Subscribe to our FinCrimes Update for news about the Foreign Corrupt Practices Act and related prosecutions and enforcement actions.
On November 19, the SEC announced a settlement with Vantage Drilling International (“Vantage”) based on the improper activities of Vantage’s predecessor, Vantage Drilling Company, in connection with the Petrobras bribery scheme. The Administrative Order found that Vantage Drilling Company had “failed to devise a system of internal accounting controls with regard to [its] transactions with [its] former outside director, largest shareholder, and only supplier of drilling assets . . . and failed to properly implement internal accounting controls related to its use of third-party marketing agents,” noting the company’s “ineffective anticorruption compliance program.” According to the Order, these failures permitted payments that “created a risk that [it] was providing or reimbursing funds that [a director] intended to use to make improper payments to [Petrobras],” a Brazilian company at the center of a massive FCPA scheme.
The settlement with the SEC concludes Vantage’s involvement in the Petrobras investigations. According to Vantage, the company received a cooperation letter from the DOJ last year confirming Vantage’s full cooperation in the Petrobras investigation, and that the DOJ would not move forward with any actions against Vantage.
Further coverage of the Petrobras matter is available here.
Two co-conspirators of billionaire news network Globovision owner Raul Gorrin Belisario were sentenced this week as part of the DOJ’s recently unsealed prosecution of a bribery scheme involving over $1 billion paid in bribes to members of the Venezuelan government. According to the DOJ, Gorrin was indicted under seal in August for conspiracy to violate the FCPA, conspiracy to commit money laundering, and nine counts of money laundering. Two co-conspirators, Florida resident and former Venezuelan National Treasurer Alejandro Andrade Cedeno, and Chicago resident and former owner of Banco Peravia Gabriel Arturo Jimenez Aray, each pleaded guilty under seal to one count of conspiracy to commit money laundering, and were sentenced in federal court earlier this week.
According to Gorrin’s indictment, he allegedly bribed members of the Venezuelan government—including Andrade—in exchange for the right to handle the government’s foreign currency exchange transactions, and then acquired a bank in order to launder the bribe money and other illicit proceeds. To do so, Gorrin allegedly moved money from Switzerland to accounts in Florida and New York and used it to purchase luxury items such as “jets, a yacht, multiple champion horses, and numerous high-end watches.”
In December 2017, Andrade pleaded guilty to one count of conspiracy to commit money laundering, admitting to taking bribes in exchange for helping his co-conspirators—including Gorrin—by choosing them to conduct currency exchanges at favorable rates to the Venezuelan government. As part of his plea, Andrade agreed to cooperate and pay a forfeiture money judgment of $1 billion through the forfeiture of “real estate, vehicles, horses, watches, aircraft, and bank accounts.” On November 27, 2018, U.S. Southern District of Florida Judge Robin L. Rosenberg sentenced Andrade to 10 years in prison, the maximum under his plea deal.
In March 2018, Chicago resident and former owner of Banco Peravia Gabriel Arturo Jimenez Aray took a similar plea deal, pleading guilty to one count of conspiracy to commit money laundering, admitting to helping Gorrin and others acquire and then launder money through Banco Peravia. On November 29, 2018, Jimenez was sentenced to 3 years in prison.
The Miami Herald has also reported that Gorrin’s personal banker is Matthias Krull, formerly of Julius Baer Panama, who was sentenced last month for his role in another money laundering scheme involving Venezuela’s Petroleos de Venezuela S.A. (PDVSA). Coverage of the PDVSA prosecutions is available here.
The DOJ unsealed two indictments and a guilty plea related to the sprawling 1Malaysia Development Berhad (1MDB) fraud on November 1 in the Eastern District of New York. Malaysian financier Low Taek Jho (also known as Jho Low) and former banker Ng Chong Hwa (also known as Roger Ng) were charged with conspiring to launder billions of dollars embezzled from 1MDB, Malaysia’s investment development fund, and conspiracy to violate the anti-bribery provisions of the FCPA. Ng was also charged with conspiring to violate the FCPA by circumventing the internal accounting controls of a U.S. financial institution, which underwrote $6 billion in bonds issued by 1MDB. Ng was a managing director at the bank. Tim Leissner, another former banker at the same financial institution, pleaded guilty to the same charges. Leissner has been ordered to forfeit $43.7 million.
