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On February 6, the U.K. SFO announced that a former sales executive, David Lufkin, of an oil-services company, Petrofac PLC, had pleaded guilty in the U.K. to 11 counts of bribery regarding payments made in exchange for winning oil-services contracts in Iraq and Saudi Arabia. Lufkin – a British citizen and the former global head of sales for a subsidiary of Petrofac – pleaded guilty to participating in payments of more than $6 million to agents to win contracts worth more than $4 billion in Iraq and Saudi Arabia. The SFO’s investigation of Petrofac regarding suspected bribery and money laundering, which was announced in May 2017, is ongoing, but no other officers or employees are currently charged.
On Friday, August 18, a Russian employee of Bombardier Transportation AB, a Swedish branch of Bombardier, the Canadian producer of aircraft and train equipment, was charged by a Swedish prosecutor with aggravated bribery. Evgeny Pavlov, a sales executive, is alleged to have bribed a public official in Azerbaijan to win a contract valued over $300 million to supply Azerbaijan with a signaling system for its railways. Pavlov was first detained in March 2017 and has been held in custody since that time. If convicted, he faces six years imprisonment and deportation.
According to a March 2017 report by the Organized Crime and Corruption Reporting Project (OCCRP), an investigative reporting network spread across Europe, Africa, Asia, and Latin America established in 2006 to conduct transnational investigative reporting to expose global organized crime and corruption, Bombardier Transportation AB was suspected of paying “millions of dollars in bribes to unidentified Azerbaijani officials through a shadowy company registered in the United Kingdom,” which the Swedish prosecutor has characterized as having “no employees or business” but which profited substantially in this deal by purchasing equipment from Bombardier Transportation AB and selling the identical equipment to Bombardier’s Azerbaijan affiliate for a profit. According to export records reviewed by the OCCRP, the equipment was delivered directly from Bombardier Transportation AB to Azerbaijan. The report identified the UK intermediary as Multiserv Overseas Ltd., which, according to an earlier OCCRP report is alleged to have ties to Vladimir Yakunin, the former president of Russian Railways, and is alleged to have had similar involvement in a Bombardier contract with Russia.
On December 2, 2015 the Sweett Group admitted to violating Section 7 of the U.K.s Bribery Act of 2010 failure to prevent bribery regarding its conduct in the Middle East. According to the Sweett Group, the underlying conduct was related to alleged bribery from 2009 to 2011 involving a former employee located in Dubai. While the SFO has not yet announced specifics associated with the conduct or any penalties that may be imposed, it previously announced the opening of its investigation into Sweett Groups activities in the United Arab Emirates and elsewhere. This investigation appeared to have been triggered by a 2013 Wall Street Journal article that reported allegations of bribery involving the construction of a hospital in Morocco. According to the WSJ, a bribe was offered to a United Arab Emirates officials personal foundation in order to secure the design work contract for the $100 million project.
Transparency International UK Releases Discussion Paper on the Recovery of Corrupt Assets in the U.K.
In May 2015, Transparency International UK ("TI-UK") released Empowering the UK to Recover Corrupt Assets: Unexplained Wealth Orders and other new approaches to illicit enrichment and asset recovery, a discussion paper that addresses the ongoing problem of the laundering of corrupt wealth through the U.K. According to TI-UK, a large amount of corrupt wealth, stolen from around the world, is invested in the U.K. Very few suspicious transactions and assets related to corruption, however, have been frozen by the British government. TI-UK states that in 2014 alone, U.K. law enforcement authorities were able to act on only seven reports of suspicious financial transactions identified as possibly linked to international corruption. After assessing the various asset recovery methods available to U.K. law enforcement authorities, TI-UK recommends that they be given the power to serve Unexplained Wealth Orders (UWO), a civil asset recovery tool used by law enforcement authorities in Ireland, Australia, and Columbia. Suspects issued an UWO would be required to establish that suspicious U.K. assets or transactions had legitimate and legal sources. An UWO could be issued without the government first alleging a crime against the suspect. A refusal to respond to an UWO or an inadequate response could be used by law enforcement authorities to facilitate a civil recovery process against the asset. TI-UK believes that this new power would allow U.K. enforcement authorities to begin acting on corrupt assets immediately and addresses what the organization believes is the most significant weakness in the U.K.'s asset recovery approach, "the over reliance on a conviction in the origin state."
On May 27, a London jury found three employees of Swift Technical Solutions Ltd (Swift) not guilty of corruption charges in connection with alleged corrupt payments to tax officials in Nigeria. The SFO announced the verdict on June 2. As to one defendant, the jury was unable to reach a verdict on one count and was discharged; the SFO informed the Southwark Crown Court that it would not seek to retry that defendant on that count and the court entered a verdict of not guilty. The SFO brought the corruption charges in late 2012 after a two-year investigation related to the tax affairs of a Swift Nigerian subsidiary. The SFO alleged that the Swift employees paid bribes totaling approximately £180,000 in 2008 and 2009 to Nigerian tax officials to avoid, reduce, or delay paying tax on behalf of workers placed by Swift. The alleged bribes occurred before the enactment of the U.K. Bribery Act and allegedly went to agents of two Nigerian Boards of Internal Revenue - the Rivers State Board of Internal Revenue and the Lagos State Board of Internal Revenue. The SFO did not charge Swift with any criminal offense, citing its cooperation with the agency.
- AON Corporation today settled a Foreign Corrupt Practices Act matter with the US Department of Justice and US Securities and Exchange Commission for a combined monetary sanction of $16.264 million. This action follows the 2009 fine of £5.25 million issued by the United Kingdom's Financial Services Authority. AON resolved the DOJ matter with a non-prosecution agreement, in which the company admitted to certain FCPA books and records violations related to interactions with officials of Costa Rica's state-owned insurance company. AON neither admitted nor denied conduct identified in the SEC Litigation Release, which identified conduct in Costa Rica, Egypt, Vietnam, Indonesia, United Arab Emirates, Myanmar, and Bangladesh. The Release states that "AON realized over $11.4 million in profits from these improper payments." If you have any questions about this FCPA Update, please contact Jamie Parkinson.
- Jeffrey P. Naimon to provide “Fair lending update” at the Colorado Mortgage Lenders Association Operational and Compliance Forum
- Jonice Gray Tucker to discuss “Justice for all: Achieving racial equity through fair lending” at CBA Live
- Warren W. Traiger to discuss “On the horizon for CRA modernization” at CBA Live
- Jonice Gray Tucker to discuss "Fair lending" at the Mortgage Bankers Association Regulatory Compliance Conference
- Michelle L. Rogers to discuss “State law regulatory and enforcement trends” at the Mortgage Bankers Association Regulatory Compliance Conference
- Jonice Gray Tucker to discuss “Government investigations, and compliance 2021 trends” at the Corporate Counsel Women of Color Career Strategies Conference
- Max Bonici to discuss “BSA/AML trends: What to expect with the implementation of the AML Act of 2020” at the American Bar Association Banking Law Fall Meeting
- H Joshua Kotin to discuss “Modifications and exiting forbearance” at the National Association of Federal Credit Unions Regulatory Compliance Seminar
- Jonice Gray Tucker to discuss “Fintech trends” at the BIHC Network Elevating Black Excellence Regional Summit
- Jonice Gray Tucker to discuss "Consumer financial services" at the Practising Law Institute Banking Law Institute