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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.

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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.

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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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  • Maryland-based Transport Logistics International Inc. enters deferred prosecution agreement for violations of FCPA antibribery provisions

    On March 13, a Maryland federal court unsealed bribery-related charges filed in January 2018 against Transport Logistics International, Inc. (“TLI”), a Maryland-based company which is part of France’s Daher Group, as well as a three-year deferred prosecution agreement filed on March 12. The government alleges that TLI conspired to violate the FCPA by arranging and paying bribes to Russian officials to obtain uranium transportation contracts between 2004 and 2014. Pursuant to the deferred prosecution agreement, TLI agreed to pay a $2 million criminal fine, adopt a compliance program, and provide periodic reporting to DOJ. According to the agreement, TLI received credit for its substantial cooperation with the investigation and for its remedial actions, including firing all employees involved in the criminal conduct.

    As we covered here, in 2015 three individuals entered into guilty pleas in this matter: Vadim Mikerin, a former Russian official based in Maryland; Daren Condrey, a former co-president of TLI; and Boris Rubizhevsky, an alleged intermediary between TLI and Mikerin. Most recently and as covered here, Mark Lambert, the other former co-president of TLI, was charged in an 11-count indictment, unsealed in January 2018, alleging numerous violations of the FCPA and conspiracy to violate the FCPA.

    DOJ FCPA Bribery

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  • Houston-based energy company sues former Venezuelan government officials for bribery related conduct related to Petroleos

    On February 16, 2018, Harvest Natural Resources and HNR Energia B.V (collectively, “Harvest”), a Houston-based energy corporation that formally dissolved in May 2017, filed suit in the Southern District of Texas against two former presidents of Venezuela’s national oil company Petroleos de Venezuela, S.A. (“PDVSA”), Rafael Dario Ramirez Carreno (“Ramirez”) and Eulogio Antonio Del Pino Diaz (“Del Pino), and others who allegedly worked for Ramirez and PDVSA. According to the complaint filed by Harvest, Venezuela’s Ministerio del Poder Popular de Petroleo y Mineria twice refused to allow Harvest to sell energy assets co-owned with PDVSA because Harvest refused to pay bribes requested by the defendants. According to Harvest, the denials forced the company to sell the same assets at a loss of $470 million. Harvest has sued the defendants alleging civil violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), the Sherman Act, the Robinson-Patman Act, and the Texas Free Enterprise and Antitrust Act.

    This suit was filed days after the DOJ unsealed charges against five former Venezuelan government officials for their involvement in a money laundering scheme at PDVSA. Previous FCPA Scorecard coverage of the ongoing DOJ and ICE-HIS investigation into bribery at Petroleos can be found here.

    DOJ Harvest Natural Resources Petroleos de Venezuela Bribery

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  • DOJ unseals charges against former Venezuelan government officials for money laundering and FCPA violations in Petroleos scheme

    On February 12, the DOJ unsealed charges against five former Venezuelan government officials for their involvement in a money laundering scheme at Venezuela’s state-owned energy company Petroleos de Venezuela (Petroleos). The five defendants—Luis Carlos De Leon Perez (De Leon), Nervis Gerardo Villalobos Cardenas (Villalobos), Cesar David Rincon Godoy (Cesar Rincon), Alejandro Isturiz-Chiesa, and Rafael Ernesto Reiter Munozare (Reiter)—are each charged with conspiracy to commit money laundering. De Leon and Villalobos are also charged with conspiracy to violate the FCPA. 

    De Leon, Villalobos, Cesar Rincon, and Reiter were arrested in Spain in October 2017 on arrest warrants based on an indictment filed in the Southern District of Texas last August. Cesar Rincon has been extradited from Spain, while the others are pending extradition. 

    The indictment alleges that the five defendants possessed significant influence within Petroleos, which permitted them to solicit PDVSA vendors for “bribes and kickbacks in exchange for providing assistance to those vendors in connection with their PDVSA business.” The Petroleos vendors included residents of the U.S. and vendors who owned U.S.-based businesses. According to the indictment, two Petroleos vendors, Roberto Enrique Rincon Fernandez and Jose Shiera-Bastidas, transferred more than $27 million to accounts in Switzerland that were connected to De Leon and Villalobos. Rincon and Shiera previously pleaded guilty in the Southern District of Texas to FCPA charges related to the bribery of Petroleos officials. 

