Top 10 Anti-Corruption Developments for October 2023
Top 10 Anti-Corruption Developments for October 2023
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: Will a new policy from the U.S. Department of Justice (DOJ) encourage companies to self-disclose misconduct discovered during the merger and acquisition process? What did the Organisation for Economic Cooperation and Development’s (OECD) Working Group on Bribery have to say about Brazil’s and Canada’s foreign bribery enforcement efforts? What is the latest development in a foreign bribery case involving a U.S. Senator? The answers to these questions and more are here in our October 2023 Top 10.
On October 4, 2023, Deputy Attorney General Lisa O. Monaco announced a new Safe Harbor Policy for merger and acquisition‑related voluntary disclosures. According to the policy, if an acquiring company discovers wrongdoing while investigating an acquisition target, promptly and voluntarily discloses the misconduct during the Safe Harbor period, cooperates with DOJ, and engages in requisite, timely, and appropriate remediation, restitution, and disgorgement, then the acquiring company will receive the presumption of a declination. Voluntarily disclosed misconduct will also not count against the acquiring company in any future recidivist analysis. The “baseline” safe harbor periods for an acquiring company are (i) six months from the date of closing to report misconduct and (ii) twelve months from the date of closing to fully remediate the reported misconduct. The new policy will apply Department-wide, but each DOJ component “will tailor its application of this policy to fit their specific enforcement regime.” Little tailoring will likely be required for FCPA cases, as the new policy is essentially an extension of the merger-and-acquisition safe harbor that has existed under the Criminal Division’s FCPA Corporate Enforcement Policy (CEP) since March 2019. (For more information on the Safe Harbor policy, read our full client alert.)
On October 10, 2023, Acting Assistant Attorney General for DOJ’s Criminal Division, Nicole M. Argentieri, delivered remarks at the American Bar Association’s (“ABA’s”) 10th Annual London White Collar Crime Institute, in which she discussed the Criminal Division’s cooperation with foreign law enforcement agencies and its efforts to reward companies for self-disclosures and compliance efforts. Argentieri highlighted the “successful partnerships” between prosecutors in the DOJ FCPA Unit and other DOJ components and their foreign law enforcement partners, forged “not only by cooperating on cases, but also by working together in critical international organizations,” such as the OECD’s Working Group on Bribery. Argentieri cited the ABB and Corficolombia FCPA resolutions as recent examples of the effectiveness of international law enforcement cooperation and of the benefits of the Criminal Division’s revised Corporate Enforcement Policy and new Compensation Incentives and Clawbacks Pilot Program. Argentieri also noted that the M&A Safe Harbor Policy discussed above “builds upon an existing provision in our Criminal Division CEP that we’ve used to great effect” and cited the Safran declination as an example of how the policy will work in practice.
On October 10, 2023, Southern District of Texas Judge Kenneth M. Hoyt denied a motion to dismiss bribery-related money laundering charges against former Venezuelan Vice Minister of Energy Nervis Gerardo Villalobos Cardenes, and Javier Alvarado Ochoa, the former president of the procurement subsidiary of Venezuela’s national oil company, Petróleos de Venezuela, S.A. (PDVSA). DOJ first announced the charges against Villalobos in February 2018, and charges were added against Alvarado in September 2019. According to DOJ, the two former officials took bribes in exchange for helping vendors secure contracts and payment priority and laundered the proceeds. Citing to the February 2023 opinion by the United States Court of Appeals for the Fifth Circuit, which reversed Judge Hoyt’s earlier dismissal of money laundering charges against different defendants in the same case, Judge Hoyt held that “Alvarado’s and Villalobos[’s] claims concerning the conspiracy and money laundering statutes, and whether the Court lacks jurisdiction, are foreclosed by the law of the case.” Judge Hoyt also rejected the defendants’ argument that the charges were barred by the statute of limitations, finding that the limitations period had been extended by DOJ’s use of the Mutual Legal Assistance Treaty (MLAT) process to obtain overseas evidence.
On October 12, 2023, a grand jury sitting in the Southern District of New York returned a superseding indictment against U.S. Senator Robert Menendez, adding a charge that he conspired to violate the Foreign Agent Registration Act (FARA). In September 2023, DOJ announced that Senator Menendez and others had been charged with bribery offenses arising from an alleged scheme in which he agreed to use his official position to benefit the government of Egypt. According to the superseding indictment, public officials, including members of Congress, are prohibited by law from agreeing to be or acting as an agent of a foreign principal required to register under FARA. Nevertheless, the superseding indictment alleges Senator Menendez conspired from January 2018 through June 2022 to act as an agent of the Government of Egypt and Egyptian officials. Senator Menendez pleaded not guilty to the charge at his arraignment on October 23, 2023.
