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: What did the acting head of the U.S. Department of Justice’s Criminal Division have to say about the pace of FCPA enforcement in 2021? Which Swiss bank resolved soccer-related bribery allegations? Which publicly traded companies received DOJ declinations for foreign bribery allegations related to China and Brazil, respectively? The answers to these questions and more are here in our May 2021 Top 10 list.
1. Swiss Bank Resolves Money Laundering Allegations Connected to FIFA Bribery. On May 27, 2021, the U.S. Department of Justice (DOJ) announced that Swiss bank Julius Baer & Co. Ltd., had entered into a three-year deferred prosecution agreement (DPA) in the Eastern District of New York relating to the laundering of bribes allegedly paid to officials with the Fédération Internationale de Football Association (FIFA) and other soccer federations, between February 2013 and May 2015. As part of the DPA, the bank agreed to pay a criminal penalty of $79 million, comprising a $43 million criminal fine and $36 million in forfeiture. According to the DPA, the bank admitted it conspired to launder through the United States $36 million in bribes offered to soccer officials by sports marketing companies in exchange for broadcasting rights to soccer matches. The DPA cited compliance program failures as having contributed to the money laundering offense. The bank received a five-percent discount off its criminal fine for remediating its anti-money laundering compliance program. Jorge Luis Arzuaga, a bank employee responsible for the money laundering effort, pleaded guilty in June 2017 for his role in the conspiracy and was sentenced to three years’ probation.
2. Former Bolivian Officials Charged with Laundering Bribes Related to a Bolivian Ministry of Defense Contract. On May 26, 2021, DOJ announced that Arturo Carlos Murillo Prijic and Sergio Rodrigo Mendez Mendizabal had each been charged in the Southern District of Florida with one count of conspiracy to commit money laundering for their roles in an alleged bribery and money laundering scheme involving a Bolivian government contract. Three U.S. citizens, Luis Berkman, Bryan Berkman, and Philip Lichtenfeld, were also charged in the same complaint. Murillo, the former minister of the government of Bolivia, and Mendez, the former chief of staff of the ministry of government of Bolivia, are accused of receiving $602,000 in bribes from the three U.S citizens, in exchange for awarding a $5.6 million contract with the Bolivian Ministry of Defense for the supply of tear gas and other non-lethal equipment to Berkman’s Florida-based company. According to the complaint, the bribery scheme ran from November 2019 to April 2020, utilizing bank accounts in Florida and Bolivia.
3. Former Chadian Diplomats to the U.S. Charged with Laundering Bribe Payments from Canadian Startup. On May 24, 2021, DOJ announced that Mahamoud Adam Bechir, the Republic of Chad’s former ambassador to the United States and Canada, and Youssouf Hamid Takane, Chad’s former deputy chief of mission for the United States, had been charged in federal court in the District of Columbia with conspiring to launder $2 million in bribes from a Canadian startup energy company, in exchange for a promise to assist the company in obtaining oil rights in Chad. The indictment also charges Naeem Tyab, a founding shareholder and former director of the startup, and Bechir’s wife, Nouracham Bechir Niam, with Foreign Corrupt Practices Act (FCPA) and money laundering charges. Tyab allegedly arranged to pay the bribe to Niam via a sham consulting contract and issued shares to her, Takane’s wife, and a third, unnamed Chadian individual as part of the bribery scheme, which allegedly took place between August 2009 and July 2014. The FCPA charges are premised on territorial jurisdiction (15 U.S.C. § 78dd-3), and the indictment cites meetings and other activities that took place in Washington, D.C., in furtherance of the alleged bribery scheme. DOJ filed a forfeiture complaint against the Canadian company, Griffiths Energy, in June 2015. According to the DOJ press release, Tyab was arrested and pleaded guilty to one count of conspiring to violate the FCPA in February and April 2019, respectively, another reminder that much of the work of DOJ’s FCPA Unit takes place outside of the public view (see also #8 below).
4. Two Austrian Bankers Charged in Connection with Foreign Bribery and Tax Evasion Scheme. On May 25, 2021, DOJ announced that Austrian nationals Peter Weinzierl and Alexander Waldstein had been indicted in the Eastern District of New York on four counts of money laundering originating from their role in an alleged scheme to launder hundreds of millions of dollars through the U.S. financial system on behalf of Odebrecht S.A. Weinzierl and Waldstein had served as the CEO and officer, respectively, of an Austrian bank and were both board members of an Antiguan bank. According to the indictment, over a 10-year span, the bankers used fraudulent transactions, sham agreements, and shell corporations to launder more than $170 million from bank accounts in New York, enabling the Brazilian multinational to pay bribes to public officials in multiple countries and to avoid paying taxes in Brazil. The bankers allegedly made millions of dollars in fees for their role in the scheme.
