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Senator Ben Cardin and Republican co-sponsors recently introduced a bill titled the “Combating Global Corruption Act of 2017,” which seeks “to identify and combat corruption in countries, to establish a tiered system of countries with respect to levels of corruption by their governments and their efforts to combat such corruption, and to assess United States assistance to designated countries in order to advance anti-corruption efforts in those countries and better serve United States taxpayers.”
This bill, if enacted, would require the Secretary of State to publish annual rankings of foreign countries split up into three tiers that depend on whether those countries’ governments comply with “minimum standards for the elimination of corruption.” The introduced bill defines corruption as “the exercise of public power for private gain, including by bribery, nepotism, fraud, or embezzlement.”
Once a country’s tier-rank is established, the bill would then require the Secretary of State, Administrator of USAID, and the Secretary of Defense to take various steps, including the creation of a “corruption risk assessment” and “corruption mitigation strategy” for U.S. foreign assistance programs; fortified anti-corruption and clawback provisions in contracts, grants and other agreements; disclosure of beneficial ownership for contractors and other participants; and mechanisms to investigate misappropriated funds.
If passed into law, this bill would create substantial new enforcement powers to combat international corruption activities. And, unlike the current ambiguity under the FCPA regarding its applicability to state-owned or state-controlled enterprises (“SOEs”), as drafted, this bill expressly would cover SOEs. Like the FCPA, however, this bill also contains a broad national security waiver component, if the Secretary of State “certifies to the appropriate congressional committees that such waiver is important to the national security interest of the United States.”
On April 24, 2017, in a speech at the Ethics and Compliance Initiative Annual Conference in Washington, D.C., Attorney General Jeff Sessions appeared to commit to the continued aggressive enforcement of the FCPA. He noted that bribery "increases the cost of doing business and hurts honest companies that don’t pay these bribes,” and he explained that the Trump administration’s DOJ will enforce laws that protect honest businesses: “One area where this is critical is enforcement of the Foreign Corrupt Practices Act (FCPA). Congress enacted this law 40 years ago, when some companies considered it a routine expense to bribe foreign officials in order to gain business advantages abroad.” AG Sessions also emphasized that individuals, not just companies, may face increased FCPA focus.
These remarks come on the heels of comments from another senior DOJ official who recently noted that robust FCPA enforcement will continue. As previously reported, Trevor McFadden, the DOJ’s Criminal Division's Acting Principal Deputy Assistant Attorney General, noted that the DOJ remains "intent on creating an even playing field for honest businesses."
These remarks suggest that the DOJ will remain active in enforcing FCPA compliance issues, despite comments from then-candidate Trump that FCPA enforcement may be scaled back under his watch.
On April 17, former South Korean president Park Geun-hye was formally indicted on 18 charges of corruption including bribery, extortion, abuse of power, and leaking state secrets. Ms. Park was impeached in December after months of public protests. Last month, she was removed from office and arrested.
The corruption scandal has also implicated Ms. Park’s longtime confidante, Choi Soon-sil, who is currently on trial on corruption charges. The pair is accused of coercing Korean businesses into donating $68 million to two non-profit foundations that Ms. Choi controlled. Ms. Park and Ms. Choi are also accused of collecting or demanding $52 million in bribes from businesses, including $38 million from Korean conglomerate Samsung, $6.2 million from the retail conglomerate Lotte, and $7.8 million from the telecommunications and semiconductor conglomerate SK. Shin Dong-bin, the chairman of Lotte, was indicted on bribery charges on Monday.
On March 29, the former governor of the Tourism Authority of Thailand was reportedly sentenced in Thailand to 50 years in prison for accepting $1.8 million in bribes from 2002 to 2007 from two U.S. filmmakers in exchange for rights to organize the Bangkok International Film Festival. The former tourism chief, Juthamas Siriwan, was also ordered to forfeit the bribe money. Her daughter, Jittisopa, received a 44-year prison sentence for her own involvement. In 2009, the U.S. filmmakers, Gerald and Patricia Green, who paid the bribes, were convicted in the U.S. on charges of FCPA violations. A U.S. federal court sentenced the Greens to six months incarceration, three years of supervised release, and $250,000 in restitution.
