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: Which company and its bank subsidiary were the subject of the first coordinated foreign bribery resolution between Colombian authorities and the U.S. Department of Justice (DOJ) and U.S. Securities and Exchange Commission (SEC)? What guidance did DOJ provide about paying for foreign official travel? Which major corruption investigations did UK’s Serious Fraud Office (SFO) close? The answers to these questions and more are here in our August 2023 Top 10.
1. Colombian Conglomerate and Bank Subsidiary Resolve Colombia FCPA Allegations
On August 10, 2023, DOJ and SEC, in coordination with Colombian authorities, announced parallel resolutions with Colombian conglomerate, Grupo Aval Acciones y Valores S.A. (“Grupo Aval”) and its bank subsidiary, Corporación Financiera Colombiana S.A. (“Corficolombiana”), related to allegations that the companies bribed Colombian officials to win a contract to construct and operate a highway toll road in Colombia. Between 2012 and 2015, Corficolombiana allegedly caused other entities to enter into fictitious contracts with companies associated with intermediaries that passed bribe payments along to officials in Colombia’s executive and legislative branches and to an executive at a state-owned infrastructure agency. According to the SEC Order, this conduct constituted a violation of the FCPA’s anti-bribery provisions by Corficolombiana and a violation of the FCPA’s accounting provisions by Grupo Aval, whose shares are traded on the New York Stock Exchange. The companies agreed to pay SEC over $40 million in disgorgement and prejudgment interest. Corficolombiana entered a three-year DPA with DOJ in the District of Maryland, agreeing to pay a $40.6 million criminal penalty for conspiring to violate the FCPA’s anti-bribery provisions. According to the DPA, up to half of the criminal penalty imposed on Corficolombiana may be credited against payments to Colombia’s Superintendencia de Industria y Comercio for violations of Colombian law related to the same conduct. According to the DOJ press release, this is the first coordinated FCPA settlement with Colombian authorities.
2. DOJ Publishes Opinion Procedure Release on Sponsored Travel for Foreign Officials
On August 14, 2023, DOJ published Opinion Procedure Release No. 23-1, stating that it did not intend to take enforcement action against a U.S. child welfare agency that sought to pay for travel expenses for foreign government officials visiting families in the United States that adopted children from their country. As part of its request, the agency represented that the foreign country’s officials were required to visit families who adopted children from that country to ensure “the success of the adoptions.” The agency proposed paying for certain travel expenses incurred by the foreign officials for this purpose, including economy class airfare, domestic lodging at a mid-range hotel, local transportation, and meals. Interestingly, the agency also proposed organizing and paying for certain recreation costs (e.g., a museum visit or city tour), not exceeding $100 per person—although not expressly stated, DOJ likely found that such events were relevant to assessing the adopted children’s experiences in their new cities or that such events represented a small portion of the overall itinerary. The agency represented that it would not compensate the foreign officials for their visit, would not provide them with cash or a daily stipend, and would make payments directly to the airlines, hotels, and other providers. Consistent with its approach in Opinion Procedure Release Nos. 11-01 and 12-02, DOJ concluded that the proposed expenses did not reflect corrupt intent and appeared to be reasonable and bona fide expenses directly related to “the promotion, demonstration or explanation of [the agency’s] products or services.” Release No. 23-1 was DOJ’s first Opinion Procedure Release since January 2022.
3. European Aircraft Manufacturer’s FCPA DPA Ends
On August 10, 2023, the United States District Court for the District of Columbia granted DOJ’s motion to dismiss FCPA charges against Airbus SE. In its motion, DOJ stated that the company had met all of its obligations under its three-year DPA, including full cooperation with DOJ, implementation of an enhanced compliance program and procedures, and satisfaction of the terms of the provisions regarding self-reporting, and had made timely payment of the approximately $527 million criminal monetary penalty remaining after the company received credits for payments made to other enforcement agencies.[1] When it was announced in January 2020, DOJ stated that this was the largest global foreign bribery resolution in history.
4. Oil Trader Charged in Houston for Alleged Mexico Bribery and Money Laundering Scheme
On August 21, 2023, DOJ announced that former Vitol Inc. employee, Javier Aguilar, had been charged in the Southern District of Texas for violating the FCPA, the Travel Act, and the federal money laundering statutes in connection with an alleged scheme to pay more than $600,000 in bribes to Mexican officials to help win contracts with PEMEX Procurement International, the procurement subsidiary of Mexico’s state-owned oil company, Petróleos Mexicanos (“PEMEX”). Aguilar and his co-conspirators allegedly caused the bribes to be paid through a series of transactions and shell companies to promote the bribery scheme and conceal the proceeds. Aguilar was originally charged in the Eastern District of New York for the same conduct in December 2022, but the charges were dismissed in May 2023 after prosecutors conceded that New York was not an appropriate venue. At that time, we noted, “Given that the FCPA charges were dismissed without prejudice, they can still be brought in a district in which venue is proper, for example the Southern District of Texas.” In December 2020, Vitol paid over $135 million to resolve civil and criminal FCPA charges for conduct in Brazil, Mexico, and Ecuador.
5. Oil and Gas Trader Charged in Connecticut for Alleged Brazil Bribery and Money Laundering Scheme
On August 29, 2023, DOJ announced that a federal grand jury in the District of Connecticut had returned a superseding indictment charging Gary Oztemel, a Connecticut-based oil and gas trader, for his role in an alleged scheme to pay bribes to Brazilian officials to win contracts with Brazil’s state-owned and state-controlled energy company, Petróleo Brasileiro S.A. (“Petrobras”). According to the superseding indictment, from 2010 through 2018, Oztemel, his brother Glenn Oztemel, Brazil-based intermediary Eduardo Innecco, and others agreed to pay bribes to Petrobras officials for their assistance in helping two Connecticut-based trading companies and Oil Trade & Transport S.A. (OTT), a company controlled by Oztemel, obtain improper business advantages in trades with Petrobras. Oztemel allegedly used his company Petro Trade to conceal the proceeds of the scheme. DOJ announced the original indictment against Glenn Oztemel and Innecco in February 2023.
