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  • Macau real estate developer sentenced for bribing UN officials

    Financial Crimes

    On May 11, Judge Vernon S. Broderick of the SDNY sentenced a Macau real estate developer to 48 months in prison and ordered him to pay a $1 million fine, $302,977 in restitution, and forfeiture of $1.5 million.  In July 2017, a jury convicted the developer of two counts of violating the FCPA, one count of paying bribes and gratuities, one count of money laundering, and two counts of conspiracy.  The conduct centered on the developer’s role in bribing UN officials in order to build a new multi-billion dollar conference center in Macau.   

    Five other defendants have been charged; four have pleaded guilty to various charges, and one passed away and the charges against him were dismissed.  Of the guilty pleas, two are awaiting sentencing.  The other two received sentences of seven months (conspiracy to defraud the United States) and 20 months (bribery).

    Prior Scorecard coverage of this matter can be viewed here.

    Financial Crimes International FCPA Bribery

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  • Brother of Honduran government official indicated for laundering bribes in New Orleans

    Financial Crimes

    On May 1, the Department of Justice announced the indictment of a Honduran national for trying to launder more than $1.3 million in bribes that had been paid to his brother, the former Executive Director of the Honduran Institute of Social Security. The bribes had been paid by two Honduran businessmen for the benefit of the Executive Director. The indictment alleges that he conspired with his brother to launder the funds through international wire transfers and the purchase of real estate in the New Orleans area. The indictment further alleges that he also used his brother’s high-ranking position to profit from lucrative Honduran government contracts and that he impeded an official proceeding by lying to the U.S. government about the source of the funds. He was arrested on the same day the indictment was announced.

     

    Financial Crimes FCPA International

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  • DOJ issues new policy against “piling on” in corporate enforcement, FCPA cases

    Financial Crimes

    On May 9, the DOJ issued a new policy to discourage “piling on” in corporate enforcement cases, including those involving the FCPA. The new policy directs the DOJ to “consider the totality of fines and penalties” being imposed by the DOJ and other law enforcement agencies on a company for the same misconduct. In a speech delivered to a New York City bar organization, Deputy Attorney General Rod Rosenstein described the new policy as encouraging “coordination among Department components and other enforcement agencies” with the aim of “avoiding unfair duplicative penalties.”

    The new policy contains four main elements. First, the DOJ should not threaten criminal prosecution solely to persuade a company to pay a larger settlement in a civil case. Second, DOJ components must coordinate with one another to achieve an overall equitable result. Third, the DOJ should coordinate with other federal, state, local, and foreign enforcement authorities. Finally, the DOJ should consider several factors, including the egregiousness of the wrongdoing and the adequacy of the company’s cooperation with the DOJ, in determining whether multiple penalties serve the interests of justice in a particular case.

    Rosenstein specifically noted in his address that the DOJ’s “FCPA Unit [had recently] announced its first coordinated resolution with . . . Singapore.” See FCPA Scorecard postThe new policy does not prohibit the DOJ from considering additional remedies in “appropriate circumstances.” 

     

    Financial Crimes FCPA DOJ

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  • Outdoor advertising company discloses potential FCPA violations

    Financial Crimes

    On April 30, one of the world’s largest outdoor advertising companies, disclosed that it had self-reported potential FCPA violations to the SEC and DOJ. The San Antonio-based company had previously disclosed that Chinese police were investigating “several employees” of its subsidiary for the misappropriation of funds in China. A related internal investigation purportedly found that three unauthorized bank accounts were opened in the name of the subsidiary and “certain transactions were recorded therein.” In the most recent disclosure, the company newly reported that: (i) “discrepancies” related to the misappropriation resulted in more than $10 million in “accounting errors”; (ii) it determined that there was a “material weakness” in the subsidiary’s internal controls over financial reporting, namely “falsification of bank statements and other supporting documentation used to complete bank reconciliations,” “collusion,” and “circumvention of controls”; and (iii) these issues “could implicate the books and records, internal controls and anti-bribery provisions” of the FCPA, making “possible . . . monetary penalties and other sanctions.” The company said it would cooperate with any investigation by the SEC or DOJ.

    Financial Crimes DOJ SEC FCPA

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  • Japanese electronics corporation settles parallel FCPA actions for $280 million

    Financial Crimes

    On April 30, a DOJ deferred prosecution agreement and SEC settlement with Japan-based electronics corporation and a subsidiary were announced, with the company agreeing to pay $280 million in total. The resolutions related to the company’s U.S.-based subsidiary, and allegations that senior management of the subsidary orchestrated a bribery scheme to help secure over $700 million in business from a state-owned airline, in which the subsidary paid a Middle East government official nearly $900,000 for a “purported consulting position, which required little to no work,” and concealed the payment “through a third-party vendor that provided unrelated services to [the subsidary].” The subsidary is then alleged to have falsely recorded the payments in its books and records, as well as similar payments made to other purported consultants and sales agents in Asia.

