Chairman of Macau-based real estate development company convicted at trial for scheme to bribe UN officials 

On 27 July 2017, the Department of Justice ("DOJ") announced that a Macau businessman was convicted after a four-week trial on six counts in connection with his multi-year scheme to pay more than $1.3 million in bribes to officials of the United Nations (“UN”). According to the DOJ, the defendant conspired with and paid bribes to a former UN Ambassador from the Dominican Republic and the late former Permanent Representative of Antigua and Barbuda to the UN and the 68th President of the UN General Assembly (“UNGA”). The businessman orchestrated the bribery scheme with the principal objective of obtaining the formal support of the UN for the Macau Conference Center he hoped to build to serve as a location for meetings, discussions, forums, and other events associated with the UN. The bribes were paid in a variety of forms, including phony contracts and intermediaries as well as cash and wire payments. Four other defendants have also pleaded guilty in this case. 

 

Telecom executive pleads guilty to FCPA charges 

On 19 July 2017, the DOJ announced that the former general manager of a Florida telecommunications company pleaded guilty to conspiracy to violate the FCPA for his role in a $3 million bribery scheme.The defendant admitted that he and his co-conspirators paid roughly $3 million in bribes directly and indirectly to foreign officials employed by Telecommunications D’Haiti ("Haiti Teleco"), the state-owned and state-controlled telecommunications company in Haiti, and to a foreign official in the executive branch of the Haitian government, in order to secure a favorable contract and favourable treatment in connection with that contract from Haiti Teleco. It is reported that the co-conspirators embezzled some of the money through third-party intermediaries and paid other money directly to officials or relatives of officials.  The defendant is the ninth individual to plead guilty or to have been convicted in this case.

 

CDM Smith Inc. resolves FCPA violations through DOJ declination and disgorgement  

The DOJ has publicly announced that it is closing its Foreign Corrupt Practices Act ("FCPA") investigation against Boston-based CDM Smith with a decision of a declination and disgorgement. According to the DOJ, employees and agents of the company and its subsidiary in India paid bribes to officials in the National Highways Authority of India (“NHAI”), India’s state-owned highway management agency and an “instrumentality” under the FCPA, in order to receive contracts from NHAI. In addition, the company and its subsidiary in India paid $25,000 to local officials in the Indian state of Goa in relation to a water project contract. All senior management at the subsidiary in India (who also acted as employees and agents of the company and signed contracts on behalf of the company, including CDM India’s country manager) were aware of the bribes, and approved or participated in the misconduct.

The DOJ agreed to the declination after the company agreed to disgorge approximately $4 million in profits, made a timely voluntary self-disclosure, completed a comprehensive investigation, gave full cooperation, enhanced its compliance program, and fired all executives and employees involved in the FCPA offenses. This resolution is the seventh declination pursuant to the DOJ's FCPA Pilot Program, and the fourth declination with disgorgement. The Pilot Program, instituted in April 2016 and extended during the DOJ's review of its utility and efficacy in April 2017, is designed to encourage companies to self-report FCPA violations in exchange for leniency. 

 

Seventh company pleads guilty for fixing electrolytic capacitor pricing  

On 11 July 2017, the DOJ announced that Nichicon Corporation ("Nichicon"), a Japanese electrolytic manufacturer, has pleaded guilty for fixing the price of electrolytic capacitors sold to customers in the US and elsewhere.  According to the DOJ, Nichicon joined a conspiracy to suppress and eliminate competition for electrolytic capacitors from November 2001 to December 2011, in violation of the Shearman Act. Nichicon agreed to pay $42 million in criminal fines. The DOJ Antitrust Division has now charged seven companies and ten individuals for participating in this lengthy price-fixing conspiracy.

DOJ seeks to recover over $100 million in Nigerian oil corruption case  

On 14 July 2017, the DOJ announced that it had filed a civil complaint seeking the forfeiture and recovery of $144 million in assets that are allegedly the proceeds of foreign corruption offences, under the Kleptocracy Asset Recovery Initiative.

According to the DOJ, from 2011 to 2015, two Nigerian businessmen conspired with others to pay bribes to Nigeria’s former Minister for Petroleum Resources, who oversaw Nigeria’s state-owned oil company, in order to obtain lucrative oil contracts. The DOJ has alleged that the proceeds of those illicitly awarded contracts were then laundered in and through the US and used to purchase various assets subject to seizure and forfeiture, including a $50 million condominium located in Manhattan’s and a $80 million yacht.  

FinCEN fines BTC-e virtual currency exchange for AML violations   

On July 27, 2017, the Financial Crimes Enforcement Network ("FinCEN") announced a $110,003,314 civil money penalty against BTC-e for willfully violating US anti-money laundering ("AML") laws.  BTC-e is an internet-based, foreign-located money transmitter that exchanges fiat currency as well as the convertible virtual currencies Bitcoin, Litecoin, Namecoin, Novacoin, Peercoin, Ethereum, and Dash. FinCEN alleges that BTC-e facilitated transactions involving ransomware, computer hacking, identity theft, tax refund fraud schemes, public corruption, and drug trafficking. One of the operators of BTC-e was arrested also whilst FinCEN assessed a $12 million penalty against him for his role in the violations.   

Celgene settles fraud allegations over cancer drug improper promotion  

On July 24 2017, the DOJ announced that Celgene Corp. ("Celgene"), a manufacturer of pharmaceuticals, has agreed to pay $280 million to resolve a “whistleblower” lawsuit that related to the promotion of two cancer treatment drugs for uses not approved by the Food and Drug Administration ("FDA"). Celgene allegedly violated the federal False Claims Act and the laws of 28 states and the District of Columbia by submitting fraudulent claims to Medicare and state health care programs. The allegations included the use of false and misleading statements about the drugs, and paying kickbacks to physicians to induce them to prescribe the drugs.