5. Sentencings in Petróleos de Venezuela S.A. (PDVSA) Investigations. On May 5, 2021, former PDVSA Executive Director of Financial Planning Abraham Edgardo Ortega, who pleaded guilty in October 2018 in the Southern District of Florida to one count of conspiracy to commit money laundering in connection with an alleged bribery and embezzlement scheme, was sentenced to 28 months’ imprisonment. According to the sentencing judge, Ortega received a significant sentencing reduction because he was the first Venezuelan official to cooperate in connection with the Miami-based PDVSA investigation. On May 6, 2021, Rafael Pinto-Franceschi and Franz Muller-Huber were sentenced in the Southern District of Texas to 24 months’ and 20 months’ imprisonment, respectively, in the Houston-based PDVSA investigation. DOJ announced in February 2019 that the two had been indicted on FCPA, wire fraud, and money laundering charges for allegedly bribing three PDVSA officials to win contracts for their company, a PDVSA supplier. On the same day, former PDVSA procurement officials Jose Orlando Camacho and Ivan Alexis Guedez were sentenced in the Southern District of Texas to 12 months’ and 18 months’ imprisonment, respectively. DOJ announced Camacho’s and Guedez’s guilty pleas in September 2018 and October 2018.
6. New Jersey Business Executive Sentenced for Bribing Korean Public Official. On May 19, 2021, Deckwon Kang was sentenced in the District of New Jersey to three years’ probation following his December 2020 guilty plea to one count of violating the FCPA’s anti-bribery provisions. At sentencing, Kang and DOJ argued that a probationary sentence was appropriate because Kang had already served two years in prison for paying a $100,000 bribe to a high-ranking official of the Korean Ministry of Defense’s Defense Acquisition Program Administration (DAPA) in exchange for awarding contracts to two New Jersey companies.
7. DOJ Closes FCPA Investigations of U.S.-Based Foodservice Packaging Company and Brazil-Based Food Company. In May 6, 2021 securities filings, Pactiv Evergreen and BRF S.A. disclosed that DOJ had informed the companies that it had decided to close its investigations without any action against the companies. In August 2020, Pactiv Evergreen disclosed potential FCPA issues involving gift card practices in China. The company is still waiting on a decision from the Securities and Exchange Commission (SEC). In February 2021, BRF disclosed that the SEC Enforcement Division had decided against recommending an enforcement action against the company related to allegations of bribery of food-sanitation inspectors and other misconduct in Brazil.
8. Acting Assistant Attorney General for DOJ’s Criminal Division Calls Foreign Bribery Cases a “Priority.” On June 2, 2021, at a conference in New York City, Acting Assistant Attorney General Nicholas McQuaid addressed concerns that FCPA investigations at DOJ were slowing down. McQuaid acknowledged that the COVID-19 pandemic created enforcement “challenges” but countered that DOJ entered into more FCPA-focused corporate resolutions in 2020 than in the three preceding years. McQuaid warned that any appearance of a lull in enforcement was merely the result of looking at a “snapshot in time” and that there would be “more [FCPA enforcement] to come in 2021.” McQuaid noted that DOJ was not “waiting around” for companies to self-report possible FCPA violations, and that prosecutors are, and have been, keen to use other means of investigating possible FCPA-related misconduct, including by using “proactive and innovative” data mining to generate leads, using their law enforcement sources and cooperators, and tapping into the Department’s wide-ranging cross-border law enforcement partnerships.
9. Four Former Employees of Sweden-Based Networking and Telecom Company Charged with Bribery in Sweden, While Company Resolves Case with Competitor. On May 26, 2021, a district court in Sweden charged four Swedish citizens with bribery in relation to the years-long bribery investigation involving Telefonaktiebolaget LM Ericsson (Ericsson). In December 2019, the company agreed to pay approximately $1.06 billion to DOJ and the SEC to resolve FCPA violations arising out of alleged conduct in China, Djibouti, Indonesia, Kuwait, Saudi Arabia, and Vietnam. The four former employees were alleged to have paid bribes of approximately $2.1 billion between 2010 and 2014 to government officials in Djibouti in an attempt to win a contract with the government-controlled Djibouti Telecom S.A. On May 12, 2021, Ericcson reached an agreement with competitor Nokia to pay the latter damages of $97 million following the long-running investigations into its FCPA-related conduct in order to avoid “lengthy and complex litigation.”
10. Former South African President Pleads Not Guilty to Corruption Charges. On May 26, 2021, trial began against Jacob Zuma, South Africa’s former president, on charges of corruption, fraud, racketeering, and money laundering. Zuma pleaded not guilty to the charges, claiming that the charges were politically motivated, and the trial was adjourned to July 19, 2021. According to prosecutors, as Zuma rose from a provincial politician to South Africa’s deputy president from 1995 through 2005, he accepted nearly 800 separate bribes from various sources, including annual payments of $40,000 from French arms manufacturer Thales in exchange for his providing “political protection” against an investigation into a $2 billion arms deal the company signed with South Africa in 1999. Zuma was first implicated in this deal in 2005, causing him to lose his position as deputy president, but the charges were dropped and reinstated numerous times, and Zuma served as South Africa’s president from 2009 until he was forced out in 2018 amid other corruption-related scandals.