In order to provide an overview for busy in-house counsel and compliance professionals, we summarize below some of the most important international anti-corruption developments from the past month, with links to primary resources. This month we ask: Which countries brought the largest coordinated foreign bribery resolution of all time? Which countries moved up, and which moved down, in the latest Transparency International Corruption Perceptions Index? How does the UK Serious Fraud Office evaluate the effectiveness of corporate compliance programs? The answers to these questions and more are here in our January 2020 Top 10.
1. European Aircraft Manufacturer Enters Into Largest-Ever Global Foreign Bribery Resolution. On January 31, 2020, DOJ announced that Airbus SE had agreed to pay over $3.9 billion in total penalties to resolve foreign bribery allegations with authorities in the United States, France, and the UK, as well as export controls allegations in the United States. The company entered into a deferred prosecution agreement (DPA), filed in federal court in the District of Columbia, related to charges that it conspired to violate the FCPA’s anti-bribery provisions in connection with benefits provided to Chinese officials and failed to disclose political contributions, commissions, or fees in connection with the sale or export of defense articles and defense services to the armed forces of a foreign country or international organization, in violation of the Arms Export Control Act (AECA) and its implementing regulations, the International Traffic in Arms Regulations (ITAR). The company agreed to pay $2.29 billion as part of an agreement with the Parquet National Financier (PNF) in France to resolve allegations that it paid bribes to public officials and private airline executives in China and other countries and $1.09 billion as part of a DPA with the UK Serious Fraud Office (SFO) related to bribery allegations involving Ghana, Indonesia, Malaysia, Sri Lanka, and Taiwan. The U.S. portion of the resolution was approximately $592 million. According to DOJ’s press release, this is the largest global foreign bribery resolution in history.
2. Transparency International Releases Annual Corruption Perceptions Index. On January 23, 2020, Transparency International (TI) published its annual Corruption Perceptions Index (CPI) for 2019. The CPI, which measures the perceived levels of public-sector corruption in 180 countries and territories, provides one of the major data-points used by compliance officers, outside counsel, and enforcement officials in assessing the anti-corruption risk of doing business in particular countries. TI uses a numerical system to rate countries on a number of factors, with a higher score representing a lower level of corruption and a lower score representing a higher level of corruption. Scores range from 0 (very corrupt) to 100 (very clean). This year’s scores ranged from 9 for Somalia, which repeated its last-place finish from last year, to 87 for Denmark and New Zealand, which were last year’s first- and second-place finishers, respectively. With a score of 69, the United States dropped two points since last year to earn its lowest score on the CPI in eight years. Just like in 2018, the average overall score was 43, with two-thirds of the countries scoring below 50, which is considered a failing score. Since 2011, only 22 countries significantly improved their CPI scores, including Greece, Guyana, and Estonia, while the scores for 21 others have significantly declined. As we noted in our client alert examining CPI results in Asia, China (41) and Indonesia (40) both saw a slight two-point improvement on their 2018 scores of 39 and 38, respectively. In a noteworthy development, Malaysia’s score jumped from 47 in 2018 to 53 in 2019, which marks the first time since 2015 that Malaysia did not obtain a failing score. Some have attributed Malaysia’s improvement to its swift response to a number of recent corruption cases, including 1MDB.
3. SFO Releases Guidance on Evaluating Compliance Programs. On January 17, 2020, the SFO released guidance on evaluating the effectiveness of compliance programs. According to the SFO guidance, the SFO will evaluate a compliance program at the time of an offense and at the time of resolution, and when deciding whether future improvements can be made through a DPA. The effectiveness of the compliance program should be reviewed at an early point in the investigation, and should be reviewed again at various time periods to determine whether the company qualifies for a DPA. The SFO guidance stresses the importance of keeping written records of corporate compliance programs but also counsels that “a key feature of any compliance programme is that it needs to be effective and not simply a ‘paper exercise.’” The SFO guidance also states that the “Six Principles” in the Ministry of Justice’s guidance on the UK Bribery Act, published in March 2011, are a good general framework for assessing compliance programs. In other words, the SFO will assess (1) proportionate procedures, (2) top-level commitment, (3) risk assessment, (4) due diligence, (5) communication (including training), and (6) monitoring and review. This is the first such guidance to be issued by the SFO and a welcome addition to the growing body of compliance expectations published by enforcement agencies. For more on the SFO guidance, please read our client alert.
4. Former Barbados Official Convicted of Money Laundering. On January 16, 2020, DOJ announced that a federal jury in the Eastern District of New York had convicted Donville Inniss of one count of conspiracy to commit money laundering and two counts of money laundering. Inniss, a former member of the Barbados Parliament who also served as the country’s Minister of Industry, was accused of receiving bribes in exchange for renewing insurance contracts with the Insurance Corporation of Barbados Limited (ICBL). Inniss allegedly received the bribes through a U.S. bank account in the name of his friend’s dental company, located in New York. In August 2018, DOJ informed ICBL that it was closing its investigation consistent with the FCPA Corporate Enforcement Policy. Two former ICBL executives, Ingrid Innes and Alex Tasker, were also charged in connection with the same alleged bribery scheme, although DOJ moved to dismiss some of the charges against them in January 2019 in light of the Second Circuit’s August 2018 decision in United States v. Hoskins. Sentencing for Inniss has not yet been scheduled.
