Subscribe to our FinCrimes Update for news about the Foreign Corrupt Practices Act and related prosecutions and enforcement actions.
On January 8, the Treasury Department’s Office of Foreign Assets Control (OFAC) sanctioned Venezuelan individuals and companies, including billionaire news network Globovision owner Raul Gorrin Belisario and former Venezuelan National Treasurer Claudia Patricia Diaz Guillen, for their participation in a bribery scheme involving bribes to members of the Venezuelan government. According to the Treasury Department, OFAC designated or blocked seven individuals, including Diaz and Gorrin, and 23 entities, including Globovision, pursuant to Executive Order 13850, for their roles in bribing the Venezuelan Office of the National Treasury in exchange for the right to conduct illicit foreign currency exchanges in Venezuela.
As a result of the designation, all property and interests in property of the designated individuals and entities “subject to or transiting U.S. jurisdiction are blocked,” and any U.S. transactions with them are prohibited. However, two Globovision companies owned by Gorrin and his business partner will be permitted to continue to conduct U.S. business for a one-year period. This period is intended to allow the Venezuelan-based Globovision news network to continue operating while Gorrin and his business partner divest their holdings in the company.
As FCPA Scorecard previously reported, Gorrin was indicted under seal in August for conspiracy to violate the FCPA, conspiracy to commit money laundering, and nine counts of money laundering.
On December 17 and 19, press reports indicate Malaysian prosecutors filed criminal charges against a New York-based financial institution and numerous individuals, including former executives of the financial institution, in connection with their alleged roles in a multi-billion bribery and money laundering scheme involving Malaysia sovereign wealth fund 1Malaysia Development Berhad (1MDB).
Malaysian prosecutors charged the financial institution with making false and misleading statements when raising money for 1MDB. Among individuals, Tim Leissner, a former participating managing director of the financial institution, and Ng Chong Hwa (also known as Roger Ng), a former managing director, also were charged. These charges follow the U.S. government’s investigation and charges related to the same 1MDB scheme.
As detailed in prior FCPA Scorecard coverage, Leissner pleaded guilty in November to Conspiracy to Violate the FCPA and Conspiracy to Commit Money Laundering and agreed to forfeit $43.7 million. The DOJ charged NG with similar offenses and, according to press reports, is fighting extradition to the United States.
According to press reports, in response to the filing of the criminal charges in Malaysia, the financial institution stated: “Under the Malaysian legal process, the firm was not afforded an opportunity to be heard prior to the filing of these charges against certain Goldman Sachs entities, which we intend to vigorously contest. These charges do not affect our ability to conduct our current business globally.”
The DOJ has not charged or reached a resolution with the financial institution, which previously announced that it was cooperating with the DOJ’s and all regulators’ investigations. The announcement of the Malaysian charges suggests that the U.S. DOJ and Malaysian prosecutors may not be coordinating efforts.
On September 11, a Miami-based financial advisor pleaded guilty to one count of conspiracy to commit money laundering in connection with his role in making corrupt payments to officials of Ecuador’s state-owned and state-controlled energy company, Empresa Pública de Hidrocarburos del Ecuador (PetroEcuador). He is scheduled to be sentenced on Nov. 14 in the Southern District of Florida.
Larrea is the fourth individual, including two former officials of PetroEcuador, to plead guilty in this case, which concerns efforts by an oil services contractor to make payments to PetroEcuador officials in an effort to retain existing contracts and win new business with PetroEcuador. Frank Roberto Chatburn Ripalda (Chatburn), who was charged in the same indictment as Larrea, has pleaded not guilty and is currently set to go to trial on October 15. Unlike Larrea, Chatburn’s charges include one count of conspiring to violate the FCPA and one count of violating the FCPA.
Real estate broker and nephew of former UN Secretary-General sentenced for trying to bribe a foreign official
On September 6, U.S. District Judge Edgardo Ramos of the Southern District of New York reportedly sentenced real estate broker Joo Hyuan Bahn, also known as Dennis Bahn, to six months in prison for trying to pay $2.5 million in bribes to a Qatari official in connection with a sale of a high rise building complex in Vietnam. The New York Times reported that Judge Ramos stated that he believed Bahn deserved a lenient sentence. Law360 reported that Judge Ramos cited, among other factors, the consequences of a longer sentence on Bahn’s immigration status. The sentence was ultimately far below what the government had requested.
As FCPA Scorecard previously reported, Bahn pleaded guilty in January 2018 to one count of conspiracy to violate the FCPA and one count of violating the FCPA. Mr. Bahn is the nephew of former UN Secretary-General Ban Ki-moon.
