Subscribe to our FinCrimes Update for news about the Foreign Corrupt Practices Act and related prosecutions and enforcement actions.
On July 16, a London jury acquitted three former Sarclad executives who had been charged with foreign bribery by the U.K. Serious Fraud Office (SFO). The SFO reportedly failed to prove that the former executives – a managing director, sales head, and project manager – had paid bribes to secure overseas contracts. The acquittal comes three years after Sarclad, a metals industry supplier, entered into the SFO’s second-ever deferred prosecution agreement (DPA). The July 2016 DPA resolved, at a corporate level, some of the same bribery allegations that the executives faced at trial, and resulted in the company paying a £6.5 million fine. Sarclad’s identity in the DPA was not publicly known until restrictions were lifted at the conclusion of the trial.
Two businessmen and two former Venezuelan officials charged in investigation related to bribery at state-owned electricity company
On June 24, two businessmen, Luis Alberto Chacin Haddad and Jesus Ramon Veroes, pleaded guilty in federal court in Miami to conspiracy to violate the FCPA. The charges relate to bribes paid to Venezuelan officials at the state-owned and state-run electricity company, Corporación Eléctrica Nacional, S.A. (Corpoelec), in an effort to obtain $60 million in contracts for their Florida-based businesses. Pursuant to their plea agreements, the businessmen will each forfeit at least $5.5 million in profits, as well as Miami-area real estate obtained with the ill-gotten gains. Sentencing is scheduled for September 4.
In addition, on June 27 the Venezuelan officials they allegedly bribed, Luis Alfredo Motta Dominguez (former minister of electrical energy in Venezuela and the head of Corpoelec) and Eustiquio Jose Lugo Gomez (former procurement director at Corpoelec), were charged by eight-count indictment in the Southern District of Florida. On the same day, the same officials were also sanctioned by OFAC. See related InfoBytes coverage here.
On May 9, pursuant to an indictment filed in federal court in Miami without announcement by DOJ, two Ecuadorian citizens were charged with conspiracy to violate FCPA, conspiracy to commit money laundering, and nine counts of money laundering. The indictment was first reported on July 1 by the Financial Times.
The charges against Armengol Alfonso Cevallos Diaz and Jose Melquiades Cisneros Alarcon, who both live in Florida, relate to the ongoing investigation and prosecution of bribery and money laundering at Ecuador’s state oil company, PetroEcuador. To date, the investigation has yielded four guilty pleas. One additional defendant has pleaded not guilty; his case is pending.
See prior FCPA Scorecard coverage here.
After a two-week jury trial in the United States District Court for the District of Massachusetts, the CEO of investment firm Haiti Invest, LLC and one of its directors were convicted of conspiracy to violate the FCPA and the Travel Act. Joseph Baptiste, a retired U.S. Army Colonel, was also found guilty of violating the Travel Act and conspiracy to commit money laundering. For prior coverage of the charges against Baptiste and CEO Roger Richard Boncy, please see here.
The evidence that federal prosecutors presented against Boncy and Baptiste included intercepted phone calls in which they discussed their plan to bribe Haitian officials “at all levels of government” in order to obtain governmental approval of a proposed $84 million project to develop a port in northwestern Haiti. In a recorded conversation with undercover agents posing as investors, Boncy and Baptiste allegedly solicited funds and told agents that the funds would be used to bribe the aide of a high-level elected official in Haiti. To conceal the bribes, Boncy and Baptiste allegedly said that they would funnel the agents’ funds through a U.S.-based non-profit organization that Baptiste controlled, which purported to sponsor social programs for Haitian residents.
The case against Boncy and Baptiste began with a sting operation conducted by the FBI in 2017. Boncy and Baptiste are scheduled to be sentenced by Judge Allison D. Burroughs on September 12, 2019.
On June 3, the UK Serious Fraud Office (SFO) announced that it had fined FH Bertling Ltd £850,000 (approximately $1.08 million) for bribes paid to secure contracts in Angola. The SFO started investigating FH Bertling in September 2014 and announced in July 2016 that it had charged the company and seven individuals with making corrupt payments. FH Bertling pleaded guilty in 2017. The SFO found that FH Bertling executives had bribed an agent of the Angolan state oil company to obtain $20 million worth of shipping contracts.
On May 29, the DOJ announced that Jose Manuel Gonzalez Testino, a dual U.S.-Venezuelan citizen, pleaded guilty for his role in a bribery scheme involving Petróleos de Venezuela, S.A. (PDVSA) officials. Gonzalez pleaded guilty in the Southern District of Texas to conspiracy to violate the FCPA, violating the FCPA, and failing to report foreign bank accounts. Gonzalez’s sentencing is set for August 28.
