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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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  • Additional Charges for Retired U.S. Army Colonel

    On October 4, the Department of Justice expanded the scope of its indictment against retired U.S. Army colonel Joseph Baptiste.  On August 29, Baptiste was charged with conspiracy to violate the Foreign Corrupt Practices Act after he allegedly solicited bribes from undercover agents who posed as potential investors for infrastructure projects in Haiti. The expanded charges include conspiracy to launder money and violate the Federal Travel Act. Prior FCPA Scorecard coverage of the initial indictment and the related FCPA sting operation can be found here.

    DOJ FCPA Score Card

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  • Telia to Pay $965 Million to DOJ and SEC to Settle Bribery Claims

    On September 21, the Swedish telecom Telia Company AB agreed to pay $965 million as a result of criminal and civil actions brought by the DOJ and SEC charging the company with paying bribes to an Uzbek government official from 2007 to 2010. Telia entered into a deferred prosecution agreement with the DOJ that required the company to pay a $548.6 million criminal penalty for violating the anti-bribery provisions of the FCPA, $274 million of which will be paid to the Swedish Prosecution Authority and credited by the DOJ. $40 million of the total criminal penalty consisted of forfeiture by Telia on behalf of its indirect subsidiary Coscom. According to the criminal information, around 2007, Telia began operating a mobile telecommunications business in Uzbekistan through Coscom, and the companies allegedly then conspired to make approximately $331 million in bribes to an Uzbek government official to expand their share of the telecommunications market. 

    On the same day, the SEC issued a cease-and-desist order finding that Telia violated the anti-bribery and internal accounting controls provisions of the FCPA and ordering the company to disgorge $457 million in illicit profits (but also agreeing to credit up to half that amount if disgorged to the Swedish Prosecution Authority). The SEC found that over the relevant time period, “Telia paid bribes to a government official in Uzbekistan in order to obtain and retain business that generated more than $2.5 billion in revenues.” It found that Telia paid the Uzbek official $330 million in bribes “funneled through payments for sham lobbying and consulting services to a front company controlled by the official.” The SEC agreed that the $40 million forfeiture to the DOJ would also offset.

    DOJ SEC Bribery FCPA Telia Uzbek Swedish Prosecution Authority

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  • SFO Director Urges Department to Compete With DOJ on Home Turf

    In a September 4 speech, Serious Fraud Office (SFO) Director David Green urged the SFO to lead anti-corruption enforcement efforts against UK-connected companies, warning that “if we take our foot off the pedal . . . , others will fill the void.” Green noted that the DOJ “is not shy about enforcing the [FCPA] against foreign companies,” and emphasized that seven of the top ten highest-dollar FCPA cases since 2008 were brought against non-American companies. Green said that “it is surely right that the UK should lead enforcement in relation to UK companies or companies with strong connections here,” because it not only “demonstrates our commitment to the level playing field,” but it also “ensures that hefty financial penalties go to UK public coffers rather than elsewhere.”

    UK Serious Fraud Office DOJ FCPA

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  • FCPA Sting Operation Results in Conspiracy Charge for Retired U.S. Army Colonel

    On August 29, the DOJ announced that it had unsealed a criminal complaint and FBI affidavit charging retired U.S. Army colonel Joseph Baptiste “for his alleged role in a foreign bribery and money laundering scheme in connection with a planned $84 million port development project in Haiti.” The DOJ alleges that Baptiste solicited bribes “from undercover [FBI] agents in Boston who posed as potential investors,” telling the agents “that he would funnel the payments to Haitian officials through a non-profit entity that he controlled . . . in order to secure government approval of the project.” Baptiste allegedly received a $50,000 payment from the FBI, which he wired to his non-profit organization. While Baptiste ultimately used the payment for personal purposes, rather than his promised bribery, he allegedly “intended to seek additional money from the undercover agents to use for future bribe payments in connection with the port project.” The DOJ also alleges that FBI agents intercepted telephone calls where Baptiste “discussed bribing an aide to a senior Haitian official by giving him a job on the port development project after he left his position.”

    FCPA sting operations are relatively rare. An infamous FCPA sting operation involving Africa resulted in charges for 22 defendants, but it concluded unsuccessfully in 2012 after a series of acquittals and hung juries caused the DOJ to dismiss the remaining indictments.

    DOJ FBI Hati Anti-Money Laundering

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  • Report: California-Based Ride Sharing Company Facing DOJ Scrutiny

    On August 29, the Wall Street Journal reported that a California-based ride sharing company is facing scrutiny from the DOJ, which has taken preliminary steps to investigate potential FCPA violations at the company. The company has expanded into more than 70 countries. A company spokesman confirmed the DOJ’s inquiry. The Wall Street Journal report stated that it was unclear whether DOJ would open a formal investigation.

