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Foreign Corrupt Practices Act & Anti-Corruption

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  • Deputy Attorney General Rod Rosenstein Announces Expansion of FCPA Pilot Program

    On November 29, Deputy Attorney General Rod Rosenstein issued remarks announcing that the DOJ’s FCPA Pilot Program will be made permanent and expanded to provide greater incentives for more companies to voluntarily disclose potential FCPA violations. The new program will be formally incorporated into the US Attorney’s Manual. These changes will include greater potential benefits offered to companies that promptly disclose suspected FCPA violations.

    Rosenstein identified three components of what will be called the “FCPA Corporate Enforcement Policy.” First, companies who voluntarily disclose, fully cooperate with the DOJ’s investigation, and undertake “timely and appropriate remediation” will be entitled to a presumption that the matter will be resolved through a declination, which “may be overcome only if there are aggravating circumstances related to the nature and seriousness of the offense, or if the offender is a criminal recidivist.” Second, if the company satisfies all other requirements but there are “aggravating circumstances,” the DOJ “will recommend a 50% reduction off the low end of the Sentencing Guidelines fine range,” although “criminal recidivists may not be eligible for such credit.” And third, the policy will provide details on how the DOJ “evaluates an appropriate compliance program, which will vary depending on the size and resources of a business.”

    The Pilot Program began in April 2016. It was greeted with some skepticism that the benefits of disclosure would outweigh the potential benefits, as Rosenstein noted in his remarks. Click here to view previous FCPA Scorecard coverage of the Pilot Program. 

    DOJ FCPA Pilot Program FCPA

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  • SBM Offshore Agrees to Pay DOJ $238 Million; Two Former Executives Charged by UK SFO

    On November 29, Dutch oilfield company SBM Offshore entered into a three year deferred prosecution agreement with the DOJ to settle allegations that SBM paid bribes to secure contracts in various countries around the world. Under the agreement, SBM agreed to pay a total of $238 million, including a $500,000 criminal fine and forfeiture of $13.2 million. The next day, the UK Serious Fraud Office announced that two former SBM executives had been charged with conspiracy to make corrupt payments in connection with government contracts in Iraq between 2005 and 2011. 

    Earlier this month, two different former SBM executives pleaded guilty in US federal court to paying bribes to government officials in Brazil, Angola, and Equatorial Guinea. Click here for FCPA Scorecard’s prior coverage of these guilty pleas. SBM has been involved in a sprawling bribery investigation involving enforcement officials in the United States, the UK, Brazil and the Netherlands. The DOJ closed its investigation in 2014 before reopening it in February of 2016. Click here to view previous FCPA Scorecard coverage of the SBM investigation.

    The company’s deferred prosecution agreement states that SBM did not receive voluntary disclosure credit even though it voluntarily disclosed the conduct to the DOJ, because the disclosure was untimely as it took place “approximately one year” after the company learned of the information. It also states that SBM received full cooperation credit because it conducted a “thorough internal investigation, [made] regular factual presentations” to the DOJ, “voluntarily [made] foreign-based employees available for interviews in the United States, [produced] documents to the United States from foreign countries” and expedited parts of the internal investigation. The deferred prosecution agreement goes on to detail the remedial measures that SBM has taken to improve its compliance function, which included hiring a third party to design and implement a new compliance program, reduce the number of third party agents engaged by the company, and terminate relationships with questionable third parties. It goes on to explain that all of these factors weighed in the DOJ’s decision not to seek a guilty plea by the company. This information provides insight into the DOJ’s expectations for receiving disclosure and compliance credit.

    DOJ SBM UK Serious Fraud Office

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  • DOJ Charges Head of Organization Backed by Chinese Energy Conglomerate and Former Foreign Minister of Senegal with Bribing High-Level Officials in Chad and Uganda

    On November 20, the DOJ unsealed a criminal complaint charging Ching Ping Patrick Ho and Cheikh Gadio (collectively, the “Defendants”) with participating in a multi-year, multimillion-dollar scheme to bribe high-level officials in Chad and Uganda in exchange for business advantages for a Shanghai-based energy conglomerate (the “Energy Company”). Mr. Ho is the head of a non-governmental organization based in Hong Kong and Virginia that holds “Special Consultative Status” with the United Nations Economic and Social Council. The Energy NGO is funded by the Energy Company. Mr. Gadio is the former Foreign Minister of Senegal and operated an international consulting firm. The DOJ charged Mr. Ho and Mr. Gadio with (i) conspiring to violate the FCPA, (ii) violating the FCPA, (iii) conspiring to commit international money laundering, and (iv) committing international money laundering. The Defendants have both been arrested and presented before Magistrates. 

