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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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  • SFO Announces Charges Against a Global Bank and Four Former Executives in Qatar Capital Raising Matter

    On Tuesday, June 20, the UK Serious Fraud Office (“SFO”) announced charges against a global bank and four former executives for conspiracy to commit fraud and provision of unlawful financial assistance in violation of the Companies Act 1985. These charges relate to the bank’s capital raising arrangements with Qatar Holding LLC and Challenger Universal Ltd in June and October 2008, as well as to a $3 billion loan facility made available to the State of Qatar acting through the Ministry of Economy and Finance in November 2008. According to the SFO press release, the investigation was first announced in 2012, and the individuals charged include a former Chief Executive Officer of the bank, a former Executive Chairman of the bank's Capital Investment Banking and Investment Management in Middle East and North Africa, a former Chief Executive of the bank's Wealth and Investment Management, and a former European Head of the bank’s Financial Institutions Group.

    While no US-based charges have been announced, the SFO’s announcement comes on the heels of the bank’s March 2017 disclosure to the SEC in which the company stated that “the DOJ and SEC are undertaking an investigation into whether the Group’s relationships with third parties who assist the bank to win or retain business are compliant with the U.S. Foreign Corrupt Practices Act.”

    SEC UK Serious Fraud Office Fraud Qatar Holding Challenger Universal

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  • Linde Gas Agrees to Pay DOJ More Than $11 Million, Receives Declination of FCPA Charges

    On Friday, June 16, the DOJ issued a declination letter to attorneys for Linde North America Inc. and Linde Gas North America LLC (collectively, “Linde”), in which the DOJ declined prosecution and closed an investigation of Linde and certain of its subsidiaries and affiliates regarding potential FCPA violations that occurred between November 2006 and December 2009. Linde, part of Germany’s Linde Group, which trades only on German stock exchanges and which has no securities registered with the SEC, agreed to pay DOJ a combined $11.2 million in disgorgement and forfeiture. 

    According to the DOJ letter, Spectra Gases, a New Jersey-based company acquired by Linde in October 2006, made corrupt payments to officials at and related to a Republic of Georgia state-owned and controlled entity to ensure continuity of business. Upon discovering this conduct, Linde initiated an internal investigation and subsequently withheld monies earmarked for a company controlled by the Georgian entity. These monies comprise the approximately $3.4 million that Linde agreed to forfeit.

    The DOJ letter stated that its decision 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 Linde had, among other things, voluntarily self-reported potential FCPA violations, conducted a thorough and proactive internal investigation, and continues to cooperate fully and remediate its compliance program and internal controls. Notably, the DOJ letter does not foreclose future prosecution of any individuals, and the letter explicitly delineates DOJ’s expectation that Linde will continue cooperating fully in any ongoing investigation of individuals.

    DOJ FCPA Enforcement Action Linde North America Anti-Corruption

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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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  • Supreme Court Limits SEC Disgorgement

    On June 5, the Supreme Court ruled in Kokesh v. SEC that the SEC’s authority to disgorge profits from defendants is subject to the five-year statute of limitations applicable to penalties and fines. The Court rejected the SEC’s position that disgorgement is an equitable remedy and not a penalty, resolving a circuit split on the issue. Writing for the unanimous Court, Justice Sotomayor said that disgorgement “bears all the hallmarks of a penalty,” reasoning that it “is intended to deter, not to compensate.” The defendant in Kokesh was an investment adviser who had been ordered to disgorge approximately $35 million for allegedly misappropriating investor funds.

    The SEC routinely seeks disgorgement in FCPA enforcement actions. The Kokesh decision may lead the SEC to seek tolling agreements sooner and in more circumstances, particularly where the alleged conduct occurred over a long period of time. The decision may also impact defendants’ ability to claim insurance coverage for disgorgement because insurers might deny coverage for payment of penalties.

    SEC FCPA Enforcement Action Kokesh

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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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  • SFO Charges Additional Individual Defendant in Connection with F.H. Bertling North Sea Investigation

    The United Kingdom’s Serious Fraud Office (SFO) has reportedly charged the former chief commercial officer of F.H. Bertling Ltd. with two counts of conspiracy to make corrupt payments to assist F.H. Bertling with attaining or retaining contracts for freight forwarding services to the North Sea oil exploration project Jasmine. The former executive is the seventh individual charged, in addition to the company, with violations of section 1 of the UK Prevention of Corruption Act 1906 and section 1 of the Criminal Law Act 1977 for alleged conduct between January 2010 and May 2013 in connection with the Jasmine project.

    The charges follow on the heels of separate corruption charges against the company and other individuals related to an Angolan project. Last July, the SFO charged F.H. Bertling and seven individuals with violation of section 1 of the Prevention of Corruption Act 1906 and section 1 of the Criminal Law Act 1977 through conspiring to make corrupt payments between January 2005 and December 2006 to an agent of the Angolan state oil company, Sonangol, in order to facilitate F.H. Bertling’s freight forwarding business operations and contracts in Angola.

    FCPA Enforcement Action UK Prevention of Corruption Act UK Serious Fraud Office

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  • DOJ Issues Strict Charging and Sentencing Policy for All Federal Crimes

    On May 10, 2017, U.S. Attorney General Jeff Sessions issued a memorandum ordering all federal prosecutors, in all criminal cases, to “charge and pursue the most serious, readily provable offense,” and to “disclose to the sentencing court all facts that impact the sentencing guidelines or mandatory minimum sentences.” The new policy – which immediately rescinds Obama-era leniency policies – is likely primarily aimed at drug-related cases, but it will impact white collar and FCPA cases as well. For instance, under the policy, prosecutors may charge more defendants with money laundering or wire fraud in addition to FCPA violations, taking into account the FCPA’s relatively low five-year maximum sentences. Prosecutors seeking an exception must secure supervisory approval and document their reasoning in the case file, which may complicate plea deals. In a May 12 speech, Sessions said of the new policy: “Charging and sentencing recommendations are bedrock responsibilities of any prosecutor. And I trust our prosecutors in the field to make good judgments. They deserve to be unhandcuffed and not micro-managed from Washington.”

    DOJ Sessions

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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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