On October 12, 2023, the European Court of Human Rights (ECHR) held that two bribery convictions stemming from illegal payments made by two European companies to Iraqi officials did not violate Article 7 (no punishment without law) of the European Convention on Human Rights. Total S.A., a French energy company, and Vitol S.A., a Swiss commodities trader, were convicted in France in 2016 of bribing Iraqi officials to bypass the conditions of the UN’s “oil-for-food” program imposed after Iraq’s invasion of Kuwait. After unsuccessfully challenging the convictions in France, the two companies appealed to the ECHR, alleging the French court violated their rights because the crime for which they were convicted did not exist at the time of commission. The ECHR found otherwise, determining that the payments the companies made to Iraqi officials were illegal at the time they were made and that the companies were “well versed in the international oil business” and therefore could not have been unaware that their conduct fell within the scope of the relevant statute.
On October 26, 2023, the United Kingdom enacted the Economic Crime and Corporate Transparency Act. The new law strengthens law enforcement agencies’ investigative powers, expands the scope of criminal liability for financial crimes, and creates a new crime of corporate liability for failure to prevent fraud. The failure to prevent fraud crime would make an organization criminally liable if it does not have “reasonable” procedures in place to stop fraud from occurring, and an employee or agent commits fraud for the organization’s benefit. The failure to prevent fraud law governs corporations and partnerships that have at least two of the three following characteristics: more than 250 employees, a turnover of more than £36 million, and more than £18 million in assets. By replacing the so-called “identification doctrine,” which required prosecutors to demonstrate that the organization’s leaders directed or knew about the fraud for liability to attach, with the senior managers test, under which a corporation will be liable where a senior manager acting within the actual or apparent scope of their authority commits an enumerated crime, the new law also makes it easier for prosecutors to press charges. With fraud comprising 41% of all criminal activity in the UK, Serious Fraud Offense Director Nick Ephgrave called the law “the most significant boost” to the country’s investigative and prosecutorial abilities in over a decade. Companies based outside of the UK should be aware of this development, as the law could affect foreign companies if the victims of fraud are located in the UK or the fraudulent acts took place there. (For more information, read our full client alert.)
On October 9, 2023, SFO’s joint head of bribery, fraud, and corruption, Sara Chouraqui, stated at the ABA’s 10th Annual London White Collar Crime Institute that SFO’s new director, Nick Ephgrave, intends to recruit up to 150 new staff members in an effort to reassert the agency’s reputation. Currently, SFO carries permanent vacancies of about 20 to 25 percent, which is largely filled by agency workers. Chouraqui added that Ephgrave’s goal is to open new cases quickly. She also explained that lawyers should anticipate that SFO will revisit issued enforcement guidance and proactively engage the defense bar in the coming year.
On October 19, 2023, the OECD Working Group on Bribery announced the results of its Phase 4 evaluation of Brazil’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. The Working Group favorably noted Brazil’s sanctioning of large-scale foreign bribery schemes as part of one of the most prominent multi-jurisdictional resolutions to date involving foreign bribery allegations (Operation Car Wash a/k/a Lava Jato), its effective use of leniency agreements to sanction foreign bribery offenses, and the willingness of the Office of the Comptroller General (CGU) and the Federal Prosecution Service (MPF) to work with international enforcement agencies to combat foreign bribery. Nevertheless, the Working Group expressed concern regarding Brazil’s limited level of ongoing enforcement, inadequate statute of limitations, incomplete whistleblower framework, and perceived threats to prosecutor independence. The Working Group recommended that Brazil increase the sanctions for foreign bribery by natural persons, increase the statute of limitations to ensure enough time to investigate foreign bribery offenses, protect foreign bribery cases from potential political bias, and protect private-sector persons who report foreign bribery allegations.
On October 12, 2023, the OECD Working Group on Bribery announced the results of its Phase 4 evaluation of Canada’s implementation of the OECD Anti-Bribery Convention. The Working Group noted that Canada had undertaken important legislative reforms to enhance its foreign bribery framework in the past decade, including the introduction of Remediation Agreements, a non-trial form of resolution, in 2018, increasing the sanctions available under its foreign bribery legislation, repealing the facilitation payment exception, and introducing nationality jurisdiction for foreign bribery offenses. Nevertheless, the Working Group expressed concern that Canada’s enforcement of the foreign bribery offense remained low, with only two individuals and four companies sanctioned since the entry into force of the country’s foreign bribery legislation nearly 25 years ago. The Working Group recommended that Canada enhance whistleblower protections, clarify policies around corporate self-reporting and corporate liability, and raise awareness of the foreign bribery offense.
On October 10, 2023, David Fuhr became the permanent head of the DOJ FCPA Unit, a position he had held in an acting capacity since May 2023. In his 10 years in the FCPA Unit, Fuhr worked on several significant corporate FCPA enforcement actions and secured the trial conviction of a South Korean official for laundering bribery proceeds.
 Mem. Op. and Order, United States v. Nervis Gerardo Villalobos-Cardenas, et al., Case No. 4:17-CR-00514, ECF No. 542 (S.D. Tex. Oct. 10, 2023).
 Superseding Indictment, United States v. Robert Menendez, et al., Case No. 1:23-CR-00490, ECF No. 65 (S.D.N.Y. Oct. 12, 2023).