Charles E. Duross, James M. Koukios, Mary G. Kaiser, and Gerardo Gomez Galvis
FCPA + Anti-Corruption, Public Companies Counseling + Compliance, Securities Enforcement, and Investigations + White Collar Defense
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 was the last corporate FCPA enforcement action of 2017? How did the first FIFA jury trial end? What anti-corruption policy statements were made by the United States, the United Kingdom, and the People’s Republic of China? The answers to these questions and more are here in our December 2017 Top Ten list.
1. Singapore-Based Oil Rig Builder Resolves Brazilian Bribery Allegations. On December 22, 2017, the U.S. Department of Justice (DOJ) announced that Keppel Offshore & Marine Ltd. and its U.S. subsidiary, Keppel Offshore & Marine USA Inc., had agreed to resolve allegations that they had paid over $55 million in bribes to Brazilian officials between 2001 and 2014 in order to win 13 contracts with Petrobras, Brazil’s state-owned oil company, and another Brazilian entity. According to the allegations, the bribes were paid to an intermediary consulting company that made payments for the benefit of the Brazilian officials and the Brazilian political party. The parent company entered into a deferred prosecution agreement (DPA) with DOJ, while the U.S. subsidiary agreed to plead guilty to conspiring to violate the FCPA’s anti-bribery provisions. DOJ also announced that the resolution had been coordinated with Singaporean and Brazilian authorities, for a total combined penalty of $422 million. This is the first coordinated FCPA resolution with Singapore and the most recent of several coordinated resolutions with Brazil.
2. Former Aerospace Executive Pleads Guilty to FCPA Charges. On December 21, 2017, Colin Steven, a former vice president of sales for the Brazilian aerospace company Embraer, pled guilty to charges that he participated in a scheme to pay $1.5 million in bribes to an official at Saudi Aramco, Saudi Arabia’s state-owned oil company. Steven, a U.K. citizen residing in the U.A.E., admitted that he engaged in a scheme to pay bribes to a foreign official in exchange for assistance in getting an aircraft sales contract. Steven also admitted that he retained a kickback as part of the scheme and lied to law enforcement about the kickback. The guilty plea follows the execution of an October 2016 DPA between DOJ and Embraer, under which the company agreed to pay $107 million in penalties to DOJ as part of a $205 million global resolution to investigations by DOJ, the Securities and Exchange Commission (SEC), and Brazilian authorities. Steven is scheduled to be sentenced on June 21, 2018.
3. Former Oil Supply Company Employees Sentenced to Twelve Months’ Imprisonment for Fraud in Illegal Kickback Scheme. On December 21, 2017, Franklin Marsan and Eduardo Betancourt—two former executives of HMT LLC, a Texas-based company that manufactured and supplied products for the petroleum, oil, and gas industries—were sentenced to 12 months and a day in prison following their February 2016 guilty pleas to charges of conspiracy to commit wire fraud. According to their plea agreements, Marsan and Betancourt ran HMT’s Latin American operations and admitted that, from 2008 until 2011, they obtained at least $150,000 in kickbacks from third-party sales agents’ commissions received in connection with sales of the company’s products in Latin America, which they actively concealed from the company. As part of their plea agreements, Marsan and Betancourt agreed to pay restitution to their former employer. In September 2016, HMT obtained a “declination with disgorgement” from DOJ, agreeing to disgorge over $2.7 million associated with alleged misconduct in Venezuela and China.
4. Former Engineering Company Executive Extradited to U.S. After Six Years as a Fugitive. On December 22, 2017, Eberhard Reichert, a former executive at Siemens AG, pled not guilty to charges that he participated in a scheme to bribe senior Argentine officials. Reichert, a German citizen, was arrested in Croatia in September 2017, almost six years after being charged in the Southern District of New York with taking part of a bribery scheme to win a $1 billion contract with the Argentine government to produce national identity cards. The charges relate to Siemens’ 2008 agreement to pay over $1.6 billion to resolve wide-ranging bribery investigations in the U.S. and Germany that included a guilty plea to FCPA violations by the Argentine subsidiary. Reichert was released on a $500,000 bond and is scheduled for trial on July 16, 2018, before U.S. District Judge Denise Cote.
5. Mixed Verdict in First FIFA Trial. On December 22, 2017, Juan Angel Napout, the former top soccer official of South America, and Jose Maria Marin, the former top soccer official of Brazil, were convicted in the Eastern District of New York following the first jury trial in the FIFA racketeering investigation. On December 26, 2017, Manuel Burga, the former president of the Peruvian soccer federation, was acquitted of racketeering conspiracy by the same jury. Trial had begun in November 2017. The three men had been arrested in 2015 and accused of taking millions of dollars in bribes in exchange for influencing hosting rights for the World Cup, other major tournaments, and lucrative media rights. More than forty defendants have been charged in the case, and more than half have pleaded guilty.
6. Trump Administration Reaffirms Fight Against International Corruption as Top Priority. On December 18, 2017, the White House released the first National Security Strategy paper of President Trump’s administration, detailing the administration’s top foreign policy priorities. Among five “Priority Actions,” the paper pledges that the U.S. will “continue to target corrupt foreign officials and work with countries to improve their ability to fight corruption. . . .” The paper characterizes corruption as a threat to American companies’ ability to compete fairly abroad and also asserts that corruption and weak government allow terrorists and criminal networks to prosper. Anti-corruption measures are listed as one of several “economic tools” the U.S. will use “to deter, coerce, and constrain adversaries.”
7. U.S. Attorney General Calls for Greater Cooperation in International Criminal Cases. On December 4, 2017, Attorney General Jeff Sessions called on investigators and prosecutors from foreign countries to increase cooperation in international criminal cases. Speaking to the Global Forum on Asset Recovery in Washington, D.C., Sessions emphasized the transnational nature of criminal activity, stating, “Criminals are not bound by border. Bribes paid to an official in West Africa can be spent on a yacht in Miami.” According to Sessions, DOJ has increased staffing in its Office of International Affairs and is devoting more resources to reviewing and executing Mutual Legal Assistant Treaties (MLATs). Sessions noted that, while the U.S. is willing to do its part, other countries must also step up their efforts, including by sharing information and properly evaluating extradition requests. Sessions specifically highlighted the foreign law enforcement assistance DOJ received in recovering the proceeds of alleged corruption in connection with the 1MDB investigation (see our June 2017 Top Ten for more).
8. United Kingdom Sets Course for Long-Term Anti-Corruption Strategy. In December 2017, the United Kingdom released a five-year strategy framework for tackling domestic and foreign bribery and announced the creation of a new economic crime center tasked with coordinating the country’s response to economic crimes.
9. China Issues Warnings to Government Officials and State-Owned Enterprises. In December 2017, China’s corruption watchdog announced that government officials who attempt to conceal corruption will be targeted and that state-owned enterprises (SOEs) must prioritize fighting overseas corruption.
10. Oil Companies and Executives to Stand Trial in Italy over Nigeria Deal. Royal Dutch Shell and Eni, as well as several former employees from both companies, are set to face trial in Milan in March 2018, after answering charges on December 20, 2017. Italian prosecutors allege that Shell and Eni paid bribes to Nigerian officials to secure the rights to an oil field that holds nearly a quarter of Nigeria’s oil reserves. The $1.3 billion deal has been under investigation by officials in Italy, the Netherlands, and Nigeria since 2014. The companies were charged by the Nigerian Economic and Financial Crimes Commission in March 2017. In a statement, Shell said it does not believe there is a case against the company or its former employees. Eni similarly denied allegations against the company and individual employees.
Podcast Highlights: James Koukios’ insights on select Top Tens
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