Ms. Siriwan and her daughter were also indicted in the U.S. in January 2009 for the same underlying conduct. The indictment raised interesting questions about the United States pursuing corruption on the “demand side,” in light of the fact that the FCPA does not criminalize the receipt of bribes. The indictment instead alleged money laundering violations and related charges. Ms. Siriwan moved to dismiss the U.S. indictment based on the double jeopardy provision of the Thai-US extradition treaty. The decision on her motion was stayed, pending the outcome of the Thai prosecution.
On Thursday, March 16, 2017, Airbus Group SE (Airbus) reportedly announced that a preliminary investigation has been opened by the Parquet National Financier, France’s financial crimes investigator, regarding the same fraud, bribery, and corruption allegations being probed by the UK Serious Fraud Office (SFO). Airbus, an aircraft manufacturer based in Toulouse, France, stated that the investigations into the use of third party agents by Airbus’s civil aviation business are being conducted in tandem, and it plans to cooperate fully with both the PNF and SFO. This unusual cooperation between France and the UK could potentially lead to the first use of a deferred prosecution agreement following France’s November 2016 enactment of the Law on Transparency, the Fight against Corruption and Modernization of Economic Life, which was enacted in response to international pressure on the French government to strengthen its corruption laws following severe sanctions imposed by the U.S. Department of Justice on French companies in recent years.
For prior coverage of the SFO’s investigation, please click here.
In late January of 2017, President Donald Trump appointed Trevor N. McFadden as Deputy Assistant Attorney General in the U.S. Department of Justice Criminal Division, a position that includes oversight over the Fraud and Criminal Appellate Sections. The Fraud Section is in charge of enforcing the FCPA, placing the former Baker & McKenzie Litigation and Government Enforcement partner, who also served as an Assistant U.S. Attorney and Counsel to the Deputy Attorney General, in a key role to determine the future of FCPA enforcement under the new administration. On February 16, 2017, McFadden gave a speech at the Global Investigations Review Conference in which he proclaimed his dedication to the continued enforcement of the statute. While McFadden’s comments reflect Attorney General Jeff Sessions’ recent promise to enforce the FCPA, they contrast with President Trump’s 2012 comments that the FCPA is a “horrible law” that “should be changed.”
Above all, McFadden’s message was one of enforcement, enforcement, enforcement. He commented that the law “has been vigorously enforced” over its 40-year history, efforts which have “steadily increased over time.” McFadden specifically highlighted two important trends of this history of enforcement: transparency to businesses, and cooperation with foreign nations in the fight against corruption. McFadden’s emphasis on the “utmost importance” of working with other countries also signaled a continued commitment to what he called “important anti-corruption conventions,” including “the OECD Anti-Bribery Convention, the United Nations Convention Against Corruption (NCAC), the Convention on Transnational Organized Crime (UNTOC), and several others.”
In looking to the future of FCPA enforcement, McFadden called the law’s continued “fight against official corruption  a solemn duty of the Justice Department…regardless of party affiliation.” He also emphasized that the Justice Department will continue to prioritize “individual accountability,” although he did comment that some people “may be unwittingly involved in facilitating an illegal payment under circumstances that do not merit criminal prosecution of the individual.” Finally, McFadden expressed that a company’s “voluntary self-disclosures, cooperation, and remedial efforts” will “continue to guide our prosecutorial discretion determinations,” along with the “penalty reductions for companies that self-disclose, cooperate, and accept responsibility for their misconduct” provided for in the U.S. Sentencing Guidelines. Interestingly, the only whiff of questioning past Justice Department approaches was McFadden’s mention of an upcoming review of the FCPA pilot program encouraging such company cooperation. However, plans to re-evaluate the pilot program were already in place under the Obama administration, according to an article McFadden co-wrote with colleagues at Baker & McKenzie in April of 2016. Notably, McFadden’s article called the pilot program “a step forward in providing companies and their counsel with more transparent and predictable benefits for self-reporting, cooperating, and remediating FCPA misconduct.”
