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  • Macau Real Estate Developer Convicted of Violating FCPA

    On July 27, 2017, a federal jury in the Southern District of New York convicted Ng Lap Seng of Macau of bribery, money laundering, and conspiracy, for his role in a widespread plan to bribe United Nations officials in order to establish a new conference facility in Macau. Five other defendants have also been charged; four have pleaded guilty, and one passed away. A sentencing date has not yet been set.

    As pointed out on the FCPA Professor, this is a significant win for the DOJ because it marks the first time since 2011 that the DOJ has successfully taken an FCPA case to verdict. Our additional coverage of this matter can be viewed here.

    FCPA Enforcement Action Anti-Money Laundering Bribery

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  • Halliburton Agrees to Settle FCPA Claim for $29 Million in Disgorgement and Penalties

    Halliburton Company recently settled allegations that the company improperly steered business to the friend of an Angolan official in exchange for that official awarding various oil contracts to the company. In total, Halliburton agreed to pay the SEC $29.2 million, comprising $14 million in disgorgement, $1.2 million in prejudgment interest, and a $14 million penalty. Halliburton’s former vice president also agreed to pay the SEC a $75,000 penalty related to these violations and other accounting irregularities.  

    This is the most recent settlement in a series of FCPA enforcement actions focusing on Halliburton’s procurement processes and operations in various countries. Former Halliburton subsidiary KBR settled similar FCPA allegations in 2009 related to alleged bribes paid to Nigerian officials to procure contracts in that country.    

    This settlement also highlights the role of whistleblowers in driving FCPA and other enforcement actions. A Halliburton whistleblower first alerted the company to potential FCPA issues in 2010, which resulted in the launching of an investigation into the allegations.

    SEC FCPA Enforcement Action Angola Disgorgement Bribery Nigeria Whistleblower

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  • CDM Smith Receives Declination of FCPA Charges

    On June 21, the DOJ issued a declination letter to attorneys for CDM Smith, Inc., in which the DOJ declined prosecution and closed an investigation of CDM regarding potential FCPA violations that occurred in India between 2011 and 2015. CDM, a Boston-based privately held engineering and construction firm, agreed to pay DOJ approximately $4 million in disgorgement. The DOJ announced the declination on June 29 with a link posted on its website, making it the second FCPA declination that the DOJ announced in June 2017. Prior to June, the DOJ had last issued an FCPA declination letter in September 2016. 

    According to the DOJ Letter, CDM paid approximately $1.18 million in bribes to India government officials in exchange for contracts that resulted in approximately $4 million in net profits (the disgorgement amount). The payments were made by CDM’s division responsible for India operations and by CDM’s wholly-owned subsidiary in India through fraudulent subcontractors and generally equaled two to four percent of the contract price. 

    The DOJ’s letter stated that its decision to close its investigation is consistent with the FCPA Pilot Program, launched in April 2016 to encourage 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.” Accordingly, the DOJ determined that CDM had, among other things, made a “timely and voluntary self-disclosure” of potential FCPA violations, conducted and “thorough and comprehensive investigation,” fully cooperated with the DOJ, and performed full remediation, including the termination of all of the executives and employees involved in the conduct at issue. However, the letter provides little detail about these factors. 

    The DOJ letter makes clear that it does not foreclose future prosecution of any individuals connected to this matter, whether affiliated with CDM or otherwise.

    DOJ India Bribery FCPA Enforcement Action CDM Smith FCPA Pilot Program

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  • U.K. Banker Receives Six-Year Sentence for Taking Bribes

    On June 20, 2017, a former banker at the European Bank for Reconstruction and Development (EBRD) in London received a six year prison sentence for accepting more than $3.5 million in bribes. According to the Crown Prosecution Service, Andrey Ryjenko also received two years (to run concurrently) for "concealing, disguising, converting and transferring criminal property."  

    Reuters reports that Ryjenko conspired with a U.S. consultant to direct EBRD investments towards certain companies in exchange for bribes deposited into a bank account in the name of Ryjenko's sister. The consultant, Dmitrji Harder, pleaded guilty in 2016 in the U.S. to two counts of violating the FCPA. For additional coverage and analysis of the U.S. Department of Justice's enforcement action against Harder, see the previous posts here.

