Charles E. Duross, James M. Koukios, and Margot G. Benedict
FCPA + Global Anti-Corruption
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 in the past month, with links to primary resources. This month we ask: Which countries rose and which fell in this year’s Transparency International Corruption Perceptions Index? What new corruption laws were published in Italy and proposed in Russia? What new international bribery investigation was opened by French authorities? The answers to these questions and more are here in our January 2019 Top 10 list.
1. Transparency International Releases Annual Corruptions Perceptions Index. On January 29, 2019, Transparency International (TI)released the Corruption Perceptions Index (CPI) for 2018. The CPI, which measures the perceived levels of public-sector corruption in 180 countries and territories, provides one of the major data-points used by compliance officers, outside counsel, and enforcement officials in assessing the anti-corruption risk of doing business in particular countries. TI uses a numerical system to rate countries on a number of factors, with a higher score representing a lower level of corruption and a lower score representing a higher level of corruption. Scores range from 0 (very corrupt) to 100 (very clean). The scores ranged from 10 for Somalia, which repeated its last-place finish from last year, to 88 for Denmark, which switched places with last year’s first-place finisher, New Zealand. The United States dropped four points from last year to 71, putting it out of the top 20 cleanest countries for the first time since 2011. The average overall score was 43, with two-thirds of the countries scoring below 50, considered to be a failing score. Since 2012, 20 countries have improved their scores, while the scores for 16 others have significantly declined. As we note in our client alert examining CPI results in Asia, both China and Vietnam saw significant declines in their CPI scores since last year, while India, Indonesia, and the Philippines saw slight improvements, and five countries in the region — New Zealand, Singapore, Australia, Hong Kong, and Japan — remained in the top 20.
2. Former Bankers Arrested on FCPA Charges in Mozambique Scheme. On January 3, 2019, three former Credit Suisse bankers were arrested in London on charges of conspiracy to violate the anti-bribery and internal-controls provisions of the FCPA, as well as conspiracy to commit money-laundering, securities fraud, and wire fraud. In addition, DOJ brought money laundering and fraud charges against Mozambique’s former finance minister and a senior executive of an Abu Dhabi–based shipbuilding company. According to the indictment, which was filed in the Eastern District of New York, the bankers — Andrew Pearse, Surjan Singh, and Detelina Subeva — conspired to arrange over US$2 billion of loans to maritime projects in Mozambique while concealing details of the loans from Credit Suisse’s internal controls. The defendants are alleged to have diverted more than US$200 million of the loans, part of which was used to bribe Mozambique government officials who approved the projects. Pearse, Singh, and Subeva were released on bail, and the U.S. is currently seeking their extradition.
3. FCPA Charges Against Barbados Insurance Executives Dismissed. On January 18, 2019, a federal judge in the Eastern District of New York granted DOJ’s request to voluntarily dismiss FCPA charges against Ingrid Inniss and Alex Tasker, two former executives of Insurance Corporation of Barbados Limited (ICBL). DOJ requested dismissal of the FCPA charges in December 2018 in light of the Second Circuit’s August 2018 decision in United States v. Hoskins, which limited U.S. prosecutors’ ability to use conspiratorial liability to bring FCPA charges against non-U.S. employees of non-U.S. companies. The defendants, Barbados nationals, still face two counts of money laundering and one count of conspiracy to commit money laundering. Inniss and Tasker were initially indicted under seal on August 23, 2018, after DOJ informed ICBL that it was closing its investigation into potential FCPA violations by the company.
4. Ten-Year-Old U.S. Indictment Against a Former Thai Tourism Official and Her Daughter Dismissed. On January 3, 2019, DOJ moved to dismiss without prejudice a criminal indictment pending in the Central District of California since January 2009 against Juthamas Siriwan, the former governor of the Tourism Authority of Thailand, and Jittisopa Siriwan, Juthamas’ daughter, charging them with money laundering and conspiracy to launder money. The court granted the motion the following day. In March 2017, Juthamas and Jittisopa were sentenced to 50 and 44 years’ imprisonment, respectively, after being criminally convicted in Thailand. DOJ moved for dismissal because the Siriwans’ sentences exceeded those anticipated in the United States and because the Siriwans have been serving their sentences since March 29, 2017. In 2009, Gerald and Patricia Green, two film executives, were convicted in the Central District of California of paying US$1.8 million in bribes to the Siriwans from 2002–2007 in order to obtain Thai government contracts, including those to operate and manage the annual Bangkok International Film Festival. The Thai criminal court also ordered the Siriwans to repay the US$1.8 million. The Siriwans had successfully resisted extradition to the United States since being charged in 2009.
