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Financial Services Law Insights and Observations


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  • OFAC sanctions Paraguayan official

    Financial Crimes

    On August 24, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13818 against three Paraguayan individuals and five entities under the Global Magnitsky Human Rights Accountability Act. According to OFAC, the designations highlight the financial risks and activities where Argentina, Brazil, and Paraguay converge, which is marked by many unregistered money exchange houses, trade based money laundering, and a lack of awareness regarding money laundering and terrorist financing typologies, among other things. As a result of the sanctions, all property and interests in property belonging to the sanctioned persons, and “any entities that are owned, directly or indirectly, 50 percent or more” by them that are subject to U.S. jurisdiction are blocked and must be reported to OFAC. OFAC notes that its regulations generally prohibit U.S. persons from participating in transactions with these individual and entities, which include “the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person or the receipt of any contribution or provision of funds, goods, or services from any such person.”

    Financial Crimes OFAC Department of Treasury OFAC Sanctions SDN List Of Interest to Non-US Persons OFAC Designations Paraguay Argentina Brazil Anti-Money Laundering

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  • Global engineering company subsidiary agrees to $43 million FCPA settlement

    Financial Crimes

    On June 25, the DOJ entered into a deferred prosecution agreement (DPA) with the subsidiary of a UK-based global engineering company, in which the subsidiary agreed to pay a fine of approximately $18.3 million related to a conspiracy to violate the FCPA’s anti-bribery provisions. Together with resolutions by a related subsidiary with the SEC, and various foreign authorities, the total resolution will reach over $43 million.

    According to the DOJ, between 2011 and 2014, the subsidiary participated in a scheme to bribe officials in Brazil to win an approximately $190 million contract from Petrobras to design a gas-to-chemicals complex in the country. The DOJ stated that the subsidiary admitted to paying bribes in Brazil to win the contract, which involved the participation of an Italian sales agent affiliated with a Monaco-based intermediary company. The DOJ further noted that the subsidiary “took acts in furtherance of the scheme while located in New York and Texas, and earned at least $12.9 million in profits from the corruptly obtained business.”

    As part of the DPA, the subsidiary agreed to cooperate with the DOJ’s ongoing or future investigations, to improve its compliance program, and to report to the DOJ on those improvements. The subsidiary’s criminal penalty reflected a 25 percent discount off the bottom of the applicable U.S. Sentencing Guidelines due largely to its cooperation and remediation. The DOJ noted that in addition to cooperation and remediation the resolution reflects a number of factors including, (i) the subsidiary’s “failure to voluntarily and timely disclose the conduct that triggered the investigation”; and (ii) “the nature and seriousness of the offence, which spanned multiple years and involved a high-level executive.”

    The SEC simultaneously announced a resolution of a related matter, in which a related subsidiary consented to a cease-and-desist order finding violations of the FCPA’s anti-bribery, books and records, and internal accounting controls provisions. According to the SEC, the subsidiary paid approximately $1.1 million in bribes to obtain the Brazilian contract. Under the terms of the order, the subsidiary agreed to pay $22.7 million in disgorgement and prejudgment interest, in which up to $12.6 million will be offset by disgorgement paid to foreign authorities. 

    In related proceedings, the subsidiary received provisional court approval for a settlement with the UK’s Serious Fraud Office and settled with several Brazilian authorities. Under the terms of the DPA, the DOJ will credit up to approximately $10.7 million of the criminal penalty to payments the subsidiary makes to the SFO and to Brazilian authorities.

    Financial Crimes SEC DOJ FCPA Bribery UK Of Interest to Non-US Persons Brazil

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  • Brazilian Petrochemical Company Reaches $10 Million Settlement With Investors

    Financial Crimes

    On September 14, a Brazilian petrochemical company, agreed to pay its U.S. investors $10 million for concealing its role in a corruption scandal involving a Brazilian multinational corporation in the petroleum industry. The settlement resolves a 2015 lawsuit brought by U.S. investors against the petrochemical company, which alleged the company had misled investors into believing its operations were legitimate. The settlement follows the December 2016 guilty plea by the company and its affiliated construction firm to violating the Foreign Corrupt Practices Act. Together, the companies agreed to pay $3.5 billion in a combined global settlement with U.S., Brazilian, and Swiss authorities.

    Financial Crimes FCPA Anti-Corruption Braskem SA Petrobras Brazil Switzerland

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