Designed for busy in-house counsel, compliance professionals, and anti-corruption lawyers, this newsletter summarizes some of the most important international anti-corruption law and enforcement developments from the past month, with links to primary resources. This month we ask: Will the new voluntary self-disclosure pilot program from the Criminal Division of the U.S. Department of Justice (DOJ) result in more foreign bribery cases? How does the UK Serious Fraud Office (SFO) intend to become the pre-eminent anti-corruption agency? In which countries are “failure to prevent” corruption offenses gaining momentum? The answers to these questions and more are here in our April 2024 Top 10.
1. DOJ Criminal Division Announces Self-Disclosure Pilot Program for Individuals
On April 15, 2024, DOJ’s Criminal Division announced a new Pilot Program on Voluntary Self-Disclosures for Individuals. Under the Pilot Program, individuals must satisfy stringent requirements to qualify for a Non-Prosecution Agreement (NPA), including voluntarily self-reporting a covered offense (such as the Foreign Corrupt Practices Act (FCPA) or the Foreign Extortion Prevention Act (FEPA)), disclosing complete and original information that was not previously known to DOJ, and repaying all proceeds of the offense, as well as full cooperation with, and substantial assistance to, DOJ’s investigation. The reporting individual cannot be the leader of the misconduct under investigation, an executive-level manager, or a domestic government official, among other limitations. These requirements impose a high bar for qualifying for an NPA and create uncertainty for individuals who are evaluating whether to self-report. The Pilot Program follows on the heels of a series of DOJ announcements regarding whistleblower incentives, including DOJ’s whistleblower rewards program, announced in March 2024, and a whistleblower program of the U.S. Attorney’s Office for the Southern District of New York, announced in January 2024. As DOJ begins to roll out the Pilot Program, companies should assess their internal reporting programs, policies, and procedures to ensure that they are fit for purpose, well known to employees, and do not improperly interfere with a whistleblower’s ability to communicate with DOJ. (For more on the Pilot Program, see our client alert.)
2. Former Ecuadorean Official Convicted for Multimillion-Dollar International Money Laundering Scheme
On April 23, 2024, DOJ announced that a federal jury in the Southern District of Florida had convicted the former Comptroller General of Ecuador, Carlos Ramon Polit Faggioni (Polit), for his role in a multimillion-dollar international bribery and money laundering scheme. Polit was indicted in March 2022. According to charging documents, Polit used his official position and influence to help a Brazil-based construction company avoid significant fines related to the company’s projects in Ecuador and received over $10 million in bribe payments in the process. Polit allegedly directed a co-conspirator to cause the bribe proceeds to “disappear” by using Florida companies registered under the names of others, often without their knowledge, and by investing in South Florida real estate. Following a two-week trial, Polit was found guilty of one count of conspiracy to commit money laundering, three counts of concealment money laundering, and two counts of engaging in transactions in criminally derived property. He faces a penalty of up to 20 years in prison on each count of money laundering and up to 10 years in prison on each count of criminally derived property.
3. Former Executive of Energy Storage and Power Delivery Company Pleads Guilty in Decade-Old Case Involving Bribery in China
On April 1, 2024, a federal judge in the Southern District of California accepted a guilty plea entered into by Alain Riedo one month earlier.[1] Riedo, a Swiss national and former executive with Maxwell Technologies S.A., pleaded guilty to one count of violating the FCPA’s books and records provision. Maxwell sold high-voltage/high-tension capacitors in several countries, including China. As alleged in the indictment, Riedo conspired with a Chinese national to pay bribes to officials of the Pinggao Group Co. Ltd., a state-owned and state-controlled manufacturer of electric-utility infrastructure in China. According to the plea agreement, invoices for sales from Maxwell to Chinese customers included a 20% markup for purported commissions to a sales agent. Riedo admitted to knowing that these payments were not actually intended as commissions and were instead paid as bribes by the sales agent to Pinggao officials. Riedo admitted to knowingly and willfully causing Maxwell’s books to disguise an extra payment of approximately $346,000 as sales expenses or commissions.