5. UK SFO Announces Additional Sentencings in Oil Contract Bribery Investigation. On January 11, 2019, the UK Serious Fraud Office announced that four more individuals had been sentenced for their roles in bribery schemes to secure contracts for FH Bertling. Their convictions were initially announced in November 2018. Christopher Lane and Colin Bagwell received sentences of six and nine months’ imprisonment, respectively, for their role in an alleged scheme to overcharge for freight-forwarding services provided by FH Bertling for a North Sea oil exploration project. Lane and Bagwell allegedly facilitated corrupt payments to secure a ConocoPhillips freight-forwarding contract, eventually worth over £16 million, and to ensure that ConocoPhillips would ignore inflated prices that FH Bertling charged for additional freight services. The other two individuals, Giuseppe Morreale and Stephen Emler, were sentenced to two years’ and eighteen months’ imprisonment, respectively, after pleading guilty to their involvement in the North Sea overcharging scheme, as well as separate charges of bribing officials to secure contracts in Angola. The first charges against FH Bertling and related individuals in the Angola bribery case were announced in July 2016. To date, 13 individuals have been charged in the SFO’s investigations into the company. Nine individuals have now been convicted and four have been acquitted.
6. SFO Narrows Scope of Longstanding Bribery Probe into UK-Based Engineering Company. On January 7, 2019, the SFO confirmed that it had notified several unidentified individuals that they were no longer suspects in the Rolls-Royce bribery probe. The investigation, which began over six years ago, targeted an alleged scheme by the company to pay bribes to government officials in various countries, including China, Russia, India, and Nigeria, in exchange for government contracts. In January 2017, the company agreed to a US$800 million settlement with authorities in the U.S., UK, and Brazil. Under the agreement, the company paid over US$600 million to the SFO.
7. Japan’s Olympics Chief Faces Corruption Charges in France. On January 11, 2019, French authorities revealed the formal investigation of Tsunekazu Takeda, the president of Japan’s Olympic Committee, on charges of corruption. Takeda was charged by an investigating judge on December 10, 2018, but he has publicly denied the accusations. Takeda is suspected of paying bribes to officials of the International Olympic Committee to secure Tokyo’s successful bid for the 2020 Summer Olympics. For several years, French investigators have maintained a focus on corruption in athletics and, in early 2016, they extended their investigation to include the bidding and voting process for the 2016 and 2020 Summer Olympics.
8. Malaysia Launches New Anti-Corruption Plan. On January 29, 2019, Malaysian Prime Minister Mahathir Mohamad launched a new five-year anti-corruption plan. As part of the plan, the Malaysian government will review the government-appointments system, require politicians and high-ranking civil servants to declare their assets, and introduce new laws on political funding. The plan also aims to strengthen the country’s existing anti-corruption commission. The new measures come amidst ongoing investigations and prosecutions related to allegations that approximately US$4.5 billion was diverted from 1MDB, a state fund established by Mahathir’s predecessor Najib Razak. The public controversy over 1MDB contributed to Najib’s electoral defeat in June 2018.
9. Two European Countries Take Steps to Strengthen Anti-Corruption Efforts.
10. Russia Proposes Further Limiting Corruption Laws. On January 25, 2019, the Russian Ministry of Justice proposed changing corruption laws to make certain corrupt acts exempt from punishment if the corruption was found to be “unavoidable.” Although the bill does not provide concrete examples of when this might occur, public figures and officials could be exempt from prosecution under the proposed rule if “objective circumstances” made it impossible for them to comply with corruption laws. The proposal comes in response to a two-year anti-corruption plan signed by President Putin in 2018. According to the Council of Europe, bribery in Russia increased in 2018, and Russia’s score on the 2018 Corruptions Perceptions Index (see No. 1 above) remained low, dropping another point to 28 (out of 100).
 United States v. Inniss et al., No. 1:18-cr-00134-KAM, Docket No. 29 (E.D.N.Y. Jan. 18, 2019).
 United States v. Inniss et al., No. 1:18-cr-00134-KAM, Docket No. 8 (E.D.N.Y. Aug 23, 2018).
 United States v. Siriwan et al., 2:09-cr-00081-GW, Docket No. 160 (C.D. Cal., Jan. 3, 2019).
 United States v. Siriwan et al., 2:09-cr-00081-GW, Docket No. 160 (C.D. Cal., Jan. 3, 2019).
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