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 companies resolved Foreign Corrupt Practices Act (FCPA) cases with the U.S. Department of Justice (DOJ) and Securities and Exchange Commission (SEC)? Why is DOJ touting 2024 as a “banner year” for FCPA enforcement? What are the results of China’s anti-corruption crackdown in the healthcare sector? The answers to these questions and more are here in our December 2024 Top 10.
On December 19, 2024, DOJ and SEC announced that AAR Corp. had agreed to pay over $55 million to resolve allegations that it violated the FCPA’s anti-bribery and accounting provisions. According to the agencies, between 2015 and 2020, the company, through Deepak Sharma, an executive of an AAR subsidiary, and Julian Aires, a principal of an AAR JV partner, conspired to bribe government officials to win business with two government-owned airlines, Nepal Airlines and South African Airways. The company entered into an 18-month non-prosecution agreement (NPA) with DOJ, under which it agreed to pay a penalty of approximately $26.4 million and administrative forfeiture of approximately $18.6 million. DOJ stated that the company did not receive voluntary disclosure credit because media outlets had already reported on potential irregularities in Nepal and South Africa before the self-disclosure and because an independent source reported the Nepalese conduct to DOJ 12 days before the company’s self-report, but that the self-disclosure nevertheless factored into its decision to enter into an NPA. (As we noted in our September 2023 Top 10, it appears that DOJ is reserving NPAs for cases in which DOJ believes that a company’s self-reporting does not fully meet the requirements of the Criminal Division’s Corporate Enforcement and Voluntary Self-Disclosure Policy (CEP).) The SEC order requires the company to pay approximately $29.2 million in combined disgorgement and prejudgment interest. Sharma and Aires previously pleaded guilty to related charges (see our July 2024 and August 2024 Top 10s, respectively), and Deepak also consented to the entry of an SEC order alleging that he violated the FCPA’s anti-bribery provisions, requiring him to pay approximately $54,000 in prejudgment interest, and crediting the $130,835 in forfeiture paid pursuant to his guilty plea as disgorgement.
On December 5, 2024, DOJ, in coordination with South African authorities, announced that McKinsey & Company’s South African subsidiary had agreed to resolve allegations that a now-former partner, Vikas Sagar, conspired with others outside of the firm to violate the FCPA’s anti-bribery provisions by paying bribes to officials at two South African state-owned and state-controlled companies through two other consulting firms. Sagar’s guilty plea to one count of conspiring to violate the FCPA was announced the same day. According to DOJ, Sagar—who acted alone at the company, used personal email and out-of-office meetings in furtherance of his crimes, and later wiped his computer to hide his conduct from his employer—obtained confidential information from the state-owned companies that helped his employer win consulting engagements that resulted in approximately $85 million in profit between 2012 and 2016. As part of the agreement with DOJ, filed in the Southern District of New York, the subsidiary and parent agreed to enhance their compliance programs as appropriate, but no independent monitor was imposed. DOJ agreed to credit up to one-half of the criminal penalty against amounts the company pays in connection with a simultaneously announced resolution in South Africa.
On December 17, 2024, Argentinian national Luis Fernando Vuteff was sentenced to 30 months in prison and two years of supervised release following his May 2024 guilty plea in the Southern District of Florida to one count of conspiracy to commit money laundering.[1] Vuteff and another asset manager allegedly helped launder the proceeds of a scheme to steal $1.2 billion from Venezuela’s national oil company, Petróleos de Venezuela S.A. (PDVSA), through bribery and fraud. DOJ first announced charges against Vuteff in July 2022.
DOJ’s Chief Counselor to the Assistant Attorney General for DOJ’s Criminal Division, Brent Wible, said in a December 5, 2024, speech that 2024 had been a “banner year” for DOJ’s FCPA Unit, for other Criminal Division components, and in terms of the Criminal Division’s development and implementation of corporate enforcement policy. Wible noted that in 2024, the FCPA Unit had secured six corporate resolutions with over $1.7 billion in global penalties (note that Wible’s speech was delivered before the two corporate resolutions discussed above were announced and did not account for an October 2024 declination with disgorgement) and convicted over 20 individuals. Wible stated that the FCPA Unit had demonstrated its “trial readiness” by securing trial convictions against seven individuals in foreign bribery cases since 2022, including four convictions in 2024. With respect to whistleblowers and self-reporting, Wible said that DOJ had already received FCPA-related tips under a whistleblower pilot program launched in August 2024 and had seen “steady increases in the number of [corporate] self-reports since 2021[.]” Wible also noted that DOJ will begin considering early terminations of corporate resolutions based on recent revisions to the CEP.