6. U.S. Navy Servicemember Charged for Receiving Bribes to Transmit Military Information to the People’s Republic of China
On August 3, 2023, DOJ announced that a U.S. Navy servicemember, Petty Officer Wenheng (Thomas) Zhao, had been arrested for allegedly receiving bribes in exchange for transmitting sensitive U.S. military information to a Chinese intelligence officer who was posing as a maritime economic researcher. The indictment, filed in the Central District of California, alleges that beginning in August 2021 and continuing through at least May 2023, Zhao, who worked at Naval Base Ventura County in Port Hueneme, received approximately $14,866 in exchange for, among other things, sending the Chinese military officer non-public and controlled operational plans for a large-scale U.S. military exercise in the Indo-Pacific Region and photographs and electrical diagrams and blueprints for a radar system stationed on a U.S. military base in Okinawa, Japan. Zhao was charged with conspiring to violate, and violating, the domestic bribery statute, 18 U.S.C. § 201, and faces up to 20 years’ imprisonment.
7. U.S. Manufacturing Conglomerate Resolves Travel-Related FCPA Allegations with SEC
On August 25, 2023, SEC announced that 3M Company had agreed to pay more than $6.5 million in disgorgement, prejudgment interest, and civil penalties to resolve allegations that it violated the FCPA’s accounting provisions. According to the SEC order, the company funded overseas trips for Chinese government officials that allegedly had tourism as the primary purpose. The company neither admitted nor denied SEC’s findings.
8. UK Serious Fraud Office Closes Major Mining Industry Corruption Investigations
On August 24, 2023, media outlets reported that the UK’s SFO had closed major corruption investigations, including its investigations of Kazakh mining group, ENRC Ltd, and Anglo-Australian mining group, Rio Tinto. SFO updated its website on the same day with notices addressing the investigations’ closures. With respect to ENRC, SFO concluded that, following its latest review in August 2023, it had “insufficient admissible evidence to prosecute.” SFO formally opened its decade-long investigation into ENRC in 2013, focusing on alleged fraud, bribery, and corruption surrounding mining contracts in the Democratic Republic of the Congo between 2009 and 2012. SFO’s investigation into ENRC has been mired in controversy over the years. In May 2022, an English court largely cleared SFO of wrongdoing after ENRC sued the agency over its handling of the probe, although SFO still faces civil proceedings relating to ENRC’s claims. With respect to Rio Tinto, SFO concluded that, following its latest review in August 2023, it “is not in the public interest to proceed with a prosecution in the UK.” The SFO notice indicated that the investigation being conducted by the Australian Federal Police (AFP) is still open and that SFO continues to support the AFP. SFO formally opened its investigation into Rio Tinto in 2017, focusing on alleged corruption in the Republic of Guinea. In March 2023, SEC announced that Rio Tinto had agreed to pay a $15 million civil penalty to resolve alleged FCPA violations relating to a third-party consultant in Guinea.
9. UK Brings Bribery Charges Against Current and Former African Officials
UK Brings Bribery Charges Against Chief of Staff to Madagascar’s President. On August 14, 2023, the UK National Crime Agency (NCA) announced that Romy Andrianarisoa, the Chief of Staff to the President of Madagascar, and Philippe Tabuteau, a French national described as Andrianarisoa’s associate, had been charged with bribery offenses. According to the NCA, a UK mining company alleged that Andrianarisoa and Tabuteau had asked for approximately £225,000 and a 5% equity stake in exchange for approving operating licenses in Madagascar. The two individuals were arrested during a meeting in London in which they allegedly solicited a bribe. Andrianarisoa was terminated as Chief of Staff shortly after the announcement.
UK Brings Bribery Charges Against Former Nigerian Oil Minister. On August 22, 2023, the NCA announced that former Nigerian Minister of Petroleum Resources, Diezani Alison-Madueke, had been charged with bribery offenses. Madueke, who served as minister between 2010 and 2015, and as the president of the Organization of the Petroleum Exporting Countries (OPEC) between 2014 and 2015, allegedly accepted bribes in return for awarding multimillion-pound oil and gas contracts. The NCA alleges that Alison-Madueke received at least £100,000 in cash, chauffeur-driven cars, flights on private jets, luxury holidays for her family, payment of private school fees, and the use of multiple London properties. The NCA said it froze significant assets relating to the alleged crimes and that it provided evidence to DOJ to recover assets totaling $53.1 million linked to Madueke’s alleged corruption. DOJ announced this recovery in March 2023 in connection with its resolution of two civil cases brought under the Kleptocracy Asset Recovery Initiative.
10. Colombia Charges Multiple Individuals in Connection with Brazil Corruption Scandal
On August 17, 2023, Colombian prosecutors announced that they had charged an additional 22 individuals, including former executives, third parties, and lobbyists, in connection with the globe-spanning corruption scandal involving a multinational Brazilian construction company. On the same date, it was reported that 60 people, including dozens of former government officials, had been charged in connection with the same case. According to Colombian prosecutors, over the course of eight years, the Brazilian construction company paid over $19.5 million in bribes to Colombian public officials in connection with execution of the Ruta del Sol project.
[1] United States v. Airbus SE, No. 1:20-cr-21, Docket No. 14 (D.D.C. July 28, 2023).
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