Top 10 International Anti-Corruption Developments for December 2022
Top 10 International Anti-Corruption Developments for December 2022
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 resolved bribery investigations with the United States, South African, and Swiss authorities? Which company did the U.S. Department of Justice (DOJ) agree not to prosecute for alleged Foreign Corrupt Practices Act (FCPA) violations? What was the Organisation for Economic Co-operation and Development (OECD)’s assessment of Poland and Finland’s foreign bribery records? The answers to these questions and more are here in our December 2022 Top 10.
On December 2, 2022, DOJ and the U.S. Securities and Exchange Commission (SEC) announced that ABB Ltd. agreed to pay approximately $462 million to resolve bribery investigations by United States, South African, Swiss, and German authorities. The company and two of its subsidiaries admitted to paying, through multiple subcontractors, more than $37 million between 2014 and 2017 to bribe a high-ranking government official at Eskom Holdings Limited, an electricity provider owned by the South African government, to secure a $160 million contract to provide cabling and installation work at Eskom’s Kusile Power Station. DOJ entered into a three-year deferred prosecution agreement (DPA) with the parent company for conspiring to violate the FCPA’s anti-bribery and books-and-records provisions, while two subsidiaries, ABB Management Services Ltd. (Switzerland) and ABB South Africa (Pty) Ltd. (South Africa), each pleaded guilty to one count of conspiracy to violate the FCPA’s anti-bribery provisions, all in the Eastern District of Virginia. Notably, despite DOJ’s recent policy statements about cracking down on corporate recidivism and imposing independent compliance monitorships (see our October 2021 and September 2022 Top 10s for more), the DOJ agreements required ABB, which previously entered into FCPA resolutions with DOJ and SEC in 2004 and 2010, to enter into a DPA with a self-reporting requirement (albeit one that requires the company to have quarterly meetings with DOJ). Among other things, ABB appears to have avoided a guilty plea and monitor because of its “demonstrated intent” to disclose the misconduct to DOJ (although press reports beat the company to DOJ’s doorstep), its “extraordinary cooperation,” and, perhaps most importantly for the monitorship question, “the Company’s remediation and the state of its compliance program[.]” DOJ agreed to credit up to $157.5 million paid to South African authorities, up to $11 million paid to Swiss authorities, and up to $11 million paid to German authorities against the $315 million criminal monetary penalty, which included a 25% reduction off the mid-point between the middle and high end of the applicable fine range to reflect the company’s prior criminal history. The SEC order alleged that the parent issuer violated the FCPA’s anti-bribery, internal-accounting-controls, and books-and-records provisions. SEC imposed a $75 million civil monetary penalty but agreed to credit more than $72 million in disgorgement for profits the company already returned to South African authorities.
In a December 21, 2022, declination letter, DOJ stated that it would not prosecute Safran S.A. for bribes allegedly paid by its subsidiaries in China. According to DOJ, two of the company’s subsidiaries, U.S.-based Monogram Systems and German-based Evac GmbH, paid bribes to a Chinese consultant closely related to a senior government official in order to receive lucrative train lavatory contracts from 1999 until 2015. The company discovered the alleged misconduct while conducting post-acquisition due diligence, terminated the remaining employee involved, withheld deferred compensation of another employee, and promptly disclosed its findings to DOJ. Among other things, DOJ based its decision to not prosecute the company on the company’s full and proactive cooperation, its voluntary self-disclosure, and the fact that the company was the successor-in-interest to its acquired subsidiaries. As part of the declination, DOJ required the company to disgorge $17.2 million in profits for Monogram Systems’ role in the alleged bribery scheme but stated that it would defer to German authorities regarding penalties against the company due to Evac GmbH’s role in the alleged bribery scheme. The Safran declination with disgorgement was only the second such resolution in 2022 (see our March 2022 Top 10 for more on the first), but that is a steep increase from the prior two years, when DOJ only entered into one declination with disgorgement combined.
On December 19, 2022, DOJ and SEC announced that Honeywell International Inc. and a U.S. subsidiary, Honeywell UOP, agreed to pay more than $160 million to resolve bribery investigations by United States and Brazilian authorities. This settlement relates to approximately $4 million in bribe paid, through a third-party sales agent, between 2010 and 2014 to a high-ranking executive at Brazil’s national oil company, Petróleo Brasileiro S.A (Petrobras), in order to obtain a $425 million contract to design and build an oil refinery in Brazil. DOJ entered into a three-year DPA with the subsidiary in the Southern District of Texas for conspiring to violate the FCPA’s anti-bribery provisions, while the SEC order alleged violations of the FCPA’s anti-bribery, internal-accounting-controls, and books-and-records provisions by the parent company.
On December 14, 2022, Ericsson released a statement that it had agreed with DOJ and SEC to extend the term of the company’s independent compliance monitor for an additional year, to June 2024. The company disclosed earlier this year that DOJ accused it of breaching its December 2019 DPA by failing to disclose compliance failures in its Iraq business. The company announced that it identified payments to intermediaries and the use of alternate transport routes in connection with circumventing customs in Iraq at a time when militant and terrorist organizations, such as the Islamic State, controlled large parts of the country.
