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: Who is the new chief of Foreign Corrupt Practices Act (FCPA) Unit at the U.S. Department of Justice (DOJ)? Why did a U.S. appellate court agree that a new trial was warranted in a case involving alleged bribery in Haiti? When can a defendant be convicted of bribing an employee of a state-owned enterprise under Canada’s foreign bribery law? The answers to these questions and more are here in our August 2021 Top 10.
1. DOJ Selects New FCPA Unit Chief.
In August 2021, David Last was named the permanent head of DOJ’s FCPA Unit. Last, who had held the position in an acting capacity since April 2021, joined the FCPA Unit in 2016 from the U.S. Attorney’s Office for the District of Columbia, where he served as an Assistant United States Attorney for approximately 10 years. Last also serves as an adjunct professor of trial practice at his alma mater, the Georgetown University Law Center. He is experienced in prosecuting both corporations and individuals (including helping secure the July 2017 trial conviction of Macau real estate developer Ng Lap Seng) under the FCPA. Last is expected to continue DOJ’s aggressive enforcement of the FCPA and is known to be a firm, but fair, prosecutor.
2. First Circuit Affirms New Trial Order in Haitian Bribery Case.
On August 9, 2021, the U.S. First Circuit Court of Appeals affirmed the District of Massachusetts’ March 2020 decision granting a new trial for business executives Joseph Baptiste and Richard Boncy, following their June 2019 convictions on FCPA and other charges related to allegations that they bribed senior Haitian government officials in exchange for approval of an $84 million port development project. The district judge determined that Baptiste’s attorney was constitutionally ineffective because he failed to investigate possible defenses, did not cross-examine most of the government’s witnesses, and did not review all of the discovery produced by prosecutors. Somewhat surprisingly, the district judge also found that the performance of Baptiste’s attorney was so poor that it justified a new trial for Boncy as well, because it negatively affected how the jury viewed both defendants and overburdened Boncy’s lawyer. In affirming the district court, the First Circuit rejected DOJ’s position that overwhelming evidence of guilt alone can negate an ineffectiveness claim and held that the trial judge was in the best position to evaluate prejudice to the defendants. Because the appeal was solely focused on the ineffective assistance of counsel issue, the Baptiste decision, unlike several other recent cases (see, e.g., #7 in our Top 10 Anti-Corruption Developments of the 2010s), does not address any substantive issues related to the FCPA.
3. SEC Closes FCPA Investigation of U.S.-Based Foodservice Packaging Company.
In an August 5, 2021 securities filing, Pactiv Evergreen disclosed that the U.S. Securities and Exchange Commission (SEC) had informed the company that it had decided to end its investigation without pursuing any action against the company. According to the filing, the company disclosed gift-card-related issues in China to DOJ and SEC in August 2020, and had also identified “certain other gift, travel and entertainment practices that do not comply with Company policy and expectations.” In May 2021, the company similarly announced that DOJ had ended its parallel investigation into the company. In total, DOJ and SEC appear to have concluded their investigation of this self-disclosure in about one year, a relatively expedited timetable that provides some reason for optimism for companies considering self-reporting potential FCPA concerns to the enforcement agencies.
4. Another Business Executive Charged with Venezuelan Bribery Scheme.
On August 4, 2021, DOJ announced that Naman Wakil, a Syrian national and U.S. lawful permanent resident, was arrested in the Southern District of Florida on FCPA and money laundering charges. According to the indictment, Wakil participated in a scheme from 2010 through 2017 to bribe officials of Venezuela’s state-owned and controlled food company, Corporación de Abastecimiento y Servicios Agrícola (CASA) officials, and of joint ventures involving Venezuela’s national oil company, Petróleos de Venezuela S.A. (PDVSA), in exchange for $250 million in contracts to provide goods and services to both entities. Wakil allegedly laundered the money through various Florida bank accounts and purchased 10 apartments, a $3.5 million plane, and a $1.5 million yacht. Wakil reportedly posted a $50 million bond to secure his pretrial release. He was first tied to potential bribery of CASA officials in documents released as part of the Panama Papers, demonstrating the continued importance of those documents to criminal investigations around the world.
