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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 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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  • ING Under Investigation by Dutch and U.S. Authorities for Activities Relating to VimpelCom

    In an annual report filed with the SEC on March 20, 2017, ING Groep, N.V., a Netherlands-based financial services company, stated that it is under criminal investigation by Dutch authorities “regarding various requirements related to the on-boarding of clients, money laundering, and corrupt practices,” and that it has also received “related information requests” from U.S. authorities.  A spokesperson for the Dutch prosecutor reportedly expressed suspicion that ING failed to report irregular transactions and may have enabled international corruption, including unusual payments made by VimpelCom, the Russian telecom company, to a government official in Uzbekistan through a shell company.  VimpelCom settled bribery charges with the U.S. and Dutch governments in February 2016, admitting to paying bribes amounting over $114 million to an Uzbek official and agreeing to pay over $397 million in penalties to the DOJ and SEC for violations of the FCPA.  ING stated that it is cooperating with the ongoing investigations and requests of Dutch and U.S. authorities.

    SEC DOJ Anti-Money Laundering Anti-Corruption ING Groep N.V. Dutch Uzbekistan VimpelCom

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  • Four Businessmen and Two Mexican Government Officials Plead Guilty in Aircraft Maintenance Bribery Scheme

    On December 27, the DOJ announced the unsealing of charges against four businessman and two Mexican officials involved in a scheme to secure aircraft maintenance and repair contracts with Mexican government-owned companies. Douglas Ray, Victor Hugo Valdez Pinon, Kamta Ramnarine, and Daniel Perez all pleaded guilty to conspiracy to violate the FCPA, with Ray and Valdez Pinon separately pleading guilty to conspiracy to commit wire fraud. Additionally, Ernesto Hernandez Montemayor and Ramiro Ascencio Nevarez, both former officials with Mexican state-owned companies, each pleaded guilty to one count of conspiracy to commit money laundering.

    According to the DOJ, the defendants admitted that between 2006 and 2016, millions of dollars were paid to numerous Mexican government officials to secure aircraft parts and servicing contracts with Mexican government-owned companies. The defendants also admitted to laundering the proceeds of the bribery scheme. In total, Ray, Valdez Pinon, Ramnarine, and Perez paid more than $2 million in bribes to Mexican officials, including Hernandez Montemayor and Nevarez.

    Navarez was sentenced in May to 15 months in prison; the remaining defendants have yet to be sentenced.

    DOJ FCPA Fraud Anti-Money Laundering

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  • Pennsylvania District Court Addresses Public International Organization” Aspect of FCPA

