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Foreign Corrupt Practices Act & Anti-Corruption

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Subscribe to our FinCrimes Update for news about the Foreign Corrupt Practices Act and related prosecutions and enforcement actions.

  • Former Guatemalan Soccer Executive and Judge Sentenced in FIFA Investigation

    On October 25, Judge Chen of the U.S. District Court for the E.D.N.Y. sentenced Hector Trujillo, the former general secretary of Guatemala’s soccer federation and a former judge, to eight months in prison and ordered restitution of $415,000 and forfeiture of $175,000. His sentence comes after a guilty plea to wire fraud and conspiracy in June 2017. Mr. Trujillo was arrested in 2015 as part of the U.S. government’s investigation into FIFA corruption. Trujillo’s sentencing marks the first individual sentenced among a group of more than 40 individuals who have been indicted or pleaded guilty since 2015.

    This sentencing comes as part of the U.S. government’s ongoing investigation into corruption in international soccer which has been ongoing. Previous FCPA Scorecard coverage of the FIFA investigation can be found here.

    FCPA Enforcement Action Anti-Corruption FIFA Fraud

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  • Deputy Attorney General Rod Rosenstein Issues Remarks on Individual Accountability for Corporate Wrongdoing

    Deputy Attorney General Rod Rosenstein recently issued remarks highlighting the importance of the DOJ’s consistency in enforcing policies “hold[ing] individuals accountable for corporate wrongdoing.” In particular, Deputy AG Rosenstein stated that the agency should focus on improving the recent track record of bringing criminal proceedings against company employees and commented that “consistency promotes fairness and enhances respect for the rule of law.”  His remarks also touched on the Yates Memo and the FCPA Pilot Program, noting the appropriateness of focusing on individual officer or director liability.

    The comments are yet another in the steady drumbeat of calls, both internal and external to the DOJ, for DOJ enforcement strategy to hold individual corporate employees accountable for FCPA violations, although how much that strategy is being implemented remains to be seen. A recent review of DOJ corporate FCPA enforcement actions notes that the last 20 such actions have lacked related criminal charges against company employees, and going back to 2008, approximately 80% of DOJ corporate FCPA enforcement actions have lacked related criminal charges against company employees.  As Deputy AG Rosenstein’s comments concluded: “When we are serious about wanting people to follow rules, it does no good merely to post them. We need to make clear our intent to enforce the rules, with sufficient vigor that people fear the consequences of violating them.”

    FCPA Enforcement Action State AG DOJ FCPA Pilot Program

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  • Bio-Rad Appeals $11 Million Verdict Awarded to FCPA Whistleblower

    Following a $55 million civil and criminal FCPA settlement by Bio-Rad, a life science research and diagnostics company, in November 2014, the company’s former General Counsel and Secretary, Sanford Wadler, filed a civil complaint against Bio-Rad and executive officers and board members alleging that he was fired for blowing the whistle on FCPA issues. In February 2017 a jury awarded Wadler a total of $11 million in punitive and compensatory damages (including double back-pay under Dodd-Frank).

    Bio-Rad recently appealed that verdict to the Ninth Circuit on the grounds that the trial court should have directed the verdict in favor of Bio-Rad because, it argues, the alleged FCPA violations were the result of Wadler’s lack of due diligence, because Wadler did not first consult the company’s compliance officers and FCPA lawyers before reporting, and because his allegations were discredited by trial witnesses. Bio-Rad also claims that the trial court wrongly excluded certain impeachment testimony, and that Wadley did not qualify as a “whistleblower” under Dodd-Frank in light of his internal reporting. 

    FCPA Enforcement Action Whistleblower FCPA Bio-Rad

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  • Florida Energy Company Owner Pleads Guilty to Conspiracy to Violate the FCPA in Venezuelan Bribery Scheme

    On October 11, the DOJ announced that Fernando Ardila Rued – a co-owner of several Florida-based energy companies – pleaded guilty to FCPA charges that he conspired to bribe foreign officials in exchange for obtaining contracts from Venezuela’s state-owned energy company, Petroleos de Venezuela S.A. (PDVSA). In his plea, Ardila admitted to conspiring with two other individuals – Abraham Jose Shiera Bastidas and Roberto Enrique Rincon Fernandez – from 2008 through 2014 to bribe PDVSA purchasing analysts through cash payments and other entertainment in order to win contracts for Shiera and Rincon’s companies. Ardila is the tenth individual who has pleaded guilty in connection with the PDVSA scheme.    

    This investigation has been a collaboration between the DOJ, ICE-HSI, and IRS-Criminal Investigation Division. Previous FCPA Scorecard coverage of the PDVSA investigation can be found here.

    Score Card Bribery FCPA DOJ Petroleos de Venezuela Financial Crimes International

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  • South Korean Earthquake Research Official Sentenced for Laundering Bribes

    On October 2, the former director of the earthquake research center of South Korea’s Institute of Geoscience and Mineral Resources, Mr. Hoen-Cheol Chi, was reportedly sentenced in U.S. federal court to 14 months in prison for laundering bribes he had received in South Korea from seismology companies. Prosecutors argued to the federal jury, which convicted Mr. Chi in July, that Mr. Chi had demanded and received more than $1 million in bribes from two seismological companies in exchange for providing them with insider information and directed some of the funds to be transferred to his personal bank account in California.

