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: Why did two Swiss commodities companies resolve Latin American bribery allegations with the U.S. Department of Justice (DOJ)? Which DOJ component will be responsible for enforcing the new Foreign Extortion Prevention Act (FEPA)? How can Luxembourg improve its efforts to combat foreign bribery? The answers to these questions and more are here in our March 2024 Top 10.
1. Swiss Commodities Trader Pleads Guilty in Connection with Ecuador Bribery Scheme
On March 1, 2024, DOJ announced that Gunvor S.A. had pleaded guilty in the Eastern District of New York to one count of conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA). Between 2012 and 2020, the company allegedly paid more than $97 million to third-party intermediaries knowing that some portion of those funds would be used to bribe officials at the Ecuadorian Ministry of Hydrocarbons and at Ecuador’s national oil company, Empresa Publica de Hidrocarburos del Ecuador (PetroEcuador), in exchange for contracts to acquire oil products. The money was allegedly funneled through a complicated network of shell companies and offshore bank accounts, including accounts in the United States, and several meetings in furtherance of the conspiracy were allegedly held in the Miami area. The company agreed to pay a total of over $661 million, comprised of a criminal monetary penalty of approximately $374.5 million and forfeiture of approximately $287 million in profits connected to the alleged bribery scheme. According to DOJ, the fine amount represents a 25% reduction off the 30th percentile of the U.S. Sentencing Guidelines range, reflecting the company’s cooperation and remediation, but also a prior bribery scheme in Africa that was the subject of an October 2019 resolution with Swiss authorities. DOJ will credit up to one quarter of the monetary penalty each for amounts the company pays to resolve related investigations by Swiss and Ecuadorian authorities. Switzerland also announced its parallel resolution on March 1, 2024. DOJ did not impose an independent compliance monitor as part of its resolution, based on the company’s remediation and the state of its compliance program, as demonstrated, at least in part, through effectiveness testing. Former Gunvor employee Raymond Kohut pleaded guilty in April 2021 for his role in the scheme. According to DOJ’s press release, two intermediaries, Antonio Pere Ycaza and Enrique Pere Ycaza, pleaded guilty to related FCPA and money laundering charges in October 2020, and an allegedly corrupt PetroEcuador official, Nilsen Arias Sandoval, pleaded guilty to a money laundering charge in January 2022. (For more on the Petroecuador prosecutions, please see our April 2018, September 2018, November 2018, April 2019, October 2019, November 2019, December 2019, January 2020, February 2020, September 2020, and January 2021 Top 10s.)
2. Swiss Commodities Trader Pleads Guilty in Connection with Brazilian Bribery Scheme
On March 28, 2024, DOJ announced that Trafigura Beheer B.V. had pleaded guilty in the Southern District of Florida to one count of conspiracy to violate the FCPA’s anti-bribery provisions. Between 2003 and 2014, the company allegedly paid nearly $20 million in “corrupt commissions,” portions of which were used to bribe officials at Brazil’s national oil company, Petróleo Brasileiro S.A. (Petrobras), in order to secure improper advantages and to retain and obtain business in connection with the purchase and sale of oil products. The company agreed to pay a total of nearly $127 million, comprised of a criminal monetary penalty of approximately $80.5 million and forfeiture of approximately $46.5 million in profits connected to the alleged bribery scheme. DOJ will credit up to $26.8 million of the monetary penalty for any amount Trafigura pays to resolve a related investigation by Brazilian authorities. According to DOJ, the fine amount represents a 10% discount off the fifth percentile of the U.S. Sentencing Guidelines range, which accounts for the company’s cooperation and remediation, as well as its 2006 guilty plea for entry of goods by means of false statements and 2010 conviction in the Netherlands for export and environmental misconduct. The company was also indicted in Switzerland in December 2023 for a scheme to bribe Angolan government officials in exchange for ship-chartering and bunkering contracts between 2009 and 2010. DOJ did not impose an independent compliance monitor as part of its resolution, based on the company’s remediation and the state of its compliance program.
