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French Financial Crimes Investigator Joins SFO Criminal Investigation of Aircraft Manufacturer
On Thursday, March 16, 2017, an aircraft manufacturer based in Toulouse, France, 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). The company stated that the investigations into the use of third party agents by the company’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.
Law Firm Raided, Founders Arrested, Tied to Bribery Investigation
On February 8, authorities in Panama raided the offices of a law firm at the center of the sprawling Panama Papers scandal, and arrested the firm’s founders. Reuters reports that Panama’s Attorney General announced on Twitter that the raid and arrests were tied to the investigation of the Brazilian construction company that in December reached a $3.5 billion combined global settlement with U.S., Brazilian, and Swiss authorities to resolve FCPA allegations. Until now, the investigations spawned by the 2016 release of millions of documents stolen from the law firm were focused on money laundering and tax evasion. The tie to the company’s investigation brings anti-bribery investigations into the mix.
CEO Questioned by UK SFO in Bribery Investigation
Less than a month ago, as previously reported on FCPA Scorecard, 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 company’s CEO. Although DOJ could pursue such an investigation in the future, the agency may also defer to the SFO to handle the matter.
Two More Former Hedge Fund Company Executives Charged by SEC in Far-Reaching Bribery Scheme
On January 26, the SEC charged two more former executives at an American hedge fund company with being the “driving forces” behind a massive bribery scheme across Africa that violated the FCPA. The civil complaint, which was filed in the United States District Court for the Eastern District of New York, alleges that the former head of the company’s European office in London, and an investment executive on Africa-related deals, caused “[the company] to pay tens of millions of dollars in bribes to government officials on the continent of Africa.” Specific allegations include that they induced Libyan authorities to invest in the company’s managed funds, and directed illicit efforts to secure mining deals by bribing government officials in Libya, Chad, Niger, Guinea, and the Democratic Republic of the Congo. In announcing the complaint, Chief of the SEC’s FCPA Unit, said the defendants “were the masterminds of the company’s bribery scheme that improperly used investor funds to pay bribes through agents and partners to officials at the highest levels of foreign governments.” The complaint seeks disgorgement and civil monetary penalties among other remedies.
The complaint follows the company’s payment last September of $412 million to the DOJ and SEC to settle criminal and civil charges in one of the largest ever FCPA enforcement actions. Previous FCPA Scorecard coverage of the company’s settlement with the DOJ and SEC can be found here.
UK-based Manufacturer Settles FCPA Charges As Part of $800 Million Global Bribery Investigation Resolution
On January 17, a UK-based manufacturer and distributor for the civil aerospace, defense aerospace, marine, and energy sectors worldwide, agreed to pay nearly $170 million to the DOJ to resolve charges that it conspired to violate the anti-bribery provisions of the FCPA around the world. The settlement with the DOJ (via a three-year deferred prosecution agreement (DPA)), was a fraction of the company's $800 million global resolution in connection with bribes paid to government officials in exchange for government contracts in China, India, Indonesia, Malaysia, Nigeria, Russia, Thailand, Brazil, Kazahkstan, Azerbaijan, Angola, and Iraq.
In addition to settling with the DOJ, the company resolved charges with the UK SFO by entering into a DPA and agreeing to pay a fine of $604,808,392. The company entered into a leniency agreement with the Brazilian Ministério Público Federal (MPF) and agreed to pay a penalty of $25,579,170.
According to the DPA Statement of Facts, the company admitted that between 2000 and 2013, it conspired to violate the anti-bribery provisions of the FCPA by paying more than $35 million in bribes to foreign officials in exchange for confidential information and/or government contracts. Many of these contracts benefited RRESI, the company’s indirect U.S. subsidiary. The company made the majority of the bribes by inflating commission payments to third-party intermediaries, who then paid part of the commission as bribes to government officials.