On December 9, 2024, a Paris court validated the December 2, 2024, Judicial Public Interest Agreement (CJIP) between the National Financial Prosecutor’s Office and the French companies Areva SA and Orano Mining SAS (Orano acquired Areva’s mining operations in 2018). A CJIP is an alternate mechanism to prosecution and does not constitute an admission of guilt. The companies allegedly bribed foreign public officials in connection with mining activities in Mongolia between 2013 and 2017. As part of the CJIP, Areva agreed to pay a €4.8 million fine, and Orano agreed to implement a new compliance program for three years under the supervision of the French Anti-Corruption Agency.
On December 3, 2024, key provisions of Ireland’s Companies (Corporate Governance, Enforcement, and Regulatory Provisions) Act 2024 became effective. Among other expansions of the power of the country’s corporate watchdog, the Corporate Enforcement Authority, the law extends the list of agencies to which the CEA can disclose information or documents seized during investigations. The Criminal Assets Bureau, which investigates and seizes assets acquired through criminal conduct, including bribery and fraud, is included on the expanded list. One Irish official commented that the Act “strengthens [Ireland’s] capability to investigate company law breaches by equipping the CEA with increased powers to investigate evidence of corporate wrongdoing . . . . These measures will equip [Irish] enforcement agencies to tackle incidences of white-collar crime and corruption and will further boost Ireland’s reputation as a well-regulated and transparent economy.”
In December 2024, the OECD Working Group on Bribery announced the results of its evaluations of implementation of the OECD Anti-Bribery Convention for Croatia, Sweden, New Zealand, and Poland. The reports favorably noted the creation of specialized police and prosecutorial divisions to investigate corruption and bribery cases (Croatia), strong protections for journalists that have led to investigations of foreign bribery based on their reporting (Sweden), legislative reforms that strengthen the country’s ability to prosecute foreign bribery (New Zealand), efforts to increase detection of corruption (Poland), and enhanced whistleblower protection frameworks in all four countries. Nevertheless, the Working Group expressed concern in some evaluations that countries were failing to rigorously enforce anti-bribery and corruption laws, resulting in a low number of prosecutions (Croatia, Sweden, and New Zealand) and that some had no national strategy to combat corruption (Poland and New Zealand). Of note, the Working Group expressed particularly strong concern with Poland’s progress in implementing certain anti-bribery reforms. The Working Group issued a separate notice highlighting Poland’s shortcomings in several key areas, including ensuring prosecutorial and judicial independence. Also in December, the OECD released Integrity Reviews of Peru and Jordan. While commending efforts by both countries to improve anti-corruption enforcement, the OECD made additional recommendations for each to improve integrity and transparency among government agencies, including by creating a decision-making body that brings together the agencies that oversee integrity, transparency, and personal data protection across the country (Peru) and improving the country’s whistleblower protection framework (Jordan).
On December 18, DOD released its annual report on Beijing’s defense strategy. The report found that in 2023, a new wave of corruption-related investigations and removals of senior leaders may have disrupted the progress of the People’s Liberation Army (PLA) toward stated 2027 modernization goals. According to the report, at least 15 high-ranking military officers and defense industry executives were dismissed from their roles between July and December 2023. Among those was China’s Minister of National Defense Li Shangfu, who was removed in October 2023 for corruption charges relating to the PLA’s weapons and acquisitions program. The report also found that the Central Commission for Discipline Inspection (CCDI), the Chinese Communist Party’s top corruption watchdog, detained at least five defense industry leaders for investigation, and that nine officials were removed from the National People’s Congress (NPC) “presumably because of their connections to corruption.” The report suggests that the corruption cases may have shaken Beijing’s confidence in its officials, but that Beijing will continue to crack down on corruption in the PLA to advance its modernization goals.
On December 22, 2024, China’s National Supervisory Commission (NSC) delivered a report detailing Beijing’s crackdown on healthcare corruption to the NPC Standing Committee, China’s top legislative body. The report is part of a trend of increased attention on corruption in China’s medical sector, including the China National Health Commission’s announcement of a year-long national crackdown on corruption in the pharmaceutical sector in July 2023, and China’s State Administration for Market Regulation’s issuance of draft compliance guidelines for healthcare companies to prevent commercial bribery risks in October 2024. According to NSC’s report, Beijing has thoroughly investigated cases in which healthcare professionals exploit medical services, misuse insurance funds, and accept kickbacks and bribes. NSC’s report found that there were 52,000 medical corruption cases filed in 2023, with 40,000 people punished and 2,634 referred for prosecution. Those investigated included mid‑level officials, hospital directors, Communist Party secretaries, and heads of medical insurance authorities. Companies involved in the medical industry in China should continue to track the development of this crackdown and consider ways to mitigate their risks.
[1] Judgment, United States v. Steinmann et al, Case No. 1:22-mj-02992-AOR (S.D. Fl. Dec. 12, 2024).