    The DOJ alleges that the Defendants conspired to bribe African government officials on behalf of the Energy Company. Specifically, the DOJ alleges that in an effort to secure oil rights from the Chadian government, the Defendants offered a $2 million bribe to the President of Chad – and in return, the Defendants secured exclusive oil rights without competition. The Defendants allegedly wired almost a million dollars through New York’s banking system in furtherance of their scheme. Mr. Ho also allegedly provided Ugandan officials with gifts and promises to share profits derived from the Energy Company.

    DOJ Bribery FCPA

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  • Two Former SBM Offshore Executives Plead Guilty to FCPA Violations

    The Department of Justice announced last week that two former executives of SBM Offshore (“SBM”), a Dutch oil and gas services company, pleaded guilty in U.S. District Court for the Southern District of Texas. Anthony Mace, SBM’s CEO from 2008 to 2011, and Robert Zubiate, a former U.S.-based sales and marketing executive, admitted their involvement in a scheme to bribe government officials in Brazil, Angola, and Equatorial Guinea. The government’s allegations relate to payments made and kickbacks provided to foreign officials in exchange for their assistance in securing contracts in those countries.

    Zubiate is scheduled for sentencing on January 31, 2018, and Mace is scheduled for sentencing on February 2, 2018.

    Click here for FCPA Scorecard’s prior coverage of this matter.

    DOJ SBM Offshore N.V. Bribery

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  • Wal-Mart Sets Aside $283 Million for Potential Resolution of FCPA Allegations

    On Thursday, November 16, 2017, Wal-Mart Stores, Inc. (“Wal-Mart”) disclosed in an SEC filing that it has set aside $283 million for a potential resolution with DOJ and SEC of alleged FCPA violations. The investigation into possible FCPA violations in Mexico was first disclosed in Wal-Mart’s December 2011 SEC filing and, in subsequent filings, Wal-Mart stated that the allegations had been expanded to include possible violations in Brazil, China, and India, among others.

    In its November 16 filing, Wal-Mart reiterated that it has been cooperating with the DOJ and SEC in their investigations, and the discussions with these government agencies has progressed such that Wal-Mart can reasonably estimate a probable loss of $283 million, although it noted that the company cannot assure that its efforts to resolve these matters will ultimately succeed as anticipated.

    Click here for FCPA Scorecard’s prior coverage of this matter.

    SEC DOJ FCPA Wal-Mart

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  • DOJ Charges Five Individuals With FCPA Violations Involving Rolls-Royce

    On November 7, the DOJ unsealed FCPA charges against five individuals for their alleged participation in a foreign bribery scheme involving Rolls-Royce plc and its U.S. subsidiary (Rolls-Royce). Of the five individuals, one was indicted while the remaining four pleaded guilty for their roles in an alleged scheme to pay bribes to a Kazakhstan official in order to secure a supply contract for a gas pipeline from Kazakhstan to China.  The charges and guilty pleas were unsealed in Ohio federal district court. 

    These charges follow on the heels of the company’s January 2017 settlement with DOJ in which Rolls-Royce agreed to a three-year deferred prosecution agreement and agreed to pay $170 million to resolve charges that it conspired to violate the anti-bribery provisions of the FCPA around the world. As part of the DOJ settlement, Rolls-Royce agreed to continue to cooperate fully with the DOJ’s investigation, including its investigation of individuals. The DOJ settlement comprised just a fraction of the $800 million total penalty Rolls-Royce agreed to pay as part of a global resolution related to the corrupt conduct.  

    Of the four guilty pleas, three individuals (a former executive of Rolls-Royce, a former employee of Rolls-Royce, and an executive at an international engineering consulting firm) pleaded guilty to one count of conspiracy to violate the FCPA. The fourth individual (a former senior executive of Rolls-Royce) also pleaded guilty to one count of violating the FCPA in addition to conspiracy. The indicted individual, a former CEO of a Rolls-Royce intermediary, was charged with one count of conspiracy to violate the FCPA and seven counts of violating the FCPA, along with various money laundering charges. 

    The DOJ’s announcement noted the “significant cooperation and assistance” from the UK SFO and Brazil law enforcement.  This continues the increased trend of DOJ receiving and then highlighting cooperation efforts by its international counterparts.

