearly $30 million in profits and prejudgment interest in an SEC administrative proceeding. The SEC noted the criminal fine imposed by the DOJ in deciding not to impose a civil penalty. 

    For prior coverage of the sons and daughters investigations into hiring practices in Asia, please see here

    DOJ FCPA Sons and Daughters

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  • Aruban telecom official sentenced for money laundering conspiracy involving FCPA violations

    On June 27, Judge Frederico Moreno of the United States District Court of the Southern District of Florida sentenced Egbert Yvan Ferdinand Koolman, an official of Servicio di Telecommunicacion di Aruba N.V. (Setar), to 36 months in prison following his guilty plea for money laundering charges in connection with a scheme to arrange and receive corrupt payments to influence the awarding of contracts in Aruba. According to the DOJ’s press release, Koolman, between 2005 and 2016, used his position as Setar’s product manager to influence the awarding of lucrative mobile phone and accessory contracts with the Aruban state-owned telecommunications company. Koolman also admitted to providing favored vendors with confidential Setar information in exchange for more than $1.3 million in corrupt payments. Koolman was ordered to pay over $1.3 million in restitution and to serve three years of supervised release following his prison term.

    Previous Scorecard coverage of this matter can be found here.

    DOJ Anti-Money Laundering FCPA

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  • Global bank settles FCPA allegations concerning “sons and daughters” investigation into hiring practices

    On June 6, a global bank announced it had entered into a non-prosecution agreement with the DOJ to resolve an FCPA investigation into hiring practices in the Asia Pacific region between 2007 and 2013. As part of the agreement, the bank agreed to pay a $46 million penalty to the DOJ. According to the bank, it has already provisioned for the penalty and expects the payment to have “no material impact” on its second quarter financial results. The bank further stated that it has implemented multiple enhancements to its compliance and control functions since 2013. 

    U.S. authorities have investigated several other financial services institutions over their hiring practices in Asia, which have become known as the “sons and daughters” investigations because of the allegations that banks widely hired the children of elite Chinese political families to secure an advantage in obtaining business. Prior Scorecard coverage of those investigations can be found here.

    DOJ FCPA Sons and Daughters

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  • Legg Mason settles FCPA allegations with DOJ

    On June 4, the DOJ announced that Legg Mason, a Baltimore-based investment management firm, had entered into a non-prosecution agreement and agreed to pay $64.2 million to resolve FCPA allegations in connection with the firm’s involvement in Libya through Permal, a London-based fund purchased by the firm. Between 2004 and 2010, Permal, a Legg Mason subsidiary, partnered with Société Générale S.A., a Paris-based multinational bank, “to solicit business from state-owned financial institutions in Libya.” As admitted by Société Générale in its own resolution with the DOJ, Société Générale paid bribes of over $90 million through the use of a Libyan broker with respect to 14 investments made by Libyan state-owned financial institutions. For seven of the transactions, Société Générale made payments to the Libyan broker to benefit Legg Mason, through Permal. Permal managed the investments and earned profits of approximately $31 million.

    Legg Mason’s resolution includes a penalty of $32.625 million and disgorgement of $31.617 million. As part of the agreement, Legg Mason agreed to continue to cooperate with the DOJ in related investigations and prosecutions, as well as to enhance its compliance program. According to the DOJ, the resolution is based on factors including Legg Mason’s cooperation in the investigation, as well as the fact that the company “did not voluntarily and timely disclose the conduct at issue.” The DOJ also found that the misconduct was “not pervasive throughout Legg Mason or Permal,” but rather that Société Générale was responsible for running the scheme, noting that Legg Mason and Permal earned less than one-tenth of the profits earned by Société Générale.

    As FCPA Scorecard previously reported, Legg Mason had announced the near completion of the agreement in a recent SEC filing.

    DOJ FCPA Legg Mason Société Générale S.A.

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  • Société Générale settles FCPA allegations concerning bribery of Libyan officials

    On June 4, the DOJ announced that Société Générale S.A., a Paris-based multinational bank, and its wholly owned subsidiary SGA Société Générale Acceptance N.V., agreed to pay $585 million to resolve charges in the United States and France involving bribes to Libyan officials. According to the DOJ, Société Générale will enter into a deferred prosecution agreement related to charges of conspiracy to violate the FCPA’s anti-bribery provisions. Société Générale’s subsidiary will also plead guilty in the Eastern District of New York to similar charges. Almost $293 million of the resolution will be paid to France and credited by the U.S. This is the first coordinated anti-bribery enforcement action by the DOJ and French authorities. 