    The charges are part of an ongoing investigation by the DOJ and ICE-HSI into bribery at Petroleos, which has resulted in charges against fifteen individuals, ten of whom have pleaded guilty. Previous FCPA Scorecard coverage of the Petroleos investigation can be found here.

    Score Card Bribery FCPA Petroleos de Venezuela DOJ Anti-Money Laundering Financial Crimes

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  • GSK responding to inquiries from SFO, DOJ, and SEC regarding its use of third party advisors in China

    In a securities filing on Wednesday, Feb. 7, U.K.-based pharmaceutical company GlaxoSmithKline PLC (“GSK”) announced that it is responding to requests for information from the DOJ and SEC regarding third-party advisors that GSK engaged in China. These requests came about after GSK, pursuant to its continuing obligation to report to the SEC on its efforts to improve compliance following its September 2016 settlement of allegations that it violated the FCPA, informed the SEC and DOJ that the SFO had sought additional information in the course of its own investigation, which began in May 2014. GSK was also investigated by Chinese authorities and, in September 2014, GSK’s Chinese subsidiary was reportedly found guilty of bribery resulting in GSK’s payment of a $491.5 million fine. 

    Previous FCPA Scorecard coverage here and here.

    DOJ SEC FCPA SFO Bribery

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  • SFO confirms opening of criminal investigation into aerospace and defense group

    On January 18, the Serious Fraud Office (“SFO”) confirmed the opening of an investigation of Chemring Group PLC (“Chemring”) and its subsidiary, Chemring Technology Solutions Limited (“CTSL”) into alleged bribery, corruption, and money laundering. Chemring, a UK-based company that designs and makes products in the aerospace and defense industries, stated that the investigation followed a voluntary report from CTSL relating to “two specific historic contracts.” According to Chemring, the first of these contracts was awarded before the company took over the business group being investigated, while the second contract occurred after the acquisition. Chemring stated that the company will fully cooperate with the SFO’s investigation and provide further updates.

    UK Serious Fraud Office Fraud Bribery Anti-Corruption Anti-Money Laundering Chemring

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  • Real estate broker and nephew of former UN Secretary-General pleads guilty to FCPA charges

    On January 5, 2018, the Department of Justice announced that Joo Hyun Bahn, also known as Dennis Bahn, pleaded guilty to charges that he tried to bribe a Qatari official in connection with a sale of a high rise building complex in Vietnam. He pleaded guilty to one count of conspiracy to violate the FCPA and one count of violating the FCPA before U.S. District Judge Edgardo Ramos of the Southern District of New York. Mr. Bahn was charged with his father Ban Ki Sang, who was an executive at the South Korean construction company Keangnam, and Malcolm Harris, an arts and fashion blogger, in December 2016. Mr. Bahn is the nephew of former UN Secretary-General Ban Ki-moon.

    In his guilty plea, Mr. Bahn admitted to joining a conspiracy to make $2.5 million in bribe payments to a Qatari official between February 2014 and May 2015 in an effort to sell the Keangnam-owned Hanoi Landmark Tower and residential buildings in Vietnam, which were worth $800 million. Mr. Bahn admitted that he and Mr. Ban agreed to pay $500,000 to a Qatari official to persuade the official to use the Qatari sovereign wealth fund to purchase the building. The $500,000 was then transferred to Mr. Harris, who posed as an agent for the foreign official, but instead of passing the payment to the foreign official, Mr. Harris double-crossed his codefendants and stole the $500,000. 

    Although the scheme involved a South Korean construction company and a Qatari foreign official, the Indictment alleged that Mr. Bahn qualified as a “domestic concern” pursuant to 15 USC 78dd-2(h)(1) because he was a lawful permanent resident of the United States and resided in New Jersey at the time. 

    Mr. Bahn faces up to five years in prison on each count. Mr. Harris previously pleaded guilty to charges of wire fraud and money laundering for his role in the scheme, and was sentenced to 42 months in prison. Mr. Ban has been charged, but not yet arrested.

    DOJ FCPA Bribery Qatari Vietnam

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