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  • Class certification granted to hedge fund investors

    On September 14, a New York federal district court granted class certification to a group of shareholder investors suing an American hedge fund management firm and two of its senior executives on the grounds that the investors were misled about a government investigation into the company’s activities in Africa. In finding that the proposed class met all the requirements for certification, the court certified a class of investors that held some of the more than 100 million outstanding shares between February 2012 and August 2014, the time period in which the firm allegedly violated the Securities Exchange Act. Plaintiffs claim that the firm told investors it was not under any pending judicial or administrative proceeding that might have a material impact on the firm, when in fact it was under DOJ and SEC investigation over allegations that its employees were bribing government officials in Africa. The allegations against the firm were made public in 2014 media reports detailing government scrutiny into its dealings in Africa.

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

    DOJ SEC Securities Exchange Act Africa Bribery

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  • Real estate broker and nephew of former UN Secretary-General sentenced for trying to bribe a foreign official

    On September 6, U.S. District Judge Edgardo Ramos of the Southern District of New York reportedly sentenced real estate broker Joo Hyuan Bahn, also known as Dennis Bahn, to six months in prison for trying to pay $2.5 million in bribes to a Qatari official in connection with a sale of a high rise building complex in Vietnam. The New York Times reported that Judge Ramos stated that he believed Bahn deserved a lenient sentence. Law360 reported that Judge Ramos cited, among other factors, the consequences of a longer sentence on Bahn’s immigration status. The sentence was ultimately far below what the government had requested.

    As FCPA Scorecard previously reported, Bahn pleaded guilty in January 2018 to one count of conspiracy to violate the FCPA and one count of violating the FCPA. Mr. Bahn is the nephew of former UN Secretary-General Ban Ki-moon.

    Additionally, on September 6, the SEC announced that Bahn had agreed to pay $225,000 in disgorgement to settle civil FCPA violations arising from his conduct. The SEC’s order concluded that Bahn violated the anti-bribery and books and records provisions of the FCPA.

    See previous FCPA Scorecard coverage here.

    FCPA Enforcement Action FCPA Bribery

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  • UK SFO charges former Güralp Systems employees with bribery conspiracy as DOJ declines to prosecute the company for FCPA violations

    On August 17, the UK Serious Fraud Office (SFO) announced that it was charging two former employees of Reading-based engineering company Güralp Systems Ltd. with “conspiracy to make corrupt payments.” The SFO alleged that the founder and former Managing Director of the company, Cansun Güralp and Andrew Bell, respectively, had “conspired to corruptly make payments to a public official and employee of the Korea Institute of Geoscience and Mineral Resources (KIGAM).” The conduct allegedly occurred over a period of 13 years, from April 2002 to September 2015.

    A few days later, on August 20, the DOJ published a letter informing Güralp Systems that it was declining to prosecute the company for potential FCPA and money laundering violations related to payments it had made to Heon-Cheol Chi, a former director of KIGAM. In October 2017, Chi was sentenced to 14 months in federal prison on a U.S. money laundering charge related to the bribery scheme. The DOJ’s letter stated that it was declining to prosecute because, among other reasons, the company voluntarily disclosed the misconduct, provided cooperation that assisted with the prosecution of Chi, undertook “significant remedial efforts,” and “committed to accepting responsibility” for its conduct in the parallel SFO investigation.

    DOJ FCPA Anti-Money Laundering Bribery

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  • Another executive arrested in PDVSA bribery case

    On August 1, DOJ announced the arrest of Jose Manuel Gonzalez Testino, a dual U.S.-Venezuelan citizen, on foreign bribery charges for making and conspiring to make corrupt payments to an official of Venezuela’s state-owned energy company, Petroleos de Venezuela S.A. (PDVSA). Gonzalez was arrested at Miami International Airport on an arrest warrant based on a criminal complaint in the Southern District of Texas, which was unsealed on July 31. Gonzalez made an initial appearance before a magistrate judge in the Southern District of Florida.

    According to the criminal complaint, Gonzalez and a co-conspirator paid at least $629,000 in bribes to a former PDVSA official in exchange for favorable business treatment for Gonzalez’s companies, including: (1) directing PDVSA contracts to Gonzalez’s companies, (2) giving Gonzalez’s companies priority over other vendors to receive payments, and (3) awarding Gonzalez’s companies contracts in U.S. dollars rather than Venezuelan bolivars.

    DOJ has announced charges against 17 individuals, including Gonzalez, as part of its investigation into bribery at PDVSA. 12 individuals have pleaded guilty.

