Designed for busy in-house counsel, compliance professionals, and anti-corruption lawyers, this newsletter summarizes some of the most important international anti-corruption law and case developments from the past month, with links to primary resources. This month we ask: Which companies resolved foreign bribery cases in the United Kingdom and Brazil? How will a U.S. tip line impact anticorruption efforts in Central America? How will policy changes announced by senior U.S. enforcement officials impact enforcement of the Foreign Corrupt Practices Act (FCPA)? The answers to these questions and more are here in our October 2021 Top 10 list.
1. British Oilfield Services Provider Resolves Middle East Bribery Allegations in the UK.
On October 4, 2021, the UK Serious Fraud Office (SFO) announced that Petrofac Limited, one of the world’s largest providers to oil and gas producers, had agreed to plead guilty to seven counts of failing to prevent bribery contrary to the UK Bribery Act (UKBA) and to pay approximately $104.6 million in total penalties to resolve allegations of alleged bribery in the Middle East. According to the SFO, the company failed to prevent former executives from using agents to “systematically bribe officials” to win oil contracts worth $3.66 billion in Iraq, Saudi Arabia, and the United Arab Emirates (UAE) from 2011 to 2017. The company allegedly paid $44 million in bribes and engaged in “complex and deliberately opaque methods,” including disguising payments through sub-contractors, creating fake contracts for fictitious services, and passing bribes through more than one agent and more than one country, to disguise their actions. This settlement follows the January 2021 guilty plea of David Lufkin, Petrofac’s former global head of sales, to three counts of bribery for corruptly influencing the award of approximately $3.3 billion in contracts to Petrofac in the UAE. In February 2019, Lufkin also pleaded guilty to 11 counts of bribery related to the award of contracts to Petrofac in excess of $730 million in Iraq and in excess of $3.5 billion in Saudi Arabia.
2. UK-based Engineering Company Resolves Bribery Allegations in Brazil.
On October 26, 2021, Brazil’s Office of the Comptroller General (CGU) and the Attorney General’s Office (AGU) announced that Rolls-Royce had agreed to pay approximately $27.8 million to resolve allegations that it bribed public officials in order to obtain contracts from Brazil’s national oil company, Petroleo Brasiliero S.A. (“Petrobras”), between 2003 and 2005. The leniency agreement is connected to an agreement reached with Brazil’s Ministério Público Federal (MPF) as part of a global resolution in January 2017. The CGU and AGU credited the approximately $25.6 million payment that the company already made in connection with the MPF agreement.
3. Swiss Bank Resolves Mozambique Bribery Allegations with SEC.
On October 19, 2021, the U.S. Securities and Exchange Commission (SEC) announced that Credit Suisse Group AG had agreed to pay nearly $475 million to U.S. and UK authorities, including nearly $100 million to SEC in total penalties, disgorgement, and prejudgment interest, for allegedly misleading investors and violating the FCPA’s internal accounting controls and books and records provisions in connection with two bond offerings and a syndicated loan that raised over $1 billion on behalf of state-owned entities in Mozambique. According to SEC, the offering materials suggested that the proceeds of the transactions would help develop Mozambique’s tuna fishing industry, but instead a portion of the proceeds was used to pay at least $200 million in kickbacks to now-indicted investment bankers and their intermediaries (see our March 2019 Top 10) and bribes to Mozambique government officials. The bank neither admitted nor denied the allegations.
4. Houston-Based Oil Field Services Company Receives Declination for Iraq Dealings.
In an October 22, 2021 securities filing, Baker Hughes disclosed that the U.S. Department of Justice (DOJ) and SEC had informed the company that they had closed their investigations into the companies’ operations in Iraq and its dealings with Unaoil Limited and its affiliates. Although the filing itself provides few details regarding the investigations, U.S. and UK authorities have brought several cases and other proceedings involving Unaoil, its executives, and its business partners. (For more on the Unaoil investigation, see our November 2017, May 2018, June 2018, December 2018, July 2019, March 2020, May 2020, July 2020, August 2020, February 2021 March 2021, and June 2021 Top 10s.)
5. CEO of Brazil-Based Petrochemical Company Sentenced for Alleged Brazilian Bribery Scheme.
On October 12, 2021, DOJ announced that the former CEO of Braskem S.A., Jose Carlos Grubisich, had been sentenced to 20 months in prison following his April 2021 guilty plea in the Eastern District of New York to violations of the FCPA’s anti-bribery and books and records provisions. Grubisich was allegedly involved in the diversion of approximately $250 million of company funds into a secret slush fund used to pay bribes to government officials, political parties, and others in Brazil. As part of his guilty plea, Grubisich admitted to agreeing to pay bribes to Brazilian government officials to ensure that the company would retain a contract for a significant petrochemical project from Petrobras and to agreeing to falsely record payments to offshore shell companies as payments for legitimate services. Grubish had faced up to 10 years’ imprisonment. (For more on the Braskem case, please see our December 2016, November 2019, October 2020, and April 2021 Top 10s.)
6. Colombian and Venezuelan Nationals Charged in U.S. in Connection with Venezuelan Bribery Scheme.
On October 21, 2021, DOJ announced that money laundering charges were filed in the Southern District of Florida against five individuals—Alvaro Pulido Vargas (a.k.a. German Enrique Rubion Salas), Jose Gregorio Vielma-Moro, Emmanuel Enrique Rubio Gonzalez, Carlos Rolando Lizcano Manrique, and Ana Guillermo Luis—in connection with an alleged scheme to launder the proceeds of contracts from the Comite Local de Abastecimiento y Produccion (CLAP), a Venezuelan state-owned and state-controlled food and medicine program, that were obtained by bribing Venezuelan government officials, including Vielma-Moro. The indictment alleges that the defendants received approximately $1.6 billion from the Venezuela government as a result of the bribery scheme and transferred approximately $180 million of the proceeds to or through the United States. One of the defendants, Pulido Vargas, was previously charged in July 2019 with conspiring with Alex Nain Saab Moran (see next entry) to launder the proceeds of a bribery scheme involving a November 2011 contract with the Venezuelan government to build low-income housing.
