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DOJ unseals 11-count FCPA indictment against Maryland executive
In an indictment unsealed on January 5, the DOJ charged a former executive of a Maryland company with 11 criminal counts, including seven counts of violating the FCPA and one count of conspiracy to violate the FCPA. The allegations relate to an alleged scheme to bribe an official at a Maryland-based Russian energy company that is a subsidiary of a large Russian corporation, as well as the sole supplier and exporter of Russian Federation uranium and uranium enrichment services. The former executive alleged sought to improperly obtain awards of nuclear transportation contracts from the Maryland based company to his company. Several other key players in the case already have pleaded guilty, including his former business associate as well as the official. Although sentencing for a number of the parties is forthcoming, the official already has been ordered to forfeit $2.1 million following his guilty plea. The initial investigation began in 2007 as part of a joint DOE-OIG and FBI probe into the official for laundering the funds derived from the scheme into offshore accounts.
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 a real estate broker and nephew of former UN Secretary-General, 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. He was charged with his father, who was an executive at a South Korean construction company, and an arts and fashion blogger in December 2016.
In his guilty plea, the nephew 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 South Korean construction company-owned buildings in Vietnam, which were worth $800 million. The nephew admitted that he andhis father 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 the arts and fashion blogger, who posed as an agent for the foreign official, but instead of passing the payment to the foreign official, he 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 the nephew 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.
The nephew faces up to five years in prison on each count. The blogger 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. The father has been charged, but not yet arrested.
Singapore-Based Shipyard Operator Agrees to $422 Million Penalty to Resolve Foreign Bribery Case
On December 22, 2017, Singapore-based shipyard operator and shipping vessel repair company, and its wholly owned U.S. subsidiary, agreed to pay a combined total penalty of $422 million to resolve foreign bribery charges by the DOJ. Authorities in the United States, Brazil, and Singapore alleged that the companies engaged in a decade-long scheme to pay tens of millions of dollars in bribes to officials in Brazil, including those of a state-owned oil company. As part of the resolution, the company entered into a deferred prosecution agreement while its U.S. subsidiary pleaded guilty, as did a former senior member of the company’s legal department. The settlement is one of the largest FCPA enforcement penalties and also represents DOJ’s first coordinated FCPA resolution with Singapore. The settlement represents a 25 percent reduction off the bottom of the applicable U.S. Sentencing Guidelines fine range due to substantial cooperation by the companies with the investigation and the taking of remedial measures, including disciplining employees and implementing an enhanced compliance system.
Former Aircraft Manufacturer Sales Executive Pleads Guilty to Saudi Arabian Bribery
A former sales executive of a Brazilian-based aircraft manufacturer pleaded guilty on December 21 in connection with a scheme to pay bribes to a Saudi Arabian government official. The sales executive, a U.K. resident living in the United Arab Emirates, pleaded guilty to a count each of violating the FCPA, conspiracy to violate the FCPA, wire fraud, conspiracy to commit wire fraud, money laundering, conspiracy to launder money, and making a false statement. As part of his plea, he admitted that he engaged in a scheme to have the manufacturer pay bribes to a foreign official in exchange for assistance in getting an aircraft sales contract. The sales executive also admitted getting a kickback as part of the scheme and lying to law enforcement officials about the kickback.
The manufacturer previously paid $205 million to the DOJ and SEC in October 2016 to resolve related FCPA violations in Saudi Arabia, Mozambique, and the Dominican Republic.
Deputy Attorney General Rod Rosenstein Announces Expansion of FCPA Pilot Program
On November 29, Deputy Attorney General Rod Rosenstein issued remarks announcing that the DOJ’s FCPA Pilot Program will be made permanent and expanded to provide greater incentives for more companies to voluntarily disclose potential FCPA violations. The new program will be formally incorporated into the US Attorney’s Manual. These changes will include greater potential benefits offered to companies that promptly disclose suspected FCPA violations.
Rosenstein identified three components of what will be called the “FCPA Corporate Enforcement Policy.” First, companies who voluntarily disclose, fully cooperate with the DOJ’s investigation, and undertake “timely and appropriate remediation” will be entitled to a presumption that the matter will be resolved through a declination, which “may be overcome only if there are aggravating circumstances related to the nature and seriousness of the offense, or if the offender is a criminal recidivist.” Second, if the company satisfies all other requirements but there are “aggravating circumstances,” the DOJ “will recommend a 50% reduction off the low end of the Sentencing Guidelines fine range,” although “criminal recidivists may not be eligible for such credit.” And third, the policy will provide details on how the DOJ “evaluates an appropriate compliance program, which will vary depending on the size and resources of a business.”
The Pilot Program began in April 2016. It was greeted with some skepticism that the benefits of disclosure would outweigh the potential benefits, as Rosenstein noted in his remarks. Click here to view previous FCPA Scorecard coverage of the Pilot Program.