    Société Générale admitted that it had paid over $90 million in bribes through a Libyan broker in connection with 14 investments made by state-owned financial institutions in Libya. For each transaction, Société Générale paid the Libyan broker a commission, some of which the Libyan broker then paid to high ranking Libyan officials to secure the investments for Société Générale from the state institutions. This scheme resulted in Société Générale obtaining 13 investments and one restructuring from the Libyan state institutions, and earning approximately $523 million in profits. The scheme also involved payments for the benefit of a Legg Mason subsidiary; Legg Mason resolved its FCPA issues with the DOJ on the same day.

    As part of the same deferred prosecution agreement, Société Générale also agreed to pay $275 million to resolve charges arising from manipulation of U.S.-dollar and Japanese yen LIBOR.

    DOJ Société Générale S.A. France Bribery Legg Mason

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  • Legg Mason preparing for FCPA settlement

    On May 30, Legg Mason, a Baltimore-based investment management firm, announced in a 10-K SEC filing that it will soon complete negotiations with the DOJ and SEC to resolve FCPA allegations stemming from how Permal, a London-based fund purchased by Legg Mason in 2005, managed assets of Libyan governmental entities in 2005-2007. Legg Mason reserved $67 million for the settlement, which reflects, in part, the net revenues of approximately $31 million earned by Permal for managing the assets.

    DOJ SEC FCPA Legg Mason

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  • Brother of Honduran government official indicted for laundering bribes in New Orleans

    On May 1, the Department of Justice announced the indictment of a Honduran national, Carlos Alberto Zelaya Rojas, for trying to launder more than $1.3 million in bribes that had been paid to his brother, the former Executive Director of the Honduran Institute of Social Security.  The bribes had been paid by two Honduran businessmen for the benefit of the Executive Director.  The indictment alleges that Zelaya Rojas conspired with his brother to launder the funds through international wire transfers and the purchase of real estate in the New Orleans area.  The indictment further alleges that Zelaya Rojas also used his brother’s high-ranking position to profit from lucrative Honduran government contracts and that he impeded an official proceeding by lying to the U.S. government about the source of the funds.  Zelaya Rojas was arrested on the same day the indictment was announced.

    DOJ

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  • DOJ issues new policy against “piling on” in corporate enforcement, FCPA cases

    On May 9, the DOJ issued a new policy to discourage “piling on” in corporate enforcement cases, including those involving the FCPA.  The new policy directs the DOJ to “consider the totality of fines and penalties” being imposed by the DOJ and other law enforcement agencies on a company for the same misconduct.  In a speech delivered to a New York City bar organization, Deputy Attorney General Rod Rosenstein described the new policy as encouraging “coordination among Department components and other enforcement agencies” with the aim of “avoiding unfair duplicative penalties.”

    The new policy contains four main elements.  First, the DOJ should not threaten criminal prosecution solely to persuade a company to pay a larger settlement in a civil case.  Second, DOJ components must coordinate with one another to achieve an overall equitable result.  Third, the DOJ should coordinate with other federal, state, local, and foreign enforcement authorities.  Finally, the DOJ should consider several factors, including the egregiousness of the wrongdoing and the adequacy of the company’s cooperation with the DOJ, in determining whether multiple penalties serve the interests of justice in a particular case.

    Rosenstein specifically noted in his address that the DOJ’s “FCPA Unit [had recently] announced its first coordinated resolution with . . . Singapore.” See FCPA Scorecard postThe new policy does not prohibit the DOJ from considering additional remedies in “appropriate circumstances.” 

    DOJ FCPA

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  • Clear Channel Outdoor discloses potential FCPA violations

    On April 30, Clear Channel Outdoor, one of the world’s largest outdoor advertising companies, disclosed that it had self-reported potential FCPA violations to the SEC and DOJ. The San Antonio-based company had previously disclosed that Chinese police were investigating “several employees” of its subsidiary, Clear Media Limited, for the misappropriation of funds in China. A related internal investigation purportedly found that three unauthorized bank accounts were opened in the name of the subsidiary and “certain transactions were recorded therein.” In the most recent disclosure, the company newly reported that: (i) “discrepancies” related to the misappropriation resulted in more than $10 million in “accounting errors”; (ii) it determined that there was a “material weakness” in the subsidiary’s internal controls over financial reporting, namely “falsification of bank statements and other supporting documentation used to complete bank reconciliations,” “collusion,” and “circumvention of controls”; and (iii) these issues “could implicate the books and records, internal controls and anti-bribery provisions” of the FCPA, making “possible . . . monetary penalties and other sanctions.” The company said it would cooperate with any investigation by the SEC or DOJ.

    DOJ SEC FCPA Clear Channel Outdoor

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