    FCPA Enforcement Action DOJ

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  • MTS Systems Announces Closure of FCPA Investigations

    On August 7, MTS Systems announced in its Form 10-Q the closure of DOJ and SEC FCPA investigations related to gift, travel, entertainment, and other expenses incurred in connection with its Asia-Pacific operations. Minnesota-based MTS Systems initially informed the DOJ and SEC about this matter in 2012 and thereafter provided the government periodic updates. According to MTS Systems’ 10-Q, the government’s investigations were closed “without further action taken by either [the SEC or DOJ].”

    FCPA Enforcement Action DOJ SEC MTS Systems

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  • Teradata Discloses FCPA Investigation in Quarterly Filing

    On August 4, Ohio-based Teradata Corporation disclosed in its 10-Q that the DOJ and SEC are conducting investigations concerning potential violations of the FCPA related to a subsidiary’s operations in Turkey. Teradata operates in more than 70 countries and develops and sells technology-enabled solutions, including data warehouse management and database technologies. 

    According to Teradata’s 10-Q, the company “discovered certain questionable expenditures for travel, gifts and other expenses at one of its international subsidiaries” doing business in Turkey. Teradata stated that it promptly launched an internal investigation and, in February 2017, self-disclosed the investigation to the SEC and DOJ. According to its 10-Q, Teradata has periodically updated the government about its investigation and plans to “continue to cooperate fully.” Teradata also noted that it already has “taken remedial actions,” including terminations, and that the FCPA issues “involved specific individuals who are no longer with the Company.” 

    It appears that Teradata is making a case for full cooperation credit under the DOJ’s Pilot Program, which encourages companies to “voluntarily self-disclose FCPA-related misconduct, fully cooperate with the Fraud Section, and, where appropriate, remediate flaws in their controls and compliance programs.”

    FCPA Enforcement Action Teradata DOJ SEC

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  • Three Companies Announce the Close of FCPA Investigations

    During the week of July 24, 2017, three different companies announced the closure of DOJ and/or SEC FCPA investigations: IBM, Net 1 UEPS Technologies, Inc. (“Net 1”), and Newmont Mining. 

    In a Form 10-Q filed with the SEC on July 25, 2017, IBM disclosed that the DOJ and SEC had each informed the company in June 2017 of the closure of their respective investigations into “alleged illegal activity by a former IBM Poland employee in connection with sales to the Polish government.” The company initially informed the SEC in 2012 that the Polish Central Anti-Corruption Bureau was looking into the matter, and the DOJ followed up with its own investigation in April of 2013. The DOJ expanded the investigation from Poland to Argentina, Bangladesh, and Ukraine. The 2012 issues came on the heels of a 2011 settlement in which IBM paid the SEC $10 million to settle separate FCPA allegations for alleged cash payments to Chinese and Korean officials.

    South African alternative payment systems provider Net 1 made a similar announcement on July 27, stating that the DOJ had written a letter to the company closing its investigation of alleged FCPA and disclosure violations. According to the announcement, the DOJ, along with the SEC and South African authorities, began looking into a 2012 contract award process involving a Net 1 subsidiary, Cash Paymaster Services Proprietary Limited, after an unsuccessful bidder for the same contract “refer[ed] unsubstantiated South African press articles to the DOJ.” The SEC was the first to bow out of the investigation, closing its inquiry through a letter in 2015, followed six months later by the South African government. Net 1 is traded on NASDAQ’s Global Select Market, providing a jurisdictional hook into a case otherwise about payments made by a South African company in South Africa to South African citizens who were South African government employees. Our additional coverage of this matter can be viewed here.

    In a Form 10-Q filed on July 25, 2017, Newmont Mining also announced the end of a DOJ investigation into alleged violations of the FCPA “relating to certain business activities of [Newmont Mining] and its affiliates and contractors in countries outside the U.S.” According to the announcement, the Colorado company had already received a similar declination from the SEC earlier this year. Our additional coverage of this matter can be viewed here

    The DOJ simultaneously reportedly confirmed to the Wall Street Journal that the agency was still actively enforcing the FCPA. The Journal cited an anonymous source at the DOJ for assurances that “though there haven’t been any new corporate FCPA cases since mid-January, there is no letup in U.S. enforcement efforts.”

    DOJ SEC IBM Net 1 UEPS Technologies Newmont Mining Corporation FCPA Enforcement Action

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