DOJ Charges Head of Organization Backed by Chinese Energy Conglomerate and Former Foreign Minister of Senegal With Bribing High-Level Officials in Chad and Uganda
On November 20, the DOJ unsealed a criminal complaint charging two people (collectively, the “Defendants”) with participating in a multi-year, multimillion-dollar scheme to bribe high-level officials in Chad and Uganda in exchange for business advantages for a Shanghai-based energy conglomerate (the “Energy Company”). One of the Defendants is the head of a non-governmental organization based in Hong Kong and Virginia that holds “Special Consultative Status” with the United Nations Economic and Social Council. The Energy NGO is funded by the Energy Company. The other Defendant is the former Foreign Minister of Senegal and operated an international consulting firm. The DOJ charged the Defendants with (i) conspiring to violate the FCPA, (ii) violating the FCPA, (iii) conspiring to commit international money laundering, and (iv) committing international money laundering. The Defendants have both been arrested and presented before Magistrates.
The DOJ alleges that the Defendants conspired to bribe African government officials on behalf of the Energy Company. Specifically, the DOJ alleges that in an effort to secure oil rights from the Chadian government, the Defendants offered a $2 million bribe to the President of Chad – and in return, the Defendants secured exclusive oil rights without competition. The Defendants allegedly wired almost a million dollars through New York’s banking system in furtherance of their scheme. One of the Defendants also allegedly provided Ugandan officials with gifts and promises to share profits derived from the Energy Company.
American Multinational Retail Corporation Sets Aside $283 Million for Potential Resolution of FCPA Allegations
On November 16, an American multinational retail corporation disclosed in an SEC filing that it has set aside $283 million for a potential resolution with DOJ and SEC of alleged FCPA violations. The investigation into possible FCPA violations in Mexico was first disclosed in the company’s December 2011 SEC filing and, in subsequent filings, the company stated that the allegations had been expanded to include possible violations in Brazil, China, and India, among others.
In its November 16 filing, the company reiterated that it has been cooperating with the DOJ and SEC in their investigations, and the discussions with these government agencies has progressed such that the company can reasonably estimate a probable loss of $283 million, although it noted that the company cannot assure that its efforts to resolve these matters will ultimately succeed as anticipated.
Click here for FCPA Scorecard’s prior coverage of this matter.
DOJ Charges Five Individuals With FCPA Violations Involving a British Luxury Car Company
On November 7, the DOJ unsealed FCPA charges against five individuals for their alleged participation in a foreign bribery scheme involving a British luxury car company and its U.S. subsidiary. Of the five individuals, one was indicted while the remaining four pleaded guilty for their roles in an alleged scheme to pay bribes to a Kazakhstan official in order to secure a supply contract for a gas pipeline from Kazakhstan to China. The charges and guilty pleas were unsealed in Ohio federal district court.
These charges follow on the heels of the company’s January 2017 settlement with DOJ in which the company agreed to a three-year deferred prosecution agreement and agreed to pay $170 million to resolve charges that it conspired to violate the anti-bribery provisions of the FCPA around the world. As part of the DOJ settlement, the company agreed to continue to cooperate fully with the DOJ’s investigation, including its investigation of individuals. The DOJ settlement comprised just a fraction of the $800 million total penalty the company agreed to pay as part of a global resolution related to the corrupt conduct.
Of the four guilty pleas, three individuals (a former executive of the company, a former employee of the company, and an executive at an international engineering consulting firm) pleaded guilty to one count of conspiracy to violate the FCPA. The fourth individual (a former senior executive of the company) also pleaded guilty to one count of violating the FCPA in addition to conspiracy. The indicted individual, a former CEO of the company's intermediary, was charged with one count of conspiracy to violate the FCPA and seven counts of violating the FCPA, along with various money laundering charges.
The DOJ’s announcement noted the “significant cooperation and assistance” from the UK SFO and Brazil law enforcement. This continues the increased trend of DOJ receiving and then highlighting cooperation efforts by its international counterparts.
Charles Cain Named New SEC FCPA Chief
After serving as Acting Chief of the SEC’s Enforcement Division’s Foreign Corrupt Practices Act Unit for more than six months, SEC veteran Charles Cain will now officially take on the position of head of the FCPA Unit. According to an SEC press release, Cain intends “to build[] upon the important work the unit has done to combat corruption and level the playing field globally.” The SEC named Cain to the Acting Chief role in April 2017 after his predecessor, Kara Brockmeyer, left the agency.
After graduating with honors from The George Washington University Law School, Cain spent two years in the private sector before joining the SEC in 1999. In addition to serving as Deputy Chief of the FCPA Unit since 2011, Cain co-authored A Resource Guide to the U.S. Foreign Corrupt Practices Act, an effort for which he received the Irving M. Pollack Award.
Life science research company appeals $11 million verdict awarded to FCPA whistleblower
Following a $55 million civil and criminal FCPA settlement by a life science research and diagnostics company in November 2014, the company’s former General Counsel and Secretary filed a civil complaint against the company and executive officers and board members alleging that he was fired for blowing the whistle on FCPA issues. In February 2017 a jury awarded the former employee a total of $11 million in punitive and compensatory damages (including double back-pay under Dodd-Frank).
The company recently appealed that verdict to the Ninth Circuit on the grounds that the trial court should have directed the verdict in favor of the company because, it argues, the alleged FCPA violations were the result of the former employee’s lack of due diligence, because he did not first consult the company’s compliance officers and FCPA lawyers before reporting, and because his allegations were discredited by trial witnesses. The company also claims that the trial court wrongly excluded certain impeachment testimony, and that he did not qualify as a “whistleblower” under Dodd-Frank in light of his internal reporting.