The DOJ lauded the company’s cooperation in its investigation and as a result, the company received a 25 percent reduction from the low end of the U.S. Sentencing Guidelines fine range due. However, the DOJ refused to award the company any voluntary disclosure credit. The DOJ has been transparent that it only will award voluntary disclosure credit when the disclosure occurs prior to an imminent threat of disclosure or government investigation. Here, that test was not satisfied because the company did not disclose the conduct until after media reports and the related SFO inquiry began.
Two Additional Businessmen Plead Guilty in Venezuelan Oil Company Scheme
On January 10, it was announced that two additional defendants, 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.
According to admissions contained here and here, 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 the company’s officials to obtain energy contracts or receive payment for previously awarded contracts. Some of the bribes were paid to the company’s 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 the company. The government’s investigation is ongoing. Previous FCPA Scorecard coverage on the company’s investigations can be found here.
Four Individuals 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 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, the brother and nephew conspired to bribe a governmental official of an unnamed Middle Eastern country to get his country to purchase the building from a Korea-based company, where the brother was then a senior executive. To facilitate the sale of Landmark 72, the Korea-based company hired the nephew to secure an investor for the deal.
According to the allegations, the brother and nephew agreed to pay the foreign official $500,000 initially, and $2 million upon completion of the sale, through the co-defendant, who had falsely held himself out as an agent of the foreign official; the fourth individual allegedly assisted in obtaining the initial $500,000. In a twist, according to the DOJ, the co-defendant then stole the money and used it for personal expenses instead of paying any bribes. After the Landmark 72 deal failed to go through, the nephew allegedly lied and provided forged emails from the foreign official and other documents to the Korea-based company regarding the status of the deal and stole approximately $225,000 that was advanced by the Korea-based company to cover brokerage expenses.
Four Businessmen and Two Mexican Government Officials Plead Guilty in Aircraft Maintenance Bribery Scheme
On December 27, the DOJ announced the unsealing of charges against four businessmen and two Mexican officials involved in a scheme to secure aircraft maintenance and repair contracts with Mexican government-owned companies. The four businessmen all pleaded guilty to conspiracy to violate the FCPA, with two of the businessmen separately pleading guilty to conspiracy to commit wire fraud. Additionally, both former officials with Mexican state-owned companies each pleaded guilty to one count of conspiracy to commit money laundering.
According to the DOJ, the defendants admitted that between 2006 and 2016, millions of dollars were paid to numerous Mexican government officials to secure aircraft parts and servicing contracts with Mexican government-owned companies. The defendants also admitted to laundering the proceeds of the bribery scheme. In total, the four businessmen paid more than $2 million in bribes to Mexican officials, including the two former officials.
One of the former officials was sentenced in May to 15 months in prison; the remaining defendants have yet to be sentenced.
Gabonese National Pleads Guilty to Bribing Government Officials in Africa in Connection with Global Management Firm Mining Operations
On December 9, 2016, the son of a former Prime Minister of Gabon pleaded guilty to conspiring to make corrupt payments to government officials in Africa in violation of the FCPA. The Gabonese national worked as a consultant for a joint venture between the company and an entity incorporated in the Turks and Caicos. The DOJ charged him with conspiring to pay approximately $3 million in bribes to high-level government officials in Niger, as well as providing them with luxury cars, in order to obtain uranium mining concessions. Similarly, the DOJ also charged him with bribing a high-ranking government official in Chad with luxury foreign travel for the official and his wife in order to obtain a uranium mining concession there. In addition, the DOJ charged him with bribing government officials in Guinea with cash, the use of private jets, and a luxury car in order to obtain confidential government information.
The guilty plea comes on the heels of the company’s $412 million settlement with the DOJ and SEC to resolve related criminal and civil charges of violating the FCPA in connection with the bribery of high-level government officials across Africa. The settlement represented the fourth largest FCPA financial penalty at the time. The company’s CEO and former CFO have also previously settled related civil allegations. Prior Scorecard coverage of the company’s settlement with the DOJ and SEC may be found here.
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 to 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.