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  • International Financial Institution Sanctions Two French Companies for Corruption in Developing Countries

    Financial Crimes

    An international financial institution recently sanctioned two French companies for separate allegations of corruption in developing countries. On November 30, the financial institution announced that a French digital security company, was debarred for 2.5 years for “corrupt and collusive practices” related to a project that would establish a national ID system in Bangladesh. As part of its Negotiated Resolution Agreement (NRA), the company acknowledged “improper payments to a sub-contractor and collusive misconduct to obtain and modify bid specifications to narrow competition and secure the award of the contract.” The company was credited for its “extensive cooperation” with the financial institution’s investigation, including voluntarily acknowledging the misconduct, proactively conducting an internal investigation, holding individuals accountable, and taking “preliminary steps to improve its governance and compliance procedures.”

    On December 5, the financial institution separately announced that a French manufacturing company, was debarred for two years for a “corrupt practice” related to a project that would improve electricity infrastructure in the Congo. The financial institution's investigation found evidence that the company “made improper payments to an employee of a consulting company to influence a tender process.” Under the NRA, the manufacturing company’s parent company was also “conditionally non-debarred” for an 18-month probationary period. The holding company for the entities agreed to pay €6.8 million to the Congo, and the companies agreed to develop and implement a “group-wide integrity compliance program.” The holding company was credited for its “ongoing cooperation” with the financial institution's investigators, “acceptance of responsibility,” and “voluntary corrective and remedial actions.”

    Financial Crimes Sanctions Anti-Corruption

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  • German Software Company Self-Discloses Approximately $6.8 Million in Payments to Gupta Family-Related South African Entities

    Financial Crimes

    On October 26, a German multinational software corporation, announced that it has voluntarily disclosed commission payments of approximately $6.8 million to a wealthy South African family's related entities to the U.S. Department of Justice and the Securities and Exchange Commission. The voluntary disclosure in July has led to an ongoing DOJ and SEC investigation into the company's conduct. 

    The company acknowledged that between December 2014 and June 2017, contracts with two South African state-owned companies were closed with the assistance of family-related entities. The company’s internal investigation has also led to the initiation of disciplinary proceedings against three employees in South Africa. The family, which is connected to South African President Jacob Zuma, has previously denied wrongdoing associated with receiving such kickbacks. While acknowledging cooperation with the DOJ and the SEC, the company stated that it has had no interaction with South African authorities and has not decided whether the company will approach South African authorities in the future. The U.S. investigation is ongoing and the company has acknowledged that it has begun the process of sharing documents with authorities. 

    Financial Crimes SEC DOJ Anti-Corruption

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  • Former Guatemalan Soccer Executive and Judge Sentenced in Investigation

    Financial Crimes

    On October 25, Judge Chen of the U.S. District Court for the E.D.N.Y. sentenced 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. He was arrested in 2015 as part of the U.S. government’s investigation into corruption in a soccer association. His 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 investigation can be found here.

    Financial Crimes Anti-Corruption Fraud

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  • Brazilian Petrochemical Company Reaches $10 Million Settlement With Investors

    Financial Crimes

    On September 14, a Brazilian petrochemical company, agreed to pay its U.S. investors $10 million for concealing its role in a corruption scandal involving a Brazilian multinational corporation in the petroleum industry. The settlement resolves a 2015 lawsuit brought by U.S. investors against the petrochemical company, 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 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.

    Financial Crimes FCPA Anti-Corruption Braskem SA Petrobras Brazil Switzerland

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  • Swedish Prosecutor Charges Russian Sales Executive with Bribery of Azerbaijan Officials

    Financial Crimes

    On Friday, August 18, a Russian employee of a Swedish branch of a Canadian producer of aircraft and train equipment, was charged by a Swedish prosecutor with aggravated bribery. The sales executive is alleged to have bribed a public official in Azerbaijan to win a contract valued over $300 million to supply Azerbaijan with a signaling system for its railways. The executive was first detained in March 2017 and has been held in custody since that time. If convicted, he faces six years imprisonment and deportation.

    According to a March 2017 report by the Organized Crime and Corruption Reporting Project (OCCRP), an investigative reporting network spread across Europe, Africa, Asia, and Latin America established in 2006 to conduct transnational investigative reporting to expose global organized crime and corruption, the company was suspected of paying “millions of dollars in bribes to unidentified Azerbaijani officials through a shadowy company registered in the United Kingdom,” which the Swedish prosecutor has characterized as having “no employees or business” but which profited substantially in this deal by purchasing equipment from the company and selling the identical equipment to the company's Azerbaijan affiliate for a profit. According to export records reviewed by the OCCRP, the equipment was delivered directly from the company to Azerbaijan. The report identified the UK intermediary, which, according to an earlier OCCRP report is alleged to have ties to the former president of a russian railways company, and is alleged to have had similar involvement in a contract with the company and Russia.

    Financial Crimes Anti-Corruption Bribery

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  • German Multinational Chemical Company Agrees to Pay DOJ More Than $11 Million, Receives Declination of FCPA Charges

    Financial Crimes

    On Friday, June 16, the DOJ issued a declination letter to attorneys for North American affiliates of a German multinational chemical company, in which the DOJ declined prosecution and closed an investigation of the company and certain of its subsidiaries and affiliates regarding potential FCPA violations that occurred between November 2006 and December 2009. The affiliates, 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, a New Jersey-based company acquired by the affiliate companies 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, the affiliates 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 the affiliates 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 the affiliates 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 the affiliates will continue cooperating fully in any ongoing investigation of individuals.

