Barely a week into 2014, the U.S. Department of Justice’s (“DOJ”) first Foreign Corrupt Practices Act (“FCPA”) enforcement actions of the new year became public. On January 6, criminal complaints alleging conspiracy to violate the FCPA and substantive FCPA violations were unsealed against two former co-CEOs of PetroTiger, Ltd. (“PetroTiger”), a British Virgin Islands oil and gas services company with offices in the United States. That same day, the DOJ announced that PetroTiger’s former general counsel had pleaded guilty to conspiracy to violate the FCPA in connection with the same scheme.
The charges allege that three U.S. citizen executives of PetroTiger caused the company to make several payments in late 2010, totaling over $330,000, to an official of the Colombian state-owned oil company, Ecopetrol S.A. (“Ecopetrol”), in exchange for the official’s influencing Ecopetrol to approve PetroTiger’s contract with another company to perform oil-related services in Colombia. The contract, which was worth $39.6 million, has generated approximately $3.5 million in profits for PetroTiger to date.
Not only do these FCPA charges represent a continuation of longstanding FCPA enforcement trends, they are notable for several additional reasons. First, like many recent FCPA matters, they involve allegations of bribes to an employee of a state-owned company, not to an official employed directly by a foreign government. While the DOJ considers the meaning of the term “foreign official” to be both broad and settled, that issue is now pending court of appeals has not deterred the DOJ from pursuing prosecutions based on payments to employees of state-owned enterprises.
Second, these charges, consistent with the DOJ’s more recently stated priorities, are against individuals. It is rare for the DOJ to bring such charges without also taking enforcement action against the company involved in the bribery, especially where the employees accused of wrongdoing were high-ranking executives. While it is possible that the DOJ eventually will bring an enforcement action against PetroTiger, to date it has not, and, historically, typically would do so before or at the same time as charging individuals.
Third, while these PetroTiger cases represent the latest in a long line of enforcement actions related to the oil industry, it is worth noting that PetroTiger is a relatively small company, and the scheme at issue involved fairly modest sums. The charges against PetroTiger make plain that the DOJ will pursue, at a minimum, FCPA charges against individuals even at smaller, privately-held companies.
With the PetroTiger cases, the DOJ has made clear that it will continue to interpret the FCPA broadly and to enforce it vigorously. It appears that 2014 will be yet another year to watch on the FCPA front.