    The relatively sparse judicial caselaw on the FCPA expanded last week with a new opinion interpreting the “public international organization” language in the statute. In an opinion denying the defense’s Motion to Dismiss an indictment originally brought in 2015, Judge Paul Diamond of the United States District Court for the Eastern District of Pennsylvania found that the FCPA “plainly” applies to public international organizations.  United States v. Dmitrij Harder, No. 2:15-cr-00001 (E.D. Pa. Mar. 2, 2016).  Combined with the Eleventh Circuit’s 2014 opinion in Esquenazi, the contours of the types of foreign government entities subjecting defendants to FCPA sanctions are beginning to be fleshed out.  (Previous FCPA Scorecard coverage of the Esquenazi case can be found here.) Dmitrij Harder – a Russian national, German citizen, and U.S. permanent resident – owned and operated two consulting companies that, in 2007 and 2009, assisted two different independent energy companies in obtaining financing from the European Bank for Regional Development (the “EBRD”).  The EBRD is a multilateral development bank founded in 1991 to foster the growth of businesses operating in the former Soviet Union.  Today it invests throughout Europe and is jointly owned by sixty-four countries. The DOJ charged Harder in 2015 with 14 counts of violating the FCPA, the Travel Act, and money laundering.  The government alleged that the energy companies entered into agreements with Harder whereby they agreed to pay him success fees upon receiving financing from the EBRD.  After both companies obtained sizable investments from the EBRD – one company received an $85 million investment; the other a $40 million investment and $60 million loan – they allegedly paid Harder success fees totaling almost $8 million.  Shortly after the success fees were paid, Harder allegedly wired payments totaling almost $3.5 million to the sister of an EBRD official.  The government alleged that the sister of the EBRD official entered into sham consulting agreements with Harder’s companies, making it appear that the payments were made for services rendered under the agreements, but no such services were actually performed. In arguing for dismissal of the FCPA counts of the indictment, Harder challenged the sufficiency of the Indictment on several bases, including a failure to plead the involvement of a “foreign official,” and that the Indictment impermissibly substituted the phrase “foreign government or instrumentality thereof” with “public international organization” in reciting the fourth of the FCPA’s proscribed corrupt purposes:  “inducing such foreign official []to use his []influence with a foreign government or instrumentality thereof to affect or influence any act or decision of such government or instrumentality.”  15 USC 78dd-2(a)(3)(B).  On the first challenge, Judge Diamond rejected the idea that officials of EBRD could not qualify as “foreign official[s]” within the FCPA’s prohibitions.  Op. at 6; see also Op. at 8 (noting that “whether EBRD falls within the FCPA’s ambit is necessarily a ‘fact-bound question[]’ properly decided by a jury”).  On the second challenged, Harder had maintained that permitting the government to substitute “public international organization” into the statute would create an entirely new offense with no basis in the statute.  Rejecting this argument, Judge Diamond pointed out that public international organizations are themselves “an association of foreign governments.”  Op. at 7.  He reasoned that refusing to allow this substitution in the language of indictments where a public international organization, rather than a foreign government, is involved would “make it impossible to prosecute any public international organization employee who unlawfully used his position,” calling this “an absurd result” in light of Congress’ decision to include public international organizations within the scope of the FCPA.  Op. at 7. Harder also raised two challenges to the constitutionality of the FCPA’s inclusion of the EBRD.  In 1998, the FCPA was amended to include employees of public international organizations within the scope of the Act’s prohibition on certain corrupt payments.  The 1998 amendments brought employees of two groups of public international organizations within the scope of the FCPA; (1) those organizations that the President declares by Executive order are covered by the FCPA, and (2) those organizations identified pursuant to the International Organization Immunities Act  (“the IOIA”), 22 USC 288.   The IOIA allows the President, acting by executive order, to provide public international organizations in which the US participates with legal capacity, certain immunities, and privileges under US law.  In 1991, the EBRD was designated a public international organization under the IOIA, and so it became subject to the FCPA after the 1998 amendments. First, Harder argued that the FCPA’s inclusion of the EBRD and other public international organizations violates the non-delegation doctrine, which provides that where Congress delegates legislative authority it must do so with “an intelligible principle” to guide the exercise of the delegated authority.  United States v. Cooper, 750 F.3d 263, 270 (3d Cir. 2014).  Harder argued that Congress, by allowing the President to expand the list of public international organizations covered by the FCPA by executive order, impermissibly delegated its legislative function to the executive branch.  Judge Diamond rejected this argument, finding that the legislative scheme enacted by Congress constrains the President’s ability to add public international organizations to the scope of the FCPA, and that the clearly stated purposes of the FCPA provide sufficient guidance.  Op. at 9-11. Second, Harder argued that the FCPA’s inclusion of the EBRD violates the void-for-vagueness doctrine, which provides that a criminal law is void if it fails to define the offense in a way that “ordinary people can understand what conduct is prohibited” and in a way that does not encourage “arbitrary and discriminatory enforcement.”  Skilling v. United States, 561 U.S. 358, 402-403 (2010).  Harder argued that the somewhat circuitous route by which the EBRD was made subject to the FCPA renders the law unconstitutionally vague because it would require individuals to monitor whether a particular public international organization has been the subject of an executive order that subjects it to the FCPA.  Judge Diamond rejected this argument also, finding that an ordinary person could research the status of a public international organization. Judge Diamond also pointed out that there is a publicly available list of all public international organizations subject to the FCPA, and that the FCPA’s knowledge requirement alleviated any concern that a defendant might unwittingly violate the FCPA. Op. at 13.  

    Terra Telecommunications Dmitrij Harder Esquenazi Travel Act Anti-Money Laundering

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