Less than a month ago, as previously reported on FCPA Scorecard, Rolls Royce, a UK-based manufacturer and global distributor for the civil aerospace, defense aerospace, marine, and energy sectors, entered into deferred prosecution agreements with the DOJ and UK SFO to resolve allegations that the company conspired to violate anti-bribery laws around the world. Now, Reuters reports that the company’s CEO has been questioned by the SFO regarding bribery allegations. According to the article, the SFO refused to comment on the report, citing concerns about an ongoing investigation.
Both the DOJ and SFO have repeatedly stated that they intend to pursue bribery cases against individuals. But there is so far no indication that the DOJ is also investigating the Rolls Royce CEO. Although DOJ could pursue such an investigation in the future, the agency may also defer to the SFO to handle the matter.
On January 10, it was announced that two additional defendants, Juan Jose Hernandez Comerma and Charles Quintard Beech III, owners of Florida and Texas-based energy companies, had pleaded guilty to foreign bribery charges related to a scheme to corruptly secure energy contracts from Venezuela’s state-owned oil company, Petroleos de Venezuela S.A.
According to admissions by Hernandez and Beech, they conspired with other previously charged defendants from 2008 through 2012 to pay bribes and other things of value, including recreational travel, meals, and entertainment to Petroleos officials to obtain energy contracts or receive payment for previously awarded contracts. Some of the bribes were paid to a Petroleos official’s relative to conceal the nature, source, and ownership of the bribe.
In total, eight individuals have now pleaded guilty in cases related to the government’s investigation into bribery at Petroleos. The government’s investigation is ongoing. Previous FCPA Scorecard coverage on the Petroleos investigations can be found here.
Four Individuals, Including Ban Ki-moons Brother and Nephew, Face FCPA Charges Related to Vietnam Project
On January 10, the DOJ announced the unsealing of an indictment charging four individuals, including the nephew and brother of former UN Secretary-General Ban Ki-moon, with violations of the FCPA and other offenses in connection with the attempted $800 million sale of a commercial building known as Landmark 72 in Hanoi, Vietnam. According to the government, Ban Ki Sang and Joo Hyun Bahn conspired to bribe a governmental official of an unnamed Middle Eastern country to get his country to purchase the building from Keangnam Enterprises Co., where Ban was then a senior executive. To facilitate the sale of Landmark 72, Keangnam hired Ban’s son Bahn to secure an investor for the deal.
According to the allegations, Bahn and Ban agreed to pay the foreign official $500,000 initially, and $2 million upon completion of the sale, through co-defendant Malcolm Harris, who had falsely held himself out as an agent of the foreign official; Harris Sang Woo allegedly assisted in obtaining the initial $500,000. In a twist, according to the DOJ, Harris then stole the money and used it for personal expenses instead of paying any bribes. After the Landmark 72 deal failed to go through, Bahn allegedly lied and provided forged emails from the foreign official and other documents to Keangnam regarding the status of the deal and stole approximately $225,000 that was advanced by Keangnam to cover brokerage expenses.
Former Guinean Minister of Mines Charged with Receiving and Laundering $8.5 Million in Bribes from Chinese Companies
On December 13, the former Minister of Mines and Geology of the Republic of Guinea was arrested and charged in the U.S. with laundering bribes he allegedly received from two Chinese companies in exchange for actions he took to secure valuable mining rights for a conglomerate associated with the companies. According the complaint filed by the DOJ, the former mining Minister received approximately $8.5 million in bribes in 2009 and 2010. To conceal the bribes, he allegedly transferred the funds to a bank account in Hong Kong which he opened while misreporting his occupation to conceal his status as a government official. He later allegedly transferred millions of dollars from the bribe proceeds into two U.S. banks to whom he also allegedly lied to conceal his position as a foreign government official and the source of the funds. The former Minister is a United States citizen and was residing in New York City when he was arrested.
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