    Mr. Chi has not been charged in South Korea, and his conviction and sentencing in the United States illustrate the US DOJ’s continued focus on targeting foreign officials who receive bribes and then travel to the US or use its financial system.

    DOJ Anti-Money Laundering Bribery

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  • Additional Charges for Retired U.S. Army Colonel

    On October 4, the Department of Justice expanded the scope of its indictment against retired U.S. Army colonel Joseph Baptiste.  On August 29, Baptiste was charged with conspiracy to violate the Foreign Corrupt Practices Act after he allegedly solicited bribes from undercover agents who posed as potential investors for infrastructure projects in Haiti. The expanded charges include conspiracy to launder money and violate the Federal Travel Act. Prior FCPA Scorecard coverage of the initial indictment and the related FCPA sting operation can be found here.

    DOJ FCPA Score Card

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  • Alere Settles FCPA Violations With SEC for $13 Million

    On September 28, the SEC announced that diagnostic test manufacturer Alere Inc. had settled a variety of FCPA books and records and internal control allegations stemming from its sales practices in Africa, Asia, and Latin America, including the failure to improperly characterize and record payments made to government officials in Columbia and India. In concluding the more than two year investigation, Alere agreed to pay a civil monetary penalty of $9.2 million, and disgorgement and interest of approximately $3.8 million. As part of the settlement agreement, Alere did not admit or deny the SEC’s findings of fact. As discussed in a previous FCPA Scorecard post, the DOJ announced in March 2016 that it is also investigating the company’s foreign sales practices. That investigation is ongoing. 

    Ongoing FCPA investigations can of course have costly business implications beyond reputational damage; the ongoing FCPA investigation of Alere appears to have taken a toll, likely playing a role in the reduced price paid by Abbott Laboratories in April 2017 to acquire Alere.

    SEC Alere Inc. FCPA

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  • Telia to Pay $965 Million to DOJ and SEC to Settle Bribery Claims

    On September 21, the Swedish telecom Telia Company AB agreed to pay $965 million as a result of criminal and civil actions brought by the DOJ and SEC charging the company with paying bribes to an Uzbek government official from 2007 to 2010. Telia entered into a deferred prosecution agreement with the DOJ that required the company to pay a $548.6 million criminal penalty for violating the anti-bribery provisions of the FCPA, $274 million of which will be paid to the Swedish Prosecution Authority and credited by the DOJ. $40 million of the total criminal penalty consisted of forfeiture by Telia on behalf of its indirect subsidiary Coscom. According to the criminal information, around 2007, Telia began operating a mobile telecommunications business in Uzbekistan through Coscom, and the companies allegedly then conspired to make approximately $331 million in bribes to an Uzbek government official to expand their share of the telecommunications market. 

    On the same day, the SEC issued a cease-and-desist order finding that Telia violated the anti-bribery and internal accounting controls provisions of the FCPA and ordering the company to disgorge $457 million in illicit profits (but also agreeing to credit up to half that amount if disgorged to the Swedish Prosecution Authority). The SEC found that over the relevant time period, “Telia paid bribes to a government official in Uzbekistan in order to obtain and retain business that generated more than $2.5 billion in revenues.” It found that Telia paid the Uzbek official $330 million in bribes “funneled through payments for sham lobbying and consulting services to a front company controlled by the official.” The SEC agreed that the $40 million forfeiture to the DOJ would also offset.

    DOJ SEC Bribery FCPA Telia Uzbek Swedish Prosecution Authority

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  • Directors Plead Guilty in U.K. to Angola Bribe Scheme

    On September 15, F.H. Bertling Ltd., a logistics and shipping company, and six of its current and former directors pleaded guilty in the U.K. to charges of conspiracy to pay bribes in Angola. The trial against a seventh man charged in the conspiracy started this week in London. The U.K.’s Serious Fraud Office charged the company and the seven individuals last year with allegedly paying bribes when F.H. Bertling was seeking to obtain freight forwarding services contracts with the Angolan state oil company, Sonangol, between January 2005 and December 2006.

    UK Serious Fraud Office F.H. Bertling Ltd.

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  • Brazilian Petrochemical Company Reaches $10 Million Settlement With Investors

    On September 14, Braskem SA, a Brazilian petrochemical company, agreed to pay its U.S. investors $10 million for concealing its role in a corruption scandal involving Petrobras. The settlement resolves a 2015 lawsuit brought by U.S. investors against Braskem, which alleged the company had misled investors into believing its operations were legitimate. The settlement follows the December 2016 guilty plea by the company and its affiliated construction firm Odebrecht SA to violating the Foreign Corrupt Practices Act. Together, the companies agreed to pay $3.5 billion in a combined global settlement with U.S., Brazilian, and Swiss authorities.

    FCPA Enforcement Action Anti-Corruption Braskem SA Petrobras

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