    DOJ FCPA Bribery Petroleos de Venezuela

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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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  • 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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  • Guilty plea from former Venezuelan official in bribery scheme

    The DOJ announced on Thursday, April 19, that a former Venezuelan official had pleaded guilty to one count of conspiracy to commit money laundering. The charge arose from Cesar David Rincon Godoy’s role in a bribery scheme involving bribes paid by the owners of U.S. companies to Venezuelan government officials to secure energy contracts and payments on outstanding invoices. As the former general manager of the procurement subsidiary of the Venezuelan state-owned energy company, Petroleos de Venezuela S.A. (PDVSA), Rincon had solicited and accepted bribes. The judge entered a personal money judgment of $7,033,504.71. As a government official receiving the bribes, Rincon could not be charged himself with FCPA offenses (which are targeted at those paying the bribes). Related charges against four other individuals remain pending, including charges of conspiracy to violate the FCPA; 11 individuals have already pleaded guilty in the PDVSA cases.  

    For prior coverage of the PDVSA enforcement actions, please see here.

    DOJ Petroleos de Venezuela Venezuela Bribery FCPA Anti-Money Laundering

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  • FCPA class action against Embraer dismissed

    A class action against Embraer, the Brazilian aerospace firm, was recently dismissed by U.S. District Judge Richard Berman. The class action, which was brought in federal district court in New York, alleged that Embraer had failed to adequately disclose the scope and possible financial impact of ongoing corruption investigations by the DOJ and SEC, harming the company’s investors.

    In granting Embraer’s motion to dismiss, Judge Berman held that the company’s disclosures were sufficient as a matter of law, and that requiring disclosures advocated by the putative class plaintiffs would effectively require reporting companies to acknowledge guilt for conduct that was still being investigated and had not yet been charged.

    The underlying bribery alleged in the complaint (and being investigated by regulators) involves Embraer’s October 2016 admissions that from 2007 to 2011, company executives made payments to government officials in several countries, including the Dominican Republic, Saudi Arabia, Mozambique, and India, totaling $11.5 million. Embraer received government contracts resulting in profits over $83 million in exchange.

    This decision is a clear win for publicly traded companies currently under investigation for corruption-related conduct. Had the case proceeded, companies may have faced difficult choices between making more detailed disclosures to investors regarding the potential merits of ongoing investigations and protecting themselves against incriminatory public statements about these same matters.

    International Bribery Embraer Anti-Corruption

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  • Former media executive pleads guilty to bribing UN official

    Julia Vivi Wang, a Chinese-born naturalized U.S. citizen, reportedly pleaded guilty this week to violations of the FCPA related to a scheme to bribe the UN General Assembly’s former president John Ashe. Wang is a former executive of a media group that focused on promoting UN development goals, but she was accused of paying the bribe to secure diplomatic postings. She pleaded guilty this week in the SDNY to three counts, including violating and conspiring to violate the FCPA, as well as income tax fraud. 

    The charges relate to Wang’s payment of $500,000 to Ashe in April 2013 in exchange for receiving a diplomatic posting within the government of Antigua, where Ashe previously served as a UN representative. Wang is just the most recent in a line of other individuals who have faced FCPA repercussions for bribes paid to Ashe (who died in 2016), including Ng Lap Seng, who was found guilty of paying Ashe and another individual bribes worth at least $1 million, and Shiwei (Sheri) Yan who also pleaded guilty to paying Ashe bribes in excess of $800,000. As part of her plea, Wang admitted that she had failed to report approximately $2 million in income to the IRS.

    This guilty plea illustrates how prosecutors are able to unwind even complex bribery schemes by methodically targeting individual participants. The criminal charges against Wang were likely bolstered by the string of preceding bribery cases involving similar payments to Ashe that likewise resulted in a guilty pleas and verdicts.

    FCPA Enforcement Action Bribery FCPA

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  • Second executive pleads guilty to FCPA violations in Siemens case involving bribes in Argentina

    On March 15, Eberhard Reichert, a former executive of a Siemens AG subsidiary, pleaded guilty in the U.S. District Court for the Southern District of New York to conspiracy to violate the Foreign Corrupt Practices Act, including conspiracy to commit bribery, falsify corporate books and records, circumvent internal controls, and commit wire fraud. According to the DOJ press release, Reichert “admitted that he and his co-conspirators concealed the illicit payments through various means, including using shell companies associated with intermediaries to disguise and launder the funds.” Reichert was indicted with seven others in 2011.

    Reichert was part of a decade-long scheme during which Siemens paid tens of millions of dollars in bribes to Argentine government officials to secure a contract to create national identity cards. A Siemens subsidiary was awarded a contract worth more than $1 billion to provide the ID cards in 1998. The Argentine government ended the project in 2001. Since then, Siemens and its employees have faced prosecutions and enforcement actions around the world as a result of the bribes and related conduct. Siemens pleaded guilty in the U.S. to violating the books and records provisions of the FCPA in 2008 for its conduct, and subsidiaries in Argentina and other countries pleaded guilty to similar crimes.  Siemens also paid $350 million to resolve an SEC case and paid a fine of $800 million to resolve charges brought by the Munich Public Prosecutor’s Office.

    Prior FCPA Scorecard coverage of the case can be found here, here, here, and here.

    DOJ FCPA Bribery

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