5. DOJ Begins Process of Remitting Forfeited Funds in Connection with FIFA Corruption Case.
On August 24, 2021, DOJ announced that it would begin the process of remitting forfeited funds to the victims of the Fédération Internationale de Football Association (FIFA) corruption case. The FIFA investigation has resulted in charges against more than 50 individual and corporate defendants from more than 20 countries, primarily in connection with the alleged offer and receipt of bribes and kickbacks paid by sports marketing companies to soccer officials in exchange for the media and marketing rights to various soccer tournaments and events. To date, the investigation has resulted in 27 individual guilty pleas, four corporate guilty pleas, and two individual trial convictions, among other resolutions. Many of the defendants have been ordered to forfeit assets obtained through their alleged criminal activity. DOJ granted a joint petition for remission filed by victims of the alleged corruption, recognizing losses and granting remission up to a total of more than $201 million, of which $32.3 million in forfeited funds has been approved for an initial distribution. The funds will be remitted to FIFA and the regional confederations for South America (CONMEBOL) and North and Central America (CONCACAF), which have committed to distributing the funds through the World Football Remission Fund (the “Fund”), which will be established under the FIFA Foundation, an independent foundation focused on youth programs, community outreach, and humanitarian needs. (For more on the global FIFA investigations, see our May 2015, December 2016, November 2017, February 2018, February 2020, April 2020, May 2020, June 2020, February 2021, and May 2021 Top 10s, and #6 below.)
6. Former El Salvador Soccer Chief Pleads Guilty in FIFA Corruption Probe.
On August 23, 2021, DOJ announced that Reynaldo Vasquez, the former president of El Salvador’s soccer federation, the Federacion Salvadorena de Futbol (FESFUT), had pleaded guilty in the Eastern District of New York to a racketeering conspiracy charge involving the payment of bribes to stage and broadcast soccer matches. According to court filings, Vasquez received a $350,000 bribe in 2012 in connection with the sale of media and marketing rights to El Salvador World Cup qualifying matches to be played in advance of the 2018 World Cup. He also allegedly agreed to receive tens of thousands of dollars in bribes in connection with the participation of the Salvadorian national team in friendly matches to be played in the United States. The scheme allegedly involved a Miami-based sports marketing company and wire transfers through U.S. bank accounts. Vasquez agreed to forfeit $360,000 and faces up to 20 years in prison. On January 29, 2021, Vasquez was extradited to the United States from El Salvador, where he was serving an eight-year sentence for fraud. (For more on the global FIFA investigations, see #5 above.)
7. Over $1 Billion in Allegedly Misappropriated Sovereign Wealth Funds Now Repatriated to Malaysia.
On August 5, 2021, DOJ announced that it had repatriated to Malaysia an additional $452 million in funds allegedly misappropriated from 1Malaysia Development Berhad (1MDB), Malaysia’s sovereign wealth fund. The total amount now repatriated to Malaysia exceeds $1.2 billion. DOJ alleges that more than $4.5 billion in funds belonging to 1MDB were misappropriated by high-level officials of 1MDB and their associates through a criminal scheme involving international money laundering and embezzlement. Some of the embezzlement proceeds were allegedly used to pay bribes. Beginning in 2016, 41 civil forfeiture actions filed in the U.S. District Court for the Central District of California and one in the U.S. District Court for the District of Columbia by the Money Laundering and Asset Recovery Section of DOJ led to the seizure of over $1.7 billion in stolen assets. This is the largest recovery to date under DOJ’s Kleptocracy Asset Recovery Initiative. (For more on the 1MDB case, see our July 2016, August 2016, June 2017, December 2017, May 2018, June 2018, August 2018, October 2018, February 2019, May 2019, and April 2020 Top 10s.)