    Financial Crimes DOJ Anti-Corruption

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  • Senators Introduce Combating Global Corruption Act of 2017

    Financial Crimes

    Senator Ben Cardin and Republican co-sponsors recently introduced a bill titled the “Combating Global Corruption Act of 2017,” which seeks “to identify and combat corruption in countries, to establish a tiered system of countries with respect to levels of corruption by their governments and their efforts to combat such corruption, and to assess United States assistance to designated countries in order to advance anti-corruption efforts in those countries and better serve United States taxpayers.”

    This bill, if enacted, would require the Secretary of State to publish annual rankings of foreign countries split up into three tiers that depend on whether those countries’ governments comply with “minimum standards for the elimination of corruption.” The introduced bill defines corruption as “the exercise of public power for private gain, including by bribery, nepotism, fraud, or embezzlement.”

    Once a country’s tier-rank is established, the bill would then require the Secretary of State, Administrator of USAID, and the Secretary of Defense to take various steps, including the creation of a “corruption risk assessment” and “corruption mitigation strategy” for U.S. foreign assistance programs; fortified anti-corruption and clawback provisions in contracts, grants and other agreements; disclosure of beneficial ownership for contractors and other participants; and mechanisms to investigate misappropriated funds.

    If passed into law, this bill would create substantial new enforcement powers to combat international corruption activities. And, unlike the current ambiguity under the FCPA regarding its applicability to state-owned or state-controlled enterprises (“SOEs”), as drafted, this bill expressly would cover SOEs. Like the FCPA, however, this bill also contains a broad national security waiver component, if the Secretary of State “certifies to the appropriate congressional committees that such waiver is important to the national security interest of the United States.”

    Financial Crimes Anti-Corruption FCPA Bribery Fraud

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  • DOJ’s Trevor McFadden Addresses Anti-Corruption, Export Controls & Sanctions Compliance Summit

    Financial Crimes

    On April 18, Acting Principal Deputy Assistant Attorney General Trevor McFadden spoke at the 10th annual Anti-Corruption, Export Controls & Sanctions Compliance Summit in Washington, D.C. According to Mr. McFadden, the Justice Department “remains committed to enforcing the FCPA and to prosecuting fraud and corruption more generally.” He emphasized the importance of company cooperation, stating that that the department considers voluntary self-disclosures and remedial efforts when making charging decisions. Mr. McFadden also stated that the department is making a “concerted effort to move corporate investigations expeditiously,” adding that FCPA investigations should be “measured in months, not years.”

    Mr. McFadden also discussed an increased prioritization of anti-corruption prosecutions around the world and stated that the DOJ will “seek to reach global resolutions that apportion penalties between the relevant jurisdictions so that companies that want to accept responsibility for misconduct are not unfairly penalized by multiple agencies.”

    Additionally, the department is assessing its FCPA Pilot Program. Last year, as part of the Program, the department began publishing information on cases it declined to prosecute due to voluntary self-disclosure, full cooperation, and comprehensive remediation. Mr. McFadden stated that the Program is “one example of an effort to provide more transparency and consistency for our corporate resolutions” and “will continue in full force.”

    Financial Crimes DOJ Anti-Corruption Export Controls Sanctions FCPA Pilot Program

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  • South Korea’s Former President Formally Indicted on Corruption Charges

    Financial Crimes

    On April 17, the former South Korean president was formally indicted on 18 charges of corruption including bribery, extortion, abuse of power, and leaking state secrets. The former president was impeached in December after months of public protests. Last month, she was removed from office and arrested.

    The corruption scandal has also implicated the former president’s longtime confidante, who is currently on trial on corruption charges. The pair is accused of coercing Korean businesses into donating $68 million to two non-profit foundations that the former president’s confidante controlled. They are both also accused of collecting or demanding $52 million in bribes from businesses, including $38 million from a Korean multinational conglomerate, $6.2 million from a retail conglomerate, and $7.8 million from a telecommunications and semiconductor conglomerate. The chairman of the retail conglomerate, was indicted on bribery charges on Monday.

    Financial Crimes FCPA Anti-Corruption Bribery

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  • Former Thailand Tourism Chief Sentenced to 50 Years for Accepting Bribes

    Financial Crimes

    On March 29, the former governor of the Tourism Authority of Thailand was reportedly sentenced in Thailand to 50 years in prison for accepting $1.8 million in bribes from 2002 to 2007 from two U.S. filmmakers in exchange for rights to organize the Bangkok International Film Festival. The former tourism chief was also ordered to forfeit the bribe money. Her daughter received a 44-year prison sentence for her own involvement. In 2009, the U.S. filmmakers, who paid the bribes, were convicted in the U.S. on charges of FCPA violations. A U.S. federal court sentenced the filmmakers to six months incarceration, three years of supervised release, and $250,000 in restitution. 

    The former tourism chief and her daughter were also indicted in the U.S. in January 2009 for the same underlying conduct. The indictment raised interesting questions about the United States pursuing corruption on the “demand side,” in light of the fact that the FCPA does not criminalize the receipt of bribes. The indictment instead alleged money laundering violations and related charges. The former tourism chief moved to dismiss the U.S. indictment based on the double jeopardy provision of the Thai-US extradition treaty. The decision on her motion was stayed, pending the outcome of the Thai prosecution.

    Financial Crimes FCPA Anti-Corruption Bribery

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