7. Extradited Colombian National Makes First Federal Court Appearance in Venezuelan Money Laundering Probe.
On October 18, 2021, DOJ announced that Colombian businessman Alex Nain Saab Moran would make his initial appearance later that day in the Southern District of Florida in connection with a July 2019 indictment charging him with laundering the proceeds of a Venezuelan bribery scheme. Saab was extradited to the United States on October 16, 2021, from the Republic of Cabo Verde (Cape Verde), where he had been detained since June 2020 at the request of the Untied States. Saab unsuccessfully challenged his extradition from Cabo Verde, where his private jet reportedly stopped for fuel en route to Iran. Saab is reportedly a close ally of Venezuelan President Nicolás Maduro, who characterized the extradition as a “kidnapping of the Venezuelan diplomat Alex Saab by the government of the United States.”
8. DOJ Announces New Bribery and Money Laundering Tip Line for Central America.
On October 15, 2021, DOJ announced a tip line to help assist its Anticorruption Task Force fight corruption in El Salvador, Guatemala, and Honduras. In June 2021, President Biden issued a National Security Study Memorandum (NSSM) that established fighting corruption as a “core national security interest.” The NSSM directed several federal agencies, including DOJ, to conduct an interagency review and submit a report and recommendations within 200 days of the NSSM. Shortly after the NSSM, the Anticorruption Task Force was established with a goal of combatting corruption, human smuggling, and trafficking in the Northern Triangle and Mexico. The Task Force, which is comprised of members from DOJ’s FCPA Unit, Kleptocracy Asset Recovery Initiative, and Narcotic and Dangerous Drugs Section (NDDS), will review tips regarding possible corruption or movements of ill-gotten funds for U.S. jurisdictional links that would allow the department to investigate, prosecute, or require the forfeiture and return of stolen assets. Although the three countries in question all garnered low scores on Transparency International’s Corruption Perceptions Index (TI CPI) for 2020—El Salvador ranks 104, Guatemala ranks 149, and Honduras ranks 157 out of the 180 countries and territories surveyed and none of the three has featured prominently in FCPA enforcement actions—by our count, the countries have featured in 0, 2, and 6 enforcement actions, respectively. It will be interesting to see whether the tip line results in increased FCPA enforcement involving the three countries.
9. New DOJ and SEC Leadership Announce Changes to Financial Misconduct Enforcement.
In October 2021, senior leadership from DOJ and SEC announced several new enforcement priorities that will impact FCPA enforcement. On October 5, 2021, Principal Assistant Deputy Attorney General John Carlin, speaking at a Global Investigations Review conference in New York, stated that, “in the days and months to come [you will see] that we are building up to surge resources for corporate enforcement. That has begun and we have started to redouble the department’s commitment to white-collar enforcement.” Among other things, PADAG Carlin stated that DOJ will embed a new squad of FBI agents in the Criminal Division’s Fraud Section, where the DOJ FCPA Unit is housed. (Read more on PADAG Carlin’s speech.) On October 28, 2021, Deputy Attorney General Lisa Monaco, speaking at the ABA’s 36th National Institute on White Collar Crime in Miami, announced three changes in DOJ corporate enforcement policy: (1) she directed DOJ to restore the Yates Memo’s guidance that companies must provide all non-privileged information about all individuals involved in misconduct to be eligible for cooperation credit; (2) she directed prosecutors to consider the full criminal, civil, and regulatory records of companies that are targets of criminal investigations, not just the specific conduct under investigation; and (3) she announced the rescission of prior DOJ guidance that some had interpreted as suggesting that corporate monitors are disfavored. DAG Monaco also created a Corporate Crime Advisory Group to consider DOJ’s practices with respect to non-prosecution and deferred prosecution agreements (NPAs and DPAs). (Read more on DAG Monaco’s speech.) On October 6, 2021, SEC Division of Enforcement Director Gurbir Grewal, speaking at the annual SEC Speaks conference in Washington, D.C., announced changes to SEC’s admissions policy, stating that the agency will require admissions in cases “where heightened accountability and acceptance of responsibility are in the public interest.” This change could have a particular importance to SEC FCPA enforcement actions, which are often “neither admit nor deny” resolutions.
10. World Bank Group Publishes Sanctions Systems Annual Report.
On October 18, 2021, the World Bank Group’s Integrity Vice Presidency (INT), Office of Suspension and Debarment (OSD), and Sanctions Board released their fourth annual joint sanctions systems report. The report is designed to illustrate “how the institution’s sanctions system has worked in FY21 to meet the challenges and opportunities of an ever-changing global anticorruption landscape.” According to the report, INT received 4,311 complaint submissions in FY21, mostly through a publicly available online form that allows for anonymous submissions. Although submissions have generally increased since the online reporting tool was launched in 2014, the report cautions that this has not resulted in an increase in the number of actionable complaints. According to the report, the World Bank had 46 active corruption-related external investigation cases at the end of FY 21, representing 59% of all open cases. The World Bank opened 23 and completed nine corruption-related external investigation cases in FY21. The World Bank Group debarred or otherwise sanctioned 57 firms and individuals in FY21.