    DOJ FCPA Enforcement Action Rolls Royce UK Serious Fraud Office

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  • SAP Self-Discloses Approximately $6.8 Million in Payments to Gupta Family-Related South African Entities

    On October 26, SAP, a German multinational software corporation, announced that it has voluntarily disclosed commission payments of approximately $6.8 million to Gupta family-related entities to the U.S. Department of Justice and the Securities and Exchange Commission.  The voluntary disclosure in July has led to an ongoing DOJ and SEC investigation into SAP’s conduct. 

    SAP acknowledged that between December 2014 and June 2017, contracts with Transnet and Eskom, both South African state-owned companies, were closed with the assistance of Gupta family-related entities.   SAP’s internal investigation has also led to the initiation of disciplinary proceedings against three employees in South Africa.  The Gupta family, which is connected to South African president Jacob Zuma, has previously denied wrongdoing associated with receiving such kickbacks.  While acknowledging cooperation with the DOJ and the SEC, SAP stated that it has had no interaction with South African authorities and has not decided whether the company will approach South African authorities in the future.  The U.S. investigation is ongoing and SAP has acknowledged that it has begun the process of sharing documents with authorities.

    SEC DOJ Anti-Corruption

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  • Deputy Attorney General Rod Rosenstein Issues Remarks on Individual Accountability for Corporate Wrongdoing

    Deputy Attorney General Rod Rosenstein recently issued remarks highlighting the importance of the DOJ’s consistency in enforcing policies “hold[ing] individuals accountable for corporate wrongdoing.” In particular, Deputy AG Rosenstein stated that the agency should focus on improving the recent track record of bringing criminal proceedings against company employees and commented that “consistency promotes fairness and enhances respect for the rule of law.”  His remarks also touched on the Yates Memo and the FCPA Pilot Program, noting the appropriateness of focusing on individual officer or director liability.

    The comments are yet another in the steady drumbeat of calls, both internal and external to the DOJ, for DOJ enforcement strategy to hold individual corporate employees accountable for FCPA violations, although how much that strategy is being implemented remains to be seen. A recent review of DOJ corporate FCPA enforcement actions notes that the last 20 such actions have lacked related criminal charges against company employees, and going back to 2008, approximately 80% of DOJ corporate FCPA enforcement actions have lacked related criminal charges against company employees.  As Deputy AG Rosenstein’s comments concluded: “When we are serious about wanting people to follow rules, it does no good merely to post them. We need to make clear our intent to enforce the rules, with sufficient vigor that people fear the consequences of violating them.”

    FCPA Enforcement Action State AG DOJ FCPA Pilot Program

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  • Florida Energy Company Owner Pleads Guilty to Conspiracy to Violate the FCPA in Venezuelan Bribery Scheme

    On October 11, the DOJ announced that Fernando Ardila Rued – a co-owner of several Florida-based energy companies – pleaded guilty to FCPA charges that he conspired to bribe foreign officials in exchange for obtaining contracts from Venezuela’s state-owned energy company, Petroleos de Venezuela S.A. (PDVSA). In his plea, Ardila admitted to conspiring with two other individuals – Abraham Jose Shiera Bastidas and Roberto Enrique Rincon Fernandez – from 2008 through 2014 to bribe PDVSA purchasing analysts through cash payments and other entertainment in order to win contracts for Shiera and Rincon’s companies. Ardila is the tenth individual who has pleaded guilty in connection with the PDVSA scheme.    

    This investigation has been a collaboration between the DOJ, ICE-HSI, and IRS-Criminal Investigation Division. Previous FCPA Scorecard coverage of the PDVSA investigation can be found here.

    Score Card Bribery FCPA DOJ Petroleos de Venezuela Financial Crimes International

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  • South Korean Earthquake Research Official Sentenced for Laundering Bribes

    On October 2, the former director of the earthquake research center of South Korea’s Institute of Geoscience and Mineral Resources, Mr. Hoen-Cheol Chi, was reportedly sentenced in U.S. federal court to 14 months in prison for laundering bribes he had received in South Korea from seismology companies. Prosecutors argued to the federal jury, which convicted Mr. Chi in July, that Mr. Chi had demanded and received more than $1 million in bribes from two seismological companies in exchange for providing them with insider information and directed some of the funds to be transferred to his personal bank account in California.

    Mr. Chi has not been charged in South Korea, and his conviction and sentencing in the United States illustrate the US DOJ’s continued focus on targeting foreign officials who receive bribes and then travel to the US or use its financial system.

    DOJ Anti-Money Laundering Bribery

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