    Both the Harder case and the Ryjenko prosecution were the result of a multinational investigation with cooperating agencies in several countries. Indeed, the CPS praised the cooperation, stating that Ryjenko's "conviction was made possible through effective cross-border partnerships between a number of jurisdictions, including the United States." According to Reuters, it was the bank that first contacted authorities in 2010 when its internal systems identified irregularities. 

    The Ryjenko conviction is part of a growing trend of foreign jurisdictions taking action against bribe recipients, who are not covered under the FCPA’s prohibitions in the U.S. (although U.S. authorities can sometimes try to pursue those bribe recipients under money laundering and other theories, if the bribe recipients can be brought under U.S. jurisdiction).

    FCPA Enforcement Action EBRD Ryjenko Dmitrij Harder Bribery

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  • Former Swiss Bank Executive Pleads Guilty in FIFA Investigation

    On June 15, the U.S. Attorney’s Office for the Eastern District of New York announced that Jorge Luis Arzuaga, a citizen of Argentina and a former managing director of the Swiss Bank Julius Baer, pleaded guilty to money laundering conspiracy charges. His guilty plea came in connection with allegations that he facilitated the payment of more than $25 million in bribes to soccer officials by opening and managing bank accounts for those officials. In exchange for his assistance in facilitating these bribes, Arzuaga received over $1 million in bonus payments from other co-conspirators, an amount he agreed to forfeit in connection with his plea. 

    The guilty plea came as part of the U.S. government’s investigation into corruption in international soccer which has been ongoing since May 2015. Previous FCPA Scorecard coverage of the FIFA investigation can be found here.

    Score Card Anti-Money Laundering Bribery FIFA

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  • Former Och-Ziff Consultant Sentenced to Two Years in Prison

    On May 31, Samuel Mebiame, the son of a former Prime Minister of Gabon, a former consultant to a joint venture between mining company Och-Ziff Capital Management Group LLC (Och-Ziff) and an entity incorporated in the Turks and Caicos, was sentenced to two years in prison for conspiring to violate the FCPA by bribing government officials in several African countries. 

    As previously reported here, Mebiame previously pleaded guilty to allegations related to payments of approximately $3 million to high-level government officials in Niger, in addition to providing luxury cars, in order to obtain uranium mining concessions. Similarly, the DOJ charged Mebiame with bribing a high-ranking government official in Chad with luxury foreign travel to obtain a uranium mining concession there, and with bribing government officials in Guinea with cash, the use of private jets, and a luxury car in order to obtain confidential government information. Prior Scorecard coverage regarding Och-Ziff is here.

    FCPA Enforcement Action DOJ Bribery

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  • Ukrainian Billionaire Files Motion to Dismiss Indictment

    Dmiitry Firtash, the Ukrainian billionaire indicted in 2013 for his alleged role in a conspiracy to bribe government officials in India to permit the mining of titanium minerals, filed a motion to dismiss the indictment on May 9 in a federal district court in Illinois. Firtash also faces money laundering and RICO charges along with five alleged coconspirators. In 2015, an Austrian court denied the United States’ extradition request, but that decision was eventually reversed and Firtash was extradited earlier this year. See previous Scorecard coverage here.

    Firtash’s motion to dismiss focuses on the lack of jurisdictional contact between the charged conduct and the United States. It vigorously challenges the jurisdictional basis alleged in the indictment, which was that Firtash’s coconspirators, but not Firtash himself, transferred money through United States correspondent banks, traveled to the United states, and used email accounts and cellular phones hosted on servers in the United States. However, Firtash claims that the indictment fails to allege that any of these contacts have any connection to the alleged bribery scheme and that Firtash himself never entered the United States in connection with the charged conduct, and never made or received any phone calls or sent or received any emails regarding the allegations in the indictment.