3. Waste Management Executive Charged in Conspiracy to Bribe Foreign Officials in Latin America
On March 19, 2024, DOJ announced that Mexican citizen Abraham Cigarroa Cervantes, a former finance director of the Latin American division of waste management company Stericycle, Inc., had been indicted in the Southern District of Florida on charges that he conspired to violate the FCPA’s anti-bribery and books and records provisions. From 2011 to 2016, Cigarroa and others allegedly paid over $10 million in bribes to foreign officials in Argentina, Brazil, and Mexico in order to obtain and retain business and secure advantages in connection with providing waste management services. The bribe payments, which represented a percentage of underlying contracts payments made by or owing from a government customer, were allegedly tracked in spreadsheets and disguised with code words and euphemisms. Cigarroa and others also allegedly created false books and records to conceal the bribe payments, and Cigarroa allegedly submitted and maintained falsified Sarbanes-Oxley certifications and business unit representation letters falsely attesting that the company’s books, records, and accounts were accurate. In February 2024, Mauricio Gomez Baez, former Stericycle Senior Vice President, pleaded guilty to one count of conspiracy to violate the FCPA’s anti-bribery provisions. Stericycle entered into resolutions with DOJ and SEC in April 2022, agreeing to pay $84 million in penalties, for related conduct.
4. DOJ Announces New Whistleblower Pilot Program Targeting FCPA Violations and Other Offenses
On March 7, 2024, Deputy Attorney General Lisa Monaco announced during her keynote address at the American Bar Association’s 39th National Institute on White Collar Crime that DOJ would establish a whistleblower Pilot Program, pursuant to its authority to pay awards for “information or assistance leading to civil or criminal forfeitures,” to incentivize individuals to report allegations of corporate wrongdoing to DOJ. According to Monaco, DOJ’s Pilot Program is intended to “fill gaps” by offering financial incentives to disclose misconduct in areas in which no other incentives currently exist. Monaco said that DOJ is particularly interested in reports relating to certain crimes, including FCPA cases outside the jurisdiction of the SEC, criminal abuse of the U.S. financial system, and domestic corruption cases. Monaco stated that DOJ will undertake a “90-day policy sprint” to gather information, consult with stakeholders, and design the whistleblower Pilot Program before the program is made effective later this year. DOJ’s Criminal Division, and in particular its Money Laundering and Asset Recovery Section (MLARS), will lead this information gathering effort. (For more on the Pilot Program, see our client alert.) DOJ is hoping to capitalize on the perceived success of similar whistleblower reward programs, particularly the program run by SEC (see, e.g., #8 in our November 2023 Top 10). Countries such as the UK are also considering implementing their own whistleblower award programs.
5. Foreign Extortion Prevention Act (FEPA) Prosecutions Assigned to DOJ’s FCPA Unit
On March 8, 2024, Acting Assistant Attorney General Nicole Argentieri announced that “the same attorneys who investigate and prosecute FCPA violations w[ill] also handle cases brought under FEPA [the Foreign Extortion Prevention Act].” FEPA, which became law in December 2023, effectively extends the FCPA, which applies only to bribe payers, to foreign government officials who demand or accept bribes from companies and individuals with a U.S. nexus. Argentieri also announced that the Justice Manual had been updated to reflect this assignment. We agree with Argentieri’s view that assigning FEPA to the FCPA Unit “makes sense,” as FEPA prosecutions are essentially the flip side of FCPA prosecutions. For many years, the FCPA Unit had used other laws, primarily the federal money laundering laws, to prosecute foreign officials who received bribes given to them in violation of the FCPA. (We had previously predicted that FEPA cases would be assigned to the FCPA Unit.)
6. Executives of European Aircraft Manufacturer Acquitted of Bribery Charges in the UK
On March 6, 2024, the UK Serious Fraud Office (SFO) announced that Jeffrey Cook, former managing director of former Airbus SE subsidiary GPT Special Project Management Ltd. (GPT) was found guilty of one count of misconduct in public office. Before joining GPT, Cook allegedly took £70,000 in bribes while he was employed with Britain’s Ministry of Defence and seconded to defense contractor Paradigm, which was owned by Airbus SE. Cook, as well as John Mason, a part owner of the firm that directed the payments, were acquitted of corruption charges accusing them of bribing a Saudi prince and his associates to secure business for GPT. In their successful defense, Cook and Mason argued that the British government knew and approved of the millions of pounds of payments to the Saudi royal family and other senior Saudi officials that were intended to secure the deals. In April 2021, GPT pleaded guilty to one count of corruption, contrary to Section 1 of the Prevention of Corruption Act 1906, and was ordered to pay a confiscation order of £20.6 million, a fine of £7.5 million, and the SFO’s costs of £2.2 million. In January 2020, Airbus SE agreed to pay over $3.9 billion in total penalties, the largest global foreign bribery resolution in history according to DOJ, 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, for unrelated conduct.