5. Miami-Based Businessman Pleads Guilty to Petroecuador Bribery Scheme. On January 23, 2020, DOJ announced that Armengol Alfonso Cevallos Diaz, an Ecuadorian businessman living in Miami, Florida, had pleaded guilty in the Southern District of Florida to one count of conspiring to violate the FCPA and one count of conspiring to commit money laundering in connection with an alleged $4.4 million bribery and money laundering scheme that funneled bribes to officials of Ecuador’s national oil company, Empresa Pública de Hidrocarburos del Ecuador (“Petroecuador”). Cevallos’ plea follows 12 public charges and guilty pleas against other individuals in DOJ’s ongoing investigation into bribery and money laundering involving Petroecuador. (For more on the Petroecuador prosecutions, read our April 2018, September 2018, November 2018, April 2019, October 2019, and December 2019 Top 10s.) Sentencing is scheduled for April 2020.
6. Florida Businessman Sentenced in Venezuela Oil Bribery Case. On January 8, 2020, DOJ announced that Florida businessman Juan José Hernández Comerma had been sentenced in the Southern District of Texas to four years’ imprisonment following his January 2017 guilty plea to one count of conspiracy to violate the FCPA and one count of violating the FCPA. Hernández admitted to conspiring with Abraham Jose Shiera Bastides and Roberto Enrique Rincon Fernandez to pay bribes to officials of Venezuela’s national oil company, Petroleos de Venezuela S.A. (PDVSA), including Alfonzo Eliezer Gravina Munoz, in order to win lucrative energy contracts. Shiera, Rincon, and Gravina all pleaded guilty to related charges in March 2016, June 2016, and December 2018, respectively. According to DOJ, 25 individuals have been publicly charged, and 19 have pleaded guilty, in connection with the PDVSA investigation. In addition to his prison term, Hernández was also ordered to pay a $127,000 fine and forfeit $3 million.
7. DOJ Declines to Pursue FCPA Enforcement Action Against Ride-Hailing Company. In a January 6, 2020 securities filing, Uber disclosed that DOJ had informed the company that it had closed its inquiry into potential FCPA violations in China, India, Indonesia, and Malaysia without pursuing an enforcement action. The investigation was first disclosed in August 2017.
8. Africa’s Richest Woman Faces Embezzlement and Money Laundering Charges. On January 22, 2020, Angola’s top prosecutor announced that Isabel dos Santos, the daughter of the country’s former president and reputedly the continent’s richest woman, had been formally charged with money laundering, mismanagement, and other offenses allegedly committed during her tenure as chairwoman of Sonangol, Angola’s national oil company. The announcement came just days after the International Consortium of Investigative Journalists published a detailed report analyzing more than 700,000 documents, which it called the Luanda Leaks, related to Ms. dos Santos’ businesses. According to the article, hundreds of millions of dollars in loans and contracts were directed to companies owned by dos Santos. On January 23, 2020, Angola’s attorney general requested assistance from Portugal, where dos Santos reportedly made substantial investments, in investigating the case, which involved several countries in Africa, Europe, and the Middle East.
9. China Sentences Former Interpol Chief to 13.5 Years in Prison. On January 21, 2020, a Chinese court sentenced former International Police Agency (“Interpol”) President Hongwei Meng to 13.5 years’ imprisonment. Mr. Meng, the first Chinese national to assume the presidency of the France-based international law enforcement organization, was detained by China’s Central Commission for Discipline Inspection (CCDI) and the National Supervisory Commission (NSC) in September 2018 for “suspected illegal activities.” Chinese authorities accused Meng of using his position within the Chinese Communist Party between 2005 and 2017 to receive special benefits, promotions for his wife, and more than $2 million in bribes. Meng was formally arrested and charged in April 2019 and pleaded guilty in June 2019. Meng, who was also fined approximately $290,000, said that he would not appeal his sentence.
10. SFO Wins First Conviction for Withholding Documents Requested in Bribery Investigation. On January 30, 2020, the SFO announced that, following a trial, a UK judge had found Anna Machkevitch guilty of failing to fully comply with a document request by the SFO under Section 2 of the Criminal Justice Act in connection with its bribery investigation into the Eurasian Natural Resources Company (ENRC), a Kazakh mining company co-founded by her father. Ms. Machkevitch, who is not a suspect in the ENRC investigation, is the first person to be convicted for failing to comply with a Section 2 notice. She was ordered to pay a £800 fine and a £181 victim surcharge and to cover the SFO’s legal costs.
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