    The amount and quality of contacts with the United States required to support jurisdiction under the FCPA is a frequently contested issue. The United States has repeatedly taken the position that jurisdiction is proper even where the wrongful conduct took place outside the United States and did not involve any United States companies or citizens, so long as there was some contact with the United States. For example, in the recent Magyar Telekom cases, emails sent through servers hosted in the United States were held to be sufficient to support jurisdiction. See previous Scorecard coverage here. The outcome of Firtash’s motion to dismiss will shed further light on the jurisdictional standard.

    Indictment India RICO Bribery Magyar Telekom

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  • Reports: Wal-Mart Nearing Resolution of Bribery Probe

    Bloomberg reports that Wal-Mart is nearing a resolution of a five-year old joint inquiry by the DOJ and SEC. Citing an unnamed source familiar with the matter, Bloomberg reports that the company is preparing to pay $300 million to settle allegations that company employees paid bribes in Mexico, China, and India. The same source reported that the resolution will also include at least one guilty plea by a Wal-Mart subsidiary, a non-prosecution agreement for the parent company, and a monitorship.

    In March of 2015, a federal district court in Arkansas dismissed with prejudice a consolidated shareholder derivative suit accusing Wal-Mart Stores Inc.’s (Wal-Mart) board of directors of concealing Mexican bribery claims from investors. The lawsuit was filed after a 2012 article by the New York Times reported that top officials at Wal-Mart’s Mexican subsidiary oversaw millions of dollars in bribes in connection with the company’s expansion in Mexico. See previous Scorecard coverage here. The same article is believed to have touched off the DOJ’s and SEC’s inquiry. If true, a $300 million resolution would not be near the top end of FCPA resolutions.

    DOJ SEC Score Card Bribery Wal-Mart

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  • Former Guinean Mining Minister Convicted on Bribery and Money Laundering Charges

    A former Guinean mining minister was found guilty earlier this week on bribery and money laundering charges following a seven-day jury trial in Manhattan federal court. He was charged with receiving and laundering $8.5 million in bribes allegedly for securing mining rights for two Chinese companies. 

    The conviction came one day after the former minister took the stand in his own defense and admitted to lying to banks about his status as a government official, as well as failing to report the payments on his IRS tax return.

    The conviction also follows other notable enforcement actions involving the mining industry in the Republic of Guinea. Earlier this year, the SEC charged former Och-Ziff executives with bribing government officials across Africa to secure mining deals, including in Guinea.

    SEC Guinea Africa China Och-Ziff Bribery Anti-Money Laundering

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  • Senators Introduce Combating Global Corruption Act of 2017

    Senator Ben Cardin and Republican co-sponsors recently introduced a bill titled the “Combating Global Corruption Act of 2017,” which seeks “to identify and combat corruption in countries, to establish a tiered system of countries with respect to levels of corruption by their governments and their efforts to combat such corruption, and to assess United States assistance to designated countries in order to advance anti-corruption efforts in those countries and better serve United States taxpayers.”

    This bill, if enacted, would require the Secretary of State to publish annual rankings of foreign countries split up into three tiers that depend on whether those countries’ governments comply with “minimum standards for the elimination of corruption.” The introduced bill defines corruption as “the exercise of public power for private gain, including by bribery, nepotism, fraud, or embezzlement.”

    Once a country’s tier-rank is established, the bill would then require the Secretary of State, Administrator of USAID, and the Secretary of Defense to take various steps, including the creation of a “corruption risk assessment” and “corruption mitigation strategy” for U.S. foreign assistance programs; fortified anti-corruption and clawback provisions in contracts, grants and other agreements; disclosure of beneficial ownership for contractors and other participants; and mechanisms to investigate misappropriated funds.

    If passed into law, this bill would create substantial new enforcement powers to combat international corruption activities. And, unlike the current ambiguity under the FCPA regarding its applicability to state-owned or state-controlled enterprises (“SOEs”), as drafted, this bill expressly would cover SOEs. Like the FCPA, however, this bill also contains a broad national security waiver component, if the Secretary of State “certifies to the appropriate congressional committees that such waiver is important to the national security interest of the United States.”

    FCPA Update Anti-Corruption FCPA Bribery Fraud

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