Additionally, on September 6, the SEC announced that Bahn had agreed to pay $225,000 in disgorgement to settle civil FCPA violations arising from his conduct. The SEC’s order concluded that Bahn violated the anti-bribery and books and records provisions of the FCPA.
See previous FCPA Scorecard coverage here.
Julia Vivi Wang, a Chinese-born naturalized U.S. citizen, reportedly pleaded guilty this week to violations of the FCPA related to a scheme to bribe the UN General Assembly’s former president John Ashe. Wang is a former executive of a media group that focused on promoting UN development goals, but she was accused of paying the bribe to secure diplomatic postings. She pleaded guilty this week in the SDNY to three counts, including violating and conspiring to violate the FCPA, as well as income tax fraud.
The charges relate to Wang’s payment of $500,000 to Ashe in April 2013 in exchange for receiving a diplomatic posting within the government of Antigua, where Ashe previously served as a UN representative. Wang is just the most recent in a line of other individuals who have faced FCPA repercussions for bribes paid to Ashe (who died in 2016), including Ng Lap Seng, who was found guilty of paying Ashe and another individual bribes worth at least $1 million, and Shiwei (Sheri) Yan who also pleaded guilty to paying Ashe bribes in excess of $800,000. As part of her plea, Wang admitted that she had failed to report approximately $2 million in income to the IRS.
This guilty plea illustrates how prosecutors are able to unwind even complex bribery schemes by methodically targeting individual participants. The criminal charges against Wang were likely bolstered by the string of preceding bribery cases involving similar payments to Ashe that likewise resulted in a guilty pleas and verdicts.
On December 22, 2017, Singapore-based shipyard operator and shipping vessel repair company Keppel Offshore & Marine Ltd. (KOM), and its wholly owned U.S. subsidiary, agreed to pay a combined total penalty of $422 million to resolve foreign bribery charges by the DOJ. Authorities in the United States, Brazil, and Singapore alleged that the companies engaged in a decade-long scheme to pay tens of millions of dollars in bribes to officials in Brazil, including those of state-owned oil company Petrobras. As part of the resolution, KOM entered into a deferred prosecution agreement while its U.S. subsidiary, KOM USA, pleaded guilty, as did a former senior member of KOM’s legal department. The settlement is one of the largest FCPA enforcement penalties and also represents DOJ’s first coordinated FCPA resolution with Singapore. The settlement represents a 25 percent reduction off the bottom of the applicable U.S. Sentencing Guidelines fine range due to substantial cooperation by the companies with the investigation and the taking of remedial measures, including disciplining employees and implementing an enhanced compliance system.
On November 7, the DOJ unsealed FCPA charges against five individuals for their alleged participation in a foreign bribery scheme involving Rolls-Royce plc and its U.S. subsidiary (Rolls-Royce). Of the five individuals, one was indicted while the remaining four pleaded guilty for their roles in an alleged scheme to pay bribes to a Kazakhstan official in order to secure a supply contract for a gas pipeline from Kazakhstan to China. The charges and guilty pleas were unsealed in Ohio federal district court.
These charges follow on the heels of the company’s January 2017 settlement with DOJ in which Rolls-Royce agreed to a three-year deferred prosecution agreement and agreed to pay $170 million to resolve charges that it conspired to violate the anti-bribery provisions of the FCPA around the world. As part of the DOJ settlement, Rolls-Royce agreed to continue to cooperate fully with the DOJ’s investigation, including its investigation of individuals. The DOJ settlement comprised just a fraction of the $800 million total penalty Rolls-Royce agreed to pay as part of a global resolution related to the corrupt conduct.
Of the four guilty pleas, three individuals (a former executive of Rolls-Royce, a former employee of Rolls-Royce, and an executive at an international engineering consulting firm) pleaded guilty to one count of conspiracy to violate the FCPA. The fourth individual (a former senior executive of Rolls-Royce) also pleaded guilty to one count of violating the FCPA in addition to conspiracy. The indicted individual, a former CEO of a Rolls-Royce intermediary, was charged with one count of conspiracy to violate the FCPA and seven counts of violating the FCPA, along with various money laundering charges.
The DOJ’s announcement noted the “significant cooperation and assistance” from the UK SFO and Brazil law enforcement. This continues the increased trend of DOJ receiving and then highlighting cooperation efforts by its international counterparts.
On October 25, Judge Chen of the U.S. District Court for the E.D.N.Y. sentenced Hector Trujillo, the former general secretary of Guatemala’s soccer federation and a former judge, to eight months in prison and ordered restitution of $415,000 and forfeiture of $175,000. His sentence comes after a guilty plea to wire fraud and conspiracy in June 2017. Mr. Trujillo was arrested in 2015 as part of the U.S. government’s investigation into FIFA corruption. Trujillo’s sentencing marks the first individual sentenced among a group of more than 40 individuals who have been indicted or pleaded guilty since 2015.