7. Singapore Charges Former Marine Contractor Employees for Bribing Brazilian Officials
On March 28, 2024, Wong Weng Sun and Lee Fook Kang, former executives of Jurong Shipyard Pte Ltd, a wholly owned subsidiary of Singapore-based offshore and marine contractor Sembcorp Marine (now known as Seatrium following a merger), were charged with bribing Brazilian officials to further the company’s business interests in the country. According to a joint press release from Singapore’s Corrupt Practices Investigation Bureau (CPID) and the Attorney General’s Chambers (AGC), between 2009 and 2014, the former executives paid approximately $44 million to a Brazilian middleman, Guilherme Esteves de Jesus, for the benefit of Petrobras officials, Brazilian politicians, and other Brazilian officials. Both executives were charged with five counts of conspiracy to corruptly give gratification to a Brazilian official in violation of Singapore’s Prevention of Corruption Act. Wong is additionally facing an obstruction charge for allegedly ordering two employees to remove an email containing evidence of the bribery. According to the joint press release, the Public Prosecutor is also in discussions with Seatrium on a deferred prosecution agreement.
8. South Africa Orders Subsidiary of German Software Company to Repay Funds Received through Bribery
On March 20, 2024, a Special Tribunal in South Africa ordered Systems Applications Products (South Africa) (Pty) Ltd (SAP South Africa), a subsidiary of Germany’s SAP SE, to repay 500 million rand that it had received pursuant to two software license contracts with South Africa’s national electricity company, Eskom. The order approved a settlement agreement between the company and South Africa’s Special Investigating Unit (SIU), which is responsible for recovering financial losses suffered by the state as a result of negligence or corruption and was authorized by South African President Cyril Ramaphosa to investigate allegations of corruption, malpractice, and maladministration in Eskom’s affairs. According to the SIU, the contracts were not in accordance with South African law and were entered into illegally. The SIU resolution is part of a larger resolution between South African authorities and SAP, which also entered into related FCPA resolutions with DOJ and SEC in January 2024. DOJ agreed to credit against the U.S. criminal penalty up to $55.1 million in penalties paid to South African authorities.
9. World Bank Debars Consultant for Corrupt Payments in Nigeria
In a Notice of Uncontested Sanctions Proceedings dated March 12, 2024, the World Bank’s Office of Suspension and Debarment recommended that Akuboh Victor Uneojo be debarred for at least two years and one month after he admitted to making two corrupt payments to an intermediary that were intended to be transferred to an official working on the Nigeria National Social Safety Nets Project in order to improperly influence the official’s actions in connection with the execution of an individual consultancy contract under the Project. According to the Notice, the World Bank’s investigation uncovered evidence demonstrating that Akuboh “may have felt coerced by the soliciting public official regarding the corrupt payments.” The World Bank debarment could result in Akuboh’s cross-debarment by other multilateral development banks under the April 9, 2010, Agreement for Mutual Enforcement of Debarment Decisions.
10. OECD Working Group on Bribery Urges Luxembourg to Strengthen Foreign Bribery Enforcement Efforts.
On March 15, 2024, the OECD Working Group on Bribery announced the results of its Phase 4 evaluation of Luxembourg’s implementation of the OECD Anti-Bribery Convention. All parties to the Convention are subject to a rigorous peer-review process, Phase 4 of which focuses on the evaluated country’s enforcement of the Convention and considers the country’s particular challenges and positive achievements. The Working Group found that Luxembourg has undertaken substantial legislative and institutional reforms since its last evaluation in 2011, including constitutional reforms aimed at strengthening and modernizing the status of judges and prosecutors, the adoption of a new whistleblower protection regime, the implementation of a plea‑bargaining mechanism to help facilitate the resolution of complex financial cases, and the strengthening of its ability to execute foreign-bribery-related mutual legal assistance requests. But the Working Group also found Luxembourg significantly lacking in its efforts to investigate and prosecute foreign bribery cases. The Working Group recommended, among other things, that Luxembourg devote greater attention and resources to the detection, investigation, and prosecution of foreign bribery and increase the level of fines for foreign bribery offenses.
[View source.]