8. SEC Awards Millions to FCPA Whistleblower.
On August 10, 2021, the SEC announced an award of $3.5 million to an unnamed whistleblower who reported “valuable new information that caused the SEC to expand an existing investigation into a new geographic area” and “provided supplemental information and assistance that helped the SEC bring the charges in the underlying enforcement action.” Although SEC did not identify the enforcement action, the lawyers representing the recipient confirmed that the person is a foreign national who assisted in bringing an SEC FCPA accounting-provision enforcement action against Juniper Networks in August 2019. (The company announced in February 2018 that DOJ had declined the case.) The whistleblower received 30% of the settlement amount, in line with SEC’s rule to automatically apply the 30% maximum for awards of $5 million or less where no negative factors are present. (See our September 2020 Top 10 for a discussion of this and other recent amendments to SEC’s whistleblower award rules.)
9. Brazil Brings Petrobras-Related Bribery Charges Against Executives of French Engineering Company.
On August 26, 2021, Brazil’s federal prosecution service, the Ministério Público Federal (MPF), announced bribery charges against two executives at Doris Engenharia, a Brazilian subsidiary of French engineering company Doris Group, a former treasurer of Brazil’s Workers’ Party, and two of his assistants. The business executives allegedly used a third party to bribe a former manager at Brazil’s national oil company, Petróleo Brasileiro S.A. (“Petrobras”), in exchange for $200 million in engineering contracts for eight platform vessels. The Workers’ Party treasurer also allegedly received bribes through the third party and another company controlled by his two assistants. The bribery schemes allegedly took place between 2010 and 2015. This latest action shows that, despite the closure of Operation Lava Jato (a/k/a Operation Car Wash) in February 2021, Brazil still has the appetite and resources to bring corruption cases involving Petrobras.
10. Canadian Court Orders Retrial in Indian Foreign Bribery Case.
In an August 18, 2021 judgment, the Court of Appeal for Ontario set aside the January 2019 trial convictions of UK citizen Shailesh Govindia and U.S. national Robert Barra for agreeing to bribe a foreign public official, the Indian Minister of Civil Aviation, contrary to Canada’s Corruption of Foreign Public Officials Act (CFPOA). The defendants were accused of taking part in a failed plot to secure a biometrics contract from Air India for U.S.-based Cryptometrics and its Canadian subsidiary and were sentenced in March 2019 to 30 months in prison. The Court of Appeal held there was a “reasonable possibility” that the delayed disclosure of emails between the prosecutors and a principal witness in the case, Cryptometrics’ former COO Dario Berini, affected the fairness of the trial by influencing the defendants’ decision not to testify on certain aspects of the case and hindering their counsels’ approach to Berini’s cross-examination and other evidence. Accordingly, the court set aside the convictions and ordered a new trial. The Court of Appeal also rejected the prosecution’s argument that the trial judge applied an incorrect mens rea standard for bribery involving employees of state-owned enterprises. The Court held, “In a case where the person bribed or offered a bribe is employed by a corporation, to have the necessary mens rea, the accused must know not only that the person was employed by the corporation, but that the corporation was established to perform a duty or function on behalf of a foreign state, or is performing such a duty or function. The accused need not know that this is how the CFPOA defines a foreign public official, nor that bribing the person is illegal.” The trial court found the evidence sufficient to prove that the defendants knew that India’s Minister of Civil Aviation was a foreign public official but insufficient to prove the same regarding the Air India employees. The Court of Appeal also affirmed the trial judge’s finding of territorial jurisdiction over the alleged offense, holding that prosecution had established that the alleged conspiracy had a substantial link to Canada. This case is significant because it involved the second-ever trial under the CFPOA. In July 2017, the Court of Appeal of Ontario affirmed the first-ever conviction under the CFPOA in connection with related charges against Nazir Karigar, a former agent of the Canadian subsidiary.