On December 1, 2022, DOJ announced that two Marshallese nationals, Cary Yan and Gina Zhou, the heads of a New York-based NGO, had each pleaded guilty in the Southern District of New York to one count of conspiracy to violate the FCPA’s anti-bribery provisions. The charges, first announced in September 2022, related to an alleged multi-year scheme in which tens of thousands of dollars of bribes were paid to elected officials in the Republic of the Marshall Islands in exchange for passing legislation that would benefit Yan and Zhou’s businesses. DOJ alleges that Yan and Zhou used their New York NGO, including the headquarters in Manhattan, to meet and communicate with officials in connection with the scheme. They each face a maximum penalty of five years in prison.
On December 15, 2022, DOJ announced that Claudia Patricia Díaz Guillén, former National Treasurer of Venezuela, and her spouse, Adrian Jose Velasquez Figueroa, had been convicted of conspiring to commit money laundering and money laundering by a federal jury in the Southern District of Florida due to their roles in an international bribery scheme. Evidence presented at trial showed that Raul Gorrin Belisario, Venezuelan billionaire and co-conspirator, paid more than $100 million in bribes to Díaz and Velazquez using cash concealed in cardboard boxes and international wire transfers to Swiss bank accounts in exchange for access to Venezuelan National Treasury bonds at advantageous exchange rates. Díaz and Velazquez subsequently laundered the proceeds through U.S. financial institutions, purchasing multiple private jets and funding their chic fashion line headquartered in south Florida. DOJ first announced charges against Díaz in December 2020, and she was extradited from Spain to the United States to stand trial in May 2022. In July 2022, Díaz lost her pre-trial motion to dismiss the charges against her. Díaz and Velazquez are scheduled for sentencing on February 21, 2023. Gorrin, against whom charges were first announced in November 2018, currently remains at large in Venezuela.
On December 2, 2022, a superseding indictment was filed in the Eastern District of New York against Javier Aguilar, a former oil and commodities trader at Vitol Inc. DOJ first announced FCPA and money laundering conspiracy charges against Aguilar in September 2020, alleging that he arranged for the payment of $870,000 in bribes to Ecuadorian officials to help Vitol win a $300 million oil contract. The superseding indictment includes new FCPA conspiracy and substantive charges and alleges that Aguilar facilitated the payment of over $600,000 in bribes to employees of the procurement subsidiary of Mexico’s national oil company, Petroleos Mexicanos (PemEx), for information to assist Vitol in securing a hydrocarbon ethane contract. Some of the bribe money was allegedly delivered in the United States.
On December 19, 2022, Brazil’s Attorney General’s office (AGU) and Comptroller General of the Union (CGU) announced a joint resolution with Keppel Offshore & Marine regarding a former employee’s bribe payments in Brazil. In December 2017, the company and its United States subsidiary paid more than $422 million in a global resolution with authorities in the United States, Singapore, and Brazil to settle allegations that it bribed Brazilian officials between 2001 and 2014 to win 13 contracts with Petrobras. Under the terms of the current leniency agreement, the company agreed to pay approximately $65 million in fines to the Brazilian Federal Treasury and Petrobras, resolving CGU’s administrative enforcement actions against the company as well as several of its entities. Additionally, the company pledged to improve its compliance policies, receiving credit from both AGU and CGU for its extensive cooperation and remediation in response to the investigation.
On December 15, 2022, the OECD Working Group on Bribery announced the results of its Phase 4 evaluation of Poland’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. According to the Working Group, “Poland needs to urgently address serious deficiencies in its fight against foreign bribery that have been highlighted by the OECD Working Group on Bribery since 2007.” The Working Group expressed concern that Poland has never investigated or prosecuted any company for foreign bribery and has only convicted one individual for foreign bribery, in 2012. On the positive side, the Working Group noted that Poland has well‑developed institutions, including the Central Anti-Corruption Bureau and the General Inspector of Financial Information, in addition to a well-used Central Register of Actual Beneficiaries, all of which could help increase foreign bribery enforcement.
On December 15, 2022, the Working Group released a statement announcing its intentions to send a high-level mission to Helsinki if Finland did not report tangible progress in enforcing its foreign bribery laws. In its March 2017 Phase 4 report on Finland, the Working Group expressed significant concerns that Finnish courts were applying onerous evidentiary standards to prove foreign bribery violations, resulting in a series of acquittals between 2013 and 2016. In 2021, Finland commissioned an independent study to review these decisions and conduct a benchmark assessment of the evidentiary requirements for the foreign bribery offenses in other Working Group member countries. The comprehensive study was published in February 2022 and recommended significant revisions to the foreign bribery offense. The Working Group expressed disappointment that, even after the study was released, Finland has yet to take any steps to consider its conclusions or to give any indication as to when they will be implemented. The Working Group expressed further concern that Finland had failed to investigate or prosecute any foreign bribery cases since the Phase 4 report. The Working Group urged Finland to remove any deficiencies impeding effective enforcement of its foreign bribery laws and to report to the Working Group with a concrete plan by June 2023.