4. Spirits Producer Fully Meets Obligations Under 3-Year DPA
On April 24, 2024, a federal judge in the Northern District of Illinois granted DOJ’s unopposed motion to dismiss[2] the one-count Information charging Beam Suntory Inc. with one count of conspiracy to violate the FCPA’s anti‑bribery and accounting provisions. In its motion, DOJ stated that the company had fully complied will all of its obligations under a three-year deferred prosecution agreement (DPA). The company entered into the DPA in October 2020 to resolve allegations that its Indian subsidiary bribed Indian government officials in exchange for approving a license to bottle a line of products.
5. Luxembourg-Based Steel Pipe Producer Settles Foreign Bribery Allegations in Federal Court
On April 22, 2024, a federal judge in the Eastern District of New York approved the final settlement between the Luxembourg-based steel pipe producer, Tenaris, and a class of plaintiffs who purchased the company’s stock between May 2014 and May 2018.[3] The settlement amounted to approximately $9.5 million, or an estimated $242.35 per eligible claimant. According to the complaint, filed in December 2018, the company’s CEO knew that one of his company’s executives had paid bribes to Argentine government officials in a bid to secure favorable treatment for Tenaris and its related entities, but the company failed to disclose these payments to its shareholders. The underlying corruption scheme was known as the “notebook scandal” following the publication of detailed notebooks kept by a former Argentine public official’s driver, who had meticulously documented ten years of alleged bribe payments to high-profile politicians, including Argentina’s former president. The company resolved unrelated bribery allegations with the U.S. Securities and Exchange Commission (SEC) in June 2022 and with SEC and DOJ in 2011.
6. UK SFO Publishes Five-Year Strategy
On April 18, 2024, the SFO announced the launch of its strategy for 2024–2029, which outlines the SFO’s ambitious plans to become the “pre-eminent specialist, innovative and collaborative agency” in the fight against serious and complex fraud, bribery, and corruption. Through its strategy, the SFO seeks to fulfill four primary outcomes by 2029: (1) developing a specialized, engaged, and skilled workforce; (2) harnessing the technology and tools of a changing world; (3) combating crime effectively through intelligence, enforcement, and prevention; and (4) being a proactive, authoritative player in the global and domestic justice system. A common thread across these objectives is the desire to leverage expertise, technology, and strategic partnerships—both domestic and international—to invigorate the work of the SFO. While the strategy document largely describes the SFO’s plans in broad terms, it expressly highlights the deployment of new powers, including the “failure to prevent fraud” offense introduced by the Economic Crime and Corporate Transparency Act 2023 (ECCTA). (For more on the SFO announcement, see our client alert.)
7. Australia’s Attorney General’s Department Publishes Draft Guidance on Newly Enacted “Failure to Prevent” Bribery Law
On April 29, 2024, Australia’s Attorney General’s Department released preliminary guidance on adequate compliance procedures that companies should implement to defend themselves from a “failure to prevent” foreign bribery charge. The new corporate offense was adopted by parliament in February 2024 with the passage of the Crimes Legislation Amendment (Combatting Foreign Bribery) Bill 2023. The law requires the government to publish guidance on what constitutes “adequate procedures” to prevent foreign bribery, which can be used as a defense if a company is charged under the “failure to prevent” offense. The draft guidance tackles six key topics: (1) proportional and effective bribery-prevention controls, (2) the responsibilities of senior management, (3) risk assessments, (4) due diligence, (5) communication and training, and (6) reporting. It nonetheless emphasizes that it is not meant to serve as a checklist. Rather, the “adequacy” of a company’s procedures will be determined on a case-by-case basis by the courts. The government is presently seeking input on the draft guidance to ensure that it is fit for purpose. The consultation period closes on June 9, 2024.