Low, Ng, Leissner, and others allegedly conspired to bribe Malaysian and Abu Dhabi officials to obtain business for the financial institution, including the 1MDB bond deals. They also allegedly conspired to launder the proceeds through purchasing luxury New York real estate, artwork, and financing major Hollywood films, such as The Wolf of Wall Street.
For prior coverage of the 1MDB scheme, please see here.
Swiss banker sentenced to 10 years related to PDVSA embezzlement and bribery scheme, and PDVSA official pleads guilty in same scheme
On October 29, Matthias Krull, a former banker at Julius Baer, was sentenced to serve 10 years in prison for his role in a scheme to launder funds embezzled from Petróleos de Venezuela, S.A. (PDVSA), the Venezuelan state-owned oil company. Krull had pleaded guilty to one count of conspiracy to commit money laundering on August 22, 2018. Krull admitted to using his position at the bank to attract clients from Venezuela. He helped some of those clients launder proceeds from a PDVSA foreign-exchange embezzlement scheme using false-investment schemes and Miami real estate. The PDVSA money was originally obtained through bribery and fraud.
Two days later, on October 31, Abraham Edgardo Ortega, the former executive director of financial planning at Petróleos de Venezuela, S.A. (PDVSA), the Venezuelan state-owned oil company, pleaded guilty to charges related to his role in the same scheme. Ortega admitted to accepting $5 million in bribes to give priority loan status to a French company and Russian bank. Ortega was paid with the proceeds of the same foreign-exchange embezzlement scheme. Ortega admitted that he ultimately received $12 million in bribes for his participation in the embezzlement scheme and laundered that money with a co-defendant through a false-investment scheme. Ortega is expected to be sentenced on January 9, 2019.
On October 30, the DOJ charged Roger Richard Bouncy, a dual U.S.-Haitian citizen, with conspiracy to violate the FCPA, commit money laundering, and violate the Travel Act, as well as substantive Travel Act violations. Bouncy is a licensed attorney and the CEO of Haiti Invest, LLC, a Haitian development and reconstruction company. The indictment is part of an ongoing case against retired U.S. Army Colonel, Joseph Baptiste, who was indicted in 2017 related to an alleged plan to solicit bribes from potential investors for infrastructure projects in Haiti. (For prior coverage of the charges against Baptiste, please see here.) According to the indictment, at a meeting in 2015, Bouncy and Baptiste met with undercover FBI agents posing as potential investors in the development project, and allegedly asked the agents to invest $84 million in the project. Baptiste told them that 5% of that total would be paid to Haitian officials to secure approval for the project. Baptiste allegedly planned to disguise the funds through a non-profit he controlled. The FBI then wired money to the non-profit.
In late September, Meng Hongwei, the Chief of Interpol at the time and a former Vice Minister of China’s national police, reportedly went missing during a trip home to China. According to his wife, Meng’s last known communication was a text message to her containing a knife emoji and an instruction to “wait for my call.” According to reports, after Meng’s wife, French authorities, and Interpol issued public pleas, Chinese authorities disclosed this week that Meng has been detained pursuant to a government investigation into bribery and other allegations. Meng abruptly resigned his post at Interpol and has not been available for comment.
Meng’s detention is notable due to his international stature as Interpol chief, however, he is just the latest in a string of high-ranking Chinese officials to reportedly have been swept up in widespread graft investigations by the Governing Communist Party under President Xi Jingping. A release from the Ministry of Public Security reportedly claims that Meng’s arrest demonstrates that “there is no privilege and no exception before the law.” It goes on to state: “Anyone who violates the law must be severely punished. We must resolutely uphold the authority and dignity of the law, bearing in mind that the red line of the law cannot be overstepped. . . It is necessary to make the legal system a ‘high-voltage line’ of electricity.”