This sentencing comes as part of the U.S. government’s ongoing investigation into corruption in international soccer which has been ongoing. Previous FCPA Scorecard coverage of the FIFA investigation can be found here.
Deputy Attorney General Rod Rosenstein Issues Remarks on Individual Accountability for Corporate Wrongdoing
Deputy Attorney General Rod Rosenstein recently issued remarks highlighting the importance of the DOJ’s consistency in enforcing policies “hold[ing] individuals accountable for corporate wrongdoing.” In particular, Deputy AG Rosenstein stated that the agency should focus on improving the recent track record of bringing criminal proceedings against company employees and commented that “consistency promotes fairness and enhances respect for the rule of law.” His remarks also touched on the Yates Memo and the FCPA Pilot Program, noting the appropriateness of focusing on individual officer or director liability.
The comments are yet another in the steady drumbeat of calls, both internal and external to the DOJ, for DOJ enforcement strategy to hold individual corporate employees accountable for FCPA violations, although how much that strategy is being implemented remains to be seen. A recent review of DOJ corporate FCPA enforcement actions notes that the last 20 such actions have lacked related criminal charges against company employees, and going back to 2008, approximately 80% of DOJ corporate FCPA enforcement actions have lacked related criminal charges against company employees. As Deputy AG Rosenstein’s comments concluded: “When we are serious about wanting people to follow rules, it does no good merely to post them. We need to make clear our intent to enforce the rules, with sufficient vigor that people fear the consequences of violating them.”
Following a $55 million civil and criminal FCPA settlement by Bio-Rad, a life science research and diagnostics company, in November 2014, the company’s former General Counsel and Secretary, Sanford Wadler, filed a civil complaint against Bio-Rad and executive officers and board members alleging that he was fired for blowing the whistle on FCPA issues. In February 2017 a jury awarded Wadler a total of $11 million in punitive and compensatory damages (including double back-pay under Dodd-Frank).
Bio-Rad recently appealed that verdict to the Ninth Circuit on the grounds that the trial court should have directed the verdict in favor of Bio-Rad because, it argues, the alleged FCPA violations were the result of Wadler’s lack of due diligence, because Wadler did not first consult the company’s compliance officers and FCPA lawyers before reporting, and because his allegations were discredited by trial witnesses. Bio-Rad also claims that the trial court wrongly excluded certain impeachment testimony, and that Wadley did not qualify as a “whistleblower” under Dodd-Frank in light of his internal reporting.
- Daniel P. Stipano to discuss "Making customers whole: Trends in remediation and restitution expectations" at the American Bar Association Business Law Virtual Section Meeting
- Jonice Gray Tucker to discuss "Fairness gone viral: Fair lending considerations for financial institutions amid Covid-19" at the American Bar Association Business Law Virtual Section Meeting
- Daniel P. Stipano to discuss "High standards: Best practices for banking marijuana-related businesses" at the ACAMS AML & Anti-Financial Crime Conference
- Daniel P. Stipano to discuss "Wait wait ... do tell me! Where the panelists answer to you" at the ACAMS AML & Anti-Financial Crime Conference
- Matthew P. Previn and Walter E. Zalenski to discuss "Is valid when made ... valid?" at the Women in Housing & Finance Partner Series webinar
- Warren W. Traiger and Caroline K. Eisner to discuss "CRA modernization and the OCC final rule" at CBA Live
- Daniel R. Alonso to discuss "Transnational corruption: A chat with former U.S. federal prosecutors in New York" at Marval Live Talks
- Sherry-Maria Safchuk and Lauren Frank to discuss "New CFPB interpretation on UDAAP" at a California Mortgage Bankers Association Mortgage Quality and Compliance Committee webinar
- Thomas A. Sporkin to discuss "Managing internal investigations and advanced government defense" at the Securities Enforcement Forum
- H Joshua Kotin to discuss "Mortgage servicing in a recession: Early intervention, loss mitigation and more" at the NAFCU Virtual Regulatory Compliance Seminar
- Daniel R. Alonso to discuss "Independent monitoring in the United States" at the World Compliance Association Peru Chapter IV International Conference on Compliance and the Fight Against Corruption
- Jonice Gray Tucker to discuss "The future of fair lending" at the Mortgage Bankers Association Regulatory Compliance Conference
- Michelle L. Rogers to discuss "Major litigation" at the Mortgage Bankers Association Regulatory Compliance Conference
- Kathryn L. Ryan to discuss "Pandemic fallout – Navigating practical operational challenges" at the Mortgage Bankers Association Regulatory Compliance Conference
- Jonice Gray Tucker to discuss "Consumer financial services" at the Practising Law Institute Banking Law Institute