    Under the DPA with the subsidary, they agreed to pay the DOJ a $137.4 million criminal penalty for knowing and willful violations of the FCPA’s accounting provisions. The DOJ gave the subsidary a 20 percent discount off the low end of the U.S. Sentencing Guidelines fine range because of its cooperation and remediation, which, although untimely in certain respects, did include causing several senior executives who were either involved in or aware of the misconduct to be separated from [the subsidary] or [the company].” However, because many of the company's remediation efforts were “more recent, and therefore have not been tested,” the deferred prosecution agreement subjects the company to two years of scrutiny by an independent compliance monitor, followed by a year of self-reporting. The SEC‘s simultaneous settlement included violations of the anti-bribery as well as accounting provisions, and the payment of $143 million to the SEC.

    As FCPA Scorecard previously reported, the company disclosed the investigations in February 2017, though they were first reported as early as 2013.

    Financial Crimes DOJ SEC DPA FCPA

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  • DOJ declines to prosecute commercial data and analytics firm, SEC issues $9 million fine for FCPA violations in China

    Financial Crimes

    On April 23, a commercial data and analytics firm secured a declination letter from the DOJ regarding FCPA violations stating that, “consistent with the FCPA Corporate Enforcement Policy,” the DOJ would be declining to bring criminal charges against the company. The firm simultaneously agreed to settle with the SEC regarding books and records and internal controls violations regarding the same conduct, and pay a total of $9 million, including a $2 million civil penalty and $6 million of disgorgement. The firm had self-disclosed payments made by two Chinese subsidiaries through third party agents. One of the subsidiaries, part of a joint venture with a Chinese company, made payments to Chinese government officials to acquire non-public financial statement information on Chinese entities. The other subsidiary made improper payments both to obtain specific business and to acquire non-public personal data. The SEC noted that there were pre-acquisition concerns regarding the subsidiaries, but the firm failed to take appropriate action to stop the payments or the false entries, which continued for several years after the acquisition.

    This is the first instance we are aware of a company receiving a full declination from the DOJ under the new policy. The policy, which grew out of the FCPA Pilot Program, states that when a company voluntarily self-discloses, fully cooperates, and timely and appropriately remediates, there will be a presumption that the DOJ will issue a declination. The firm's declination letter notes the company’s self-identification and disclosure, thorough investigation, and full cooperation, including identifying all individuals involved in the misconduct. The DOJ also cited the company’s “full remediation,” in part by terminating 11 employees, including senior employees, and reducing compensation and other forms of discipline.

    Financial Crimes DOJ FCPA FCPA Pilot Program SEC

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  • Former Venezuelan official pleads guilty in bribery scheme

    Financial Crimes

    The DOJ announced on April 19, that a former Venezuelan official had pleaded guilty to one count of conspiracy to commit money laundering. The charge arose from the former official’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 a procurement subsidiary of a Venezuelan state-owned energy company, he had solicited and accepted bribes. The judge entered a personal money judgment of $7,033,504.71. As a government official receiving the bribes, he 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 previous cases.  

    For prior coverage of the company's enforcement actions, please see here.

    Financial Crimes DOJ Bribery FCPA Anti-Money Laundering

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  • Aruban telecom official pleads guilty to money laundering conspiracy involving FCPA violations

    Financial Crimes

    An Aruban telecom official pleaded guilty to money laundering charges in connection with a scheme to arrange and receive corrupt payments to influence the awarding of contracts in Aruba. The DOJ’s press release describes the company as an Aruban state-owned company. According to his plea agreement, a Dutch citizen living in Florida operated a money laundering conspiracy between 2005 and 2016 in his position as the company’s product manager. An individual who owned several Florida-based telecommunications companies, previously pleaded guilty to paying bribes to the official and his wife.

    The official admitted that he conspired with the individual and others to transmit funds from Florida and elsewhere in the United States to Aruba and Panama with the intent to promote a wire fraud scheme and a corrupt scheme that violated the FCPA. The official was promised and received bribes from individuals and companies located in the United States and abroad in exchange for using his position at the company to award lucrative mobile phone and accessory contracts. The official also admitted to providing favored vendors with confidential company information in exchange for the more than $1.3 million in corrupt payments.

    The company filed a civil complaint against the official and other parties on March 3 in U.S. District Court for the Southern District of Florida, which contains a few points of note. First, the company describes itself in the complaint as a privatized company, whereas the DOJ’s press release called it an instrumentality of the Aruban government. Second, the complaint states that the company became aware of some of the official's alleged activities via the Panama Papers, the 2016 leak of over 11 million documents from Panamanian law firm and financial services provider Mossack Fonseca.

    Financial Crimes DOJ FCPA Anti-Money Laundering

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  • FCPA class action against Brazilian aerospace firm dismissed

    A class action against a 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 the firm 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 the firm’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 the firm’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. The firm 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.

    DOJ SEC FCPA Class Action Bribery

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  • Former media executive pleads guilty to bribing UN official

    Financial Crimes

    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. The citizen 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 her payment of $500,000 to the former president in April 2013 in exchange for receiving a diplomatic posting within the government of Antigua, where the former president previously served as a UN representative. She is just the most recent in a line of other individuals who have faced FCPA repercussions for bribes paid to the former president (who died in 2016), including a Chinese real estate businessman, who was found guilty of paying the fromer president and another individual bribes worth at least $1 million, and a former head of a New York-based foundation who also pleaded guilty to paying the former president bribes in excess of $800,000. As part of the citizen's plea, she 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 her were likely bolstered by the string of preceding bribery cases involving similar payments to the former president that likewise resulted in a guilty pleas and verdicts.

    Financial Crimes Bribery FCPA

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