On September 28, the DOJ announced that a former CEO and a former executive of oil services company SBM Offshore, N.V. (SBM) had been sentenced to prison and fined for their roles in a scheme to bribe foreign government officials in Brazil (at Petrobras), Angola (Sonangol), and Equatorial Guinea (GEPetrol) in exchange for oil-services contracts. In November 2017, the former CEO of SBM, Anthony “Tony” Mace, and a former sales and marketing executive at SBM USA, Robert Zubiate, each had pleaded guilty to one count of conspiracy to violate the FCPA. Mace was sentenced to 36 months in prison and a fine of $150,000 for authorizing payments in furtherance of the bribery scheme, and Zubiate was sentenced to 30 months in prison and a fine of $50,000 for using a third-party sales agent to pay bribes to Petrobras officials.
SBM itself entered into a $238 million three-year deferred prosecution agreement and its subsidiary, SBM USA, pleaded guilty to one count of conspiracy to violate the FCPA.
Prior Scorecard coverage of the company can be found here.
On September 14, a New York federal district court granted class certification to a group of shareholder investors suing an American hedge fund management firm and two of its senior executives on the grounds that the investors were misled about a government investigation into the company’s activities in Africa. In finding that the proposed class met all the requirements for certification, the court certified a class of investors that held some of the more than 100 million outstanding shares between February 2012 and August 2014, the time period in which the firm allegedly violated the Securities Exchange Act. Plaintiffs claim that the firm told investors it was not under any pending judicial or administrative proceeding that might have a material impact on the firm, when in fact it was under DOJ and SEC investigation over allegations that its employees were bribing government officials in Africa. The allegations against the firm were made public in 2014 media reports detailing government scrutiny into its dealings in Africa.
Click here for prior FCPA Scorecard’s coverage of this matter.
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.
UK SFO charges former Güralp Systems employees with bribery conspiracy as DOJ declines to prosecute the company for FCPA violations
On August 17, the UK Serious Fraud Office (SFO) announced that it was charging two former employees of Reading-based engineering company Güralp Systems Ltd. with “conspiracy to make corrupt payments.” The SFO alleged that the founder and former Managing Director of the company, Cansun Güralp and Andrew Bell, respectively, had “conspired to corruptly make payments to a public official and employee of the Korea Institute of Geoscience and Mineral Resources (KIGAM).” The conduct allegedly occurred over a period of 13 years, from April 2002 to September 2015.
A few days later, on August 20, the DOJ published a letter informing Güralp Systems that it was declining to prosecute the company for potential FCPA and money laundering violations related to payments it had made to Heon-Cheol Chi, a former director of KIGAM. In October 2017, Chi was sentenced to 14 months in federal prison on a U.S. money laundering charge related to the bribery scheme. The DOJ’s letter stated that it was declining to prosecute because, among other reasons, the company voluntarily disclosed the misconduct, provided cooperation that assisted with the prosecution of Chi, undertook “significant remedial efforts,” and “committed to accepting responsibility” for its conduct in the parallel SFO investigation.
- Daniel P. Stipano to discuss “Connecting the dots on your CDD program” at the ABA/ABA Financial Crimes Enforcement Conference
- Daniel P. Stipano to discuss “Beneficial Ownership: You have questions – We have quick answers” at the ABA/ABA Financial Crimes Enforcement Conference
- Moorari K. Shah to discuss "Legal & regulatory issues – Next wave of regulatory policy" at the Marketplace Lending & Alternative Financing Summit
- Daniel P. Stipano to discuss "Risk management in enforcement actions: Managing risk or micromanaging it" at an American Bar Association webinar
- Kari K. Hall and Christopher M. Walczyszyn to speak on the "Understanding updates to Regulation CC to ensure effective check processing" at a National Association of Federal Credit Unions webinar
- APPROVED Webcast: Periodic reporting made easier
- Daniel P. Stipano to discuss "A 20/20 view on 2020’s legislative and regulatory outlook" at the ACAMS Anti-Financial Crime and Public Policy Conference