8. South Africa Strengthens Corporate Anti-Corruption Legislation and Policy
On April 3, 2024, South African President Cyril Ramaphosa assented to the Judicial Matters Amendment Act of 2023. Among other measures, the Act strengthens the Prevention and Combating of Corrupt Activities Act (PRECCA), 2004 (Act No. 12 of 2004) through the addition of Section 34A, which adds a “failure to prevent corrupt activities” offense. The amendment exposes private and state-owned entities to liability if a broadly defined “associated person” commits a corruption offense in order to obtain or retain a business advantage on the entity’s behalf. Companies can avoid liability if they can demonstrate that they had in place “adequate procedures” designed to prevent associated persons from “giving, agreeing or offering to give” any form of prohibited gratification. Separately, South Africa’s National Prosecuting Authority published its corporate alternative dispute resolution (C-ADR) policy. Although C-ADR has been used in South Africa in the past, this policy provides clarity and guidance as to how companies can avoid criminal prosecution through self-reporting. Both April reforms align with recommendations made by the Judicial Commission of Inquiry into Allegations of State Capture, Corruption and Fraud in the Public Sector—commonly referred to as the Zondo Commission after its chairperson, Acting Chief Justice Raymond Zondo.
9. Swiss Federal Court Pursues Embezzlement Charges Tied to 1MBD Corruption Scandal
On April 2, 2024, two managers of oil exploration company PetroSaudi went on trial in Switzerland for commercial fraud, aggravated criminal mismanagement, and aggravated money laundering in connection with the $4.5 billion corruption scandal involving Malaysian state-owned investment and development fund, 1Malaysia Development Berhad (1MDB). The defendants are accused of syphoning $1 billion of 1MDB funds into PetroSaudi shell accounts in service of a fraudulent joint venture. They are also accused of fraudulently procuring an $830 million “Islamic Loan” from 1MDB. The Swiss Attorney General has sought a nine- and ten-year sentence for each defendant, respectively. The three-judge panel is not expected to issue a verdict for several months. (For more on 1MDB, see our July 2016, August 2016, June 2017, December 2017, May 2018, June 2018, August 2018, October 2018, February 2019, May 2019, April 2020, August 2021, September 2021, December 2021, February 2022, March 2022, March 2023 , April 2023, and December 2023 Top 10s.)
10. Former Oil Minister Arrested as Part of Corruption Crackdown in Venezuela
On April 9, 2024, Venezuela announced the arrest of Tareck El Aissami, who served as Venezuela’s Oil Minister from April 2020 until his resignation in March 2023, shortly before Venezuelan authorities began arresting individuals for corruption related to the country’s national oil company, Petróleos de Venezuela, S.A. (PDVSA), and other state-owned companies. (For more on the arrests, see our April 2023 Top 10.) According to Venezuelan authorities, El Aissami was involved in an alleged scheme that involved selling Venezuelan oil through the country’s cryptocurrency oversight agency in parallel to PDVSA. Joselit Ramírez, the former head of Venezuela’s national cryptocurrency regulator, Sunacrip, was arrested in March 2023 in connection with the alleged disappearance of $3.5 billion in oil revenues. According to Venezuelan authorities, a cooperating witness admitted to bribing officials connected to El Aissami on behalf of a foreign company to expedite crude oil shipments at steep discounts. El Aissami is reportedly facing charges of treason and misappropriation of public funds, among others.
[1] Plea Agreement, United States v. Alain Riedo, Case No. 3:13-cr-03789-JM, ECF No. 21 (S.D. Cal. Mar. 7, 2024).
[2] Motion to Dismiss, United States v. Beam Suntory Inc., Case No. 1:20-cr-00745, ECF No. 21 (N.D. Ill. Apr. 19, 2024).
[3] Memorandum & Order, In re Tenaris S.A. Securities Litigation, Case No. 18-cv-7059 (KAM) (SJB), ECF No. 124 (E.D.N.Y. Apr. 22, 2024).
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