While FCPA enforcement against companies has been relatively quiet this year, despite a strong beginning to the year — the SAP case for $220 million; and the Gunvor case for $661 million — DOJ has been pushing a number of individual cases, some of which appear to be flowing from ongoing corporate investigations. 

DOJ is expected to announce a new, large corporate resolution for more than $1 billion involving RTX, (former Raytheon, Pratt & Whitney and Collins Aerospace).  But even with that resolution, corporate FCPA actions have slowed this year.  The rest of the year, however, is likely to see an increase in FCPA settlements.

Smartmatic Executives Charged in FCPA Scheme

On August 8, 2024, DOJ unsealed an indictment ion Miami, Florida, against Juan Andres Donato Bautista, Roger Alejando Pinate Martinez (Pinate), Jorge Miguel Vasquez, and Elie Moreno, for their roles in a scheme to bribe a Philippine official in connection with Smartmatic Corporation’s contracts to provide voting machines for the Philippine’s 2016 elections.

The indictment alleges that, between May 2015 and February 2018, Pinate, was a co-founder, Chief Operating Officer, and President of Smartmatic, and Vasquez, who was an executive for a Smartmatic subsidiary, conspired with others to pay bribes of approximately $1 million to Bautista, the Chairman of Commission on Elections of the Republic of the Philippines in order to obtain three separate contracts worth approximately $182,351,868 to provide thousands of voting machines to the Philippines in connection with the country’s 2016 elections for President, Vice President, and other official positions. As part of the conspiracy, the DOJ alleges that all four defendants attempted to conceal the bribes by using fraudulent contracts and sham loan agreements with various shell companies and employing coded language to refer to a slush fund used to pay the bribes.

According to the indictment, the bribes came from a slush fund created by over-invoicing the cost for each voting machine sold to the Philippines for the elections. The Smartmatic executives and Bautista also used coded language to refer to that fund, creating fraudulent contracts and sham loan agreements to justify the transfers. They laundered the funds through bank accounts across the world, including in Florida.

Julian Aires

On June 11, 2024, Julian Aires plead guilty to conspiracy to violate the FCPA’s anti-bribery provisions in connection with business dealings with South Africa Airways (SAA) as well as a contract involving Swissport and SAA.  The Aires case appears to be part of a larger investigation involving AAR Corp for FCPA violations in other countries beyond South Africa.

Julian Aires was a principal at JM International (JMI), an aircraft component services company based in the United States, and at least one other aircraft component company based in South Africa.

Between January 2016 and January 2020, Aires conspired with others to bribe South African officials in order to obtain and retain business for several aviation services companies including JMI and AAR with South African Airways Technical (SAAT), a wholly owned subsidiary of South African Airways, the state-owned airline of South Africa. The conspirators paid bribes via cash and wire transfer and disguised the bribe payments as legitimate business transactions by referring to them as “consulting fees” and by using code names for the South African officials.

Deepak Sharma

Deepak Sharma, an agent for AAR, pleaded guilty to conspiracy to violate the FCPA’s anti-bribery provisions in connection with a bribery scheme involving Nepal Airlines Corporation (“NAC”), a state-owned entity of the Nepali government.

Sharma is the former President of Integrated Solutions at AAR and appears to be currently associated with Aircraft Finance Germany. Sharma and co-conspirators to illegally benefit his company by bribing Nepali officials to win a bid to sell two Airbus A330-200 aircraft to NAC. Sharma and his co-conspirators made and received wire transfers intended, in part, as bribes for Nepali officials in connection with the NAC Transaction, using bank accounts in the United States, Ireland, and the United Arab Emirates.

Sharma and his co-conspirators attempted to disguise the wire transfers as legitimate business transactions by entering into sham agreements with closely related companies.  Some of the payments were made pursuant to sham invoices sent by Sharma. The invoices falsely referred to the bribe payments as “advances.” In total, between in or around May and August 2018, Sharma and his companies paid a portion of $2.5 million as bribes to Nepali officials. 

Also, Sharma was involved in the South African conspiracy mentioned in the Aires case above. Sharma secured competitor information from a joint venture partner which came from a government official and was used in the competitive bidding process. For example, on April 18, 2016, Sharma requested and received information on competitors’ bids and bid scoring from a senior person of the JV Partner. This information was then used information from SAAT to modify Sharma’s later bid that won the SAAT contract.