Gonzalez controlled multiple U.S. and international companies that provided goods and services to PDVSA. According to the DOJ, Gonzalez and a co-conspirator paid at least $629,000 in bribes to a former PDVSA official in exchange for favorable business treatment for Gonzalez’s companies. Prior FCPA Scorecard coverage is available here.
On May 13, a Hawaiian businessman was sentenced to 30 months imprisonment to be followed by three years of supervised release after pleading guilty in January to a charge of conspiracy to bribe a Micronesian official in violation of the FCPA. The DOJ alleged that the businessman’s consulting company paid $440,000 in bribes to officials to obtain and keep contracts with the Micronesian government worth more than $10 million. One of the officials also pleaded guilty in April. See more previous coverage here.
According to the DOJ, on March 25 a Hong Kong executive, Chi Ping Patrick Ho, was sentenced in the SDNY to a 36-month prison sentence. Ho headed up CEFC China Energy Company Limited and was sentenced “for his role in a multi-year, multimillion-dollar scheme to bribe top officials of Chad and Uganda in exchange for business advantages.”
Ho was convicted of money laundering, violating the FCPA, and conspiracy after a week-long trial in December 2018. The DOJ alleged that starting in the fall of 2014, Ho used his US-based NGO to cover up a scheme in which Ho offered $2 million in cash to Idriss Déby, the President of Chad, concealed in gift boxes, in exchange for CEFC receiving oil rights from the government; the President rejected the bribe. In Uganda, the DOJ alleged that Ho gave $1,000,000 in cash payments to Sam Kutsea, the Foreign Minister of Uganda, and Yoweri Museveni, the President of Uganda.
Hempel, a Danish company that makes protective coatings used in maritime environments, announced on March 4 that it had settled bribery allegations with the Danish State Prosecutor for Serious and International Crime by paying a $33 million fine. The company self-reported what it called “illegal sales practices found in Germany, other countries in Europe, and in Asia” in April 2017.
In an indictment unsealed on February 26, the DOJ charged a former sales representative and the president of a U.S.-based company with conspiracy to commit bribery, wire fraud, and money laundering, and substantive wire fraud, for their alleged roles in “a scheme to corruptly secure business advantages, including contracts and payment on past due invoices, from Venezuela’s state-owned and state-controlled energy company, Petroleos de Venezuela S.A. (PDVSA).” The indictment alleges that from approximately 2009 to 2013, the sales representative, Rafael Enrique Pinto Franceschi, and the president of the company, Franz Herman Muller Huber, conspired to bribe three PDVSA officials in exchange for providing advantages to the unnamed company, including through the creation of fictitious invoices from Panamanian shell companies.
According to the indictment, in exchange for the bribes the PDVSA officials allegedly assisted the company in obtaining additional PDVSA contracts, inside information, and payment on past due invoices. The defendants are also alleged to have received kickbacks in connection with the scheme. In total, Pinto is alleged to have received over $985,000 and Muller over $258,000 in kickback payments. Two of the three officials that the defendants are accused of bribing have pleaded guilty in connection with the case and are pending sentencing.
- Kathryn L. Ryan to discuss "Industry open forum session on NMLS usage" at the NMLS Annual Conference & Training
- Tim Lange to discuss "State legislative update - MSBs and consumer finance" at the NMLS Annual Conference & Training
- Kathryn L. Ryan to discuss "Regulating innovative consumer lending products" at the NMLS Annual Conference & Training
- Daniel P. Stipano to moderate "Washington update" at the Puerto Rican Symposium of Anti Money Laundering
- Melissa Klimkiewicz to discuss "Private flood insurance updates" at the Mortgage Bankers Association Servicing Solutions Conference & Expo
- Jonice Gray Tucker and H Joshua Kotin to discuss regulatory compliance issues in the fintech industry at Protiviti's Risk & Compliance Innovation Roundtable
- APPROVED Checkpoint Webcast: CFL overview
- Amanda R. Lawrence and Sherry-Maria Safchuk to discuss "California privacy rule" on an NAFCU webinar
- Sasha Leonhardt to discuss "MLA & SCRA" on a NAFCU webinar
- Daniel P. Stipano to discuss "Pathway of the SARs: Tracking trajectories of suspicious activity reports from alerts to prosecution" at the ACAMS International AML & Financial Crime Conference
- Daniel P. Stipano to discuss "Which bud’s for you? A deep-dive into evolving marijuana laws" at the ACAMS International AML & Financial Crime Conference
- John P. Kromer to discuss "Navigating the multi-state fintech regulatory regime" at the American Conference Institute Legal, Regulatory and Compliance Forum on Fintech & Emerging Payment Systems