 
Sanctions

US President recertifies the JCPOA and extends review of Sudan sanctions  

On 17 July 2017, the US President certified Iranian compliance with the Iran nuclear deal, the Joint Comprehensive Plan of Action ("JCPOA"). This recertification comes despite the US President's statements that he did not want to certify compliance. The recent recertification signals the United States' continued willingness to maintain the sanctions relaxation implemented through the JCPOA, at least in the short term.

Despite the recertification, on 18 July, the Office of Foreign Assets Control ("OFAC") announced the designation of sixteen entities and individuals for supporting illicit Iranian actors or activity. These designations include seven entities and five individuals for engaging in activities in support of Iran’s military or Iran’s Islamic Revolutionary Guard Corps ("IRGC"), as well as an Iran-based transnational criminal organization and three associated persons. The three networks designated allegedly supported Iran’s military procurement or the IRGC through the development of unmanned aerial vehicles and military equipment for the IRGC, the production and maintenance of fast attack boats for the IRGC-Navy, or the procurement of electronic components for entities that support Iran’s military. The transnational criminal organisation designated, along with two Iranian businessmen and an associated entity, allegedly orchestrated the theft of US and western software programs which, at times, were sold to the Government of Iran. On 28 July, OFAC again announced the designation of six Iran-based subordinates of Shahid Hemmat Industrial Group ("SHIG"), an entity central to Iran’s ballistic missile program, in response to Iran’s continued provocative actions, such as the launch of the Simorgh space launch vehicle. 

Additionally, on 11 July 2017, the President issued an Executive Orderthat provides additional time to review the revocation of sanctions against Sudan. This Executive Order extends the review time set by an earlier Executive Order, issued in January by former President Obama. That January order provided for the revocation of certain Sudan sanctions on July 12, 2017. The new order extends the review time until October 12, 2017. Details can be found at our e-bulletin here.

US passes legislation that strengthens Iran, Russia, and North Korea Sanctions

H.R. 3364 ("Countering America's Adversaries Through Sanctions Act")overwhelmingly passed the House and Senate and has now been signed by the US President, albeit with partly critical signing statements. The law represents a significant development in sanctions against Iran, Russia, and North Korea.

The sanctions do not alter the JCPOA. Nevertheless, the law imposes a number Iran-related measures, including secondary sanctions against any person whom the President determines "knowingly engages in any activity that materially contributes to the activities of the Government of Iran with respect to its ballistic missile program" as well as on any person that knowingly "engages in any activity that materially contributes to the supply, sale, or transfer directly or indirectly to or from Iran, or for the use in or benefit of Iran" of various arms, training or resources related to use of arms. The law also imposes mandatory terrorism-related sanctions for the Iranian Revolutionary Guard Corps ("IRGC") and Iranian Revolutionary Guard Corps-Quds Force ("IRGC-QF") and their "affiliates."

With respect to Russia, it authorizes sanctions against persons knowingly investing or providing goods and services to the Russian Federation above a threshold amount of $1 million or $5 million over any 12-month period, which directly and significantly enhances the construction of energy export pipelines. It also requires the Treasury Department to shorten debt tenors allowed for certain Sector Sanctions Identification entities under current sectoral sanctions against Russia. Another provision authorizes secondary sanctions to be imposed on any foreign person that knowingly "facilitates a significant transaction or transactions" for or on behalf of "any person subject to sanctions imposed by the United States with respect to the Russian Federation."

The law's North Korea sanctions adopt the provisions of the Korean Interdiction and Modernization of Sanctions Act (H.R. 1644). Among other measures, one provision expands the mandatory designation of sanctioned persons under the North Korea Sanctions and Policy Enhancement Act of 2016 to include those who knowingly purchase "any significant amount" of North Korean rare earth minerals; sell or transfer to North Korea rocket, aviation, or jet fuel (except for use by a civilian passenger aircraft outside North Korea); insure a vessel owned or controlled by the North Korean government; or maintain a correspondent account with any North Korean financial institution (unless approved by the UN Security Council). The bill also provides for new discretionary sanctions targeting North Korean exports such as coal, iron, textiles, seafood, and overseas workers, and strengthened sanctions regarding forced or overseas labor by North Korean workers.

Details can be found at our e-bulletin here.

US imposes sanctions on Chinese bank for alleged transactions with North Korea  

On 29 June 2017, the Department of the Treasury announced multiple sanctions concerning North Korea. FinCEN announced a finding that Bank of Dandong, a Chinese bank, is a foreign bank of primary money laundering concern due to its alleged action as a conduit for illicit North Korean financial activity, and FinCEN has proposed to sever the bank from the US financial system. In addition, OFAC designated two Chinese individuals and one Chinese company who allegedly facilitated North Korea’s ongoing weapons of mass destruction development and continued violations of UN Security Council resolutions.

US imposes sanctions on Venezuelan President Nicolás Maduro  

On 31 July 2017, OFAC announced the designation of the President of Venezuela in response to his controversial election, which the US authorities allege was illegitimately used to usurp the constitutional role of the democratically elected National Assembly, rewrite the constitution, and impose an authoritarian regime on the people of Venezuela. 

OFAC fines Singapore Firm $12 Million for Iran sanction violations  

On 27 July 2017, OFAC announced that CSE TransTel Pte. Ltd., a company based in Singapore, settled 104 apparent violations of Iran sanctions by paying a fine of approximately $12 million. According to OFAC, during 2012 and 2013, the company caused at least six separate financial institutions to engage in the unauthorized exportation or re-exportation of financial services from the United States to Iran, by originating 104 wire transfers involving Iran and totaling more than $11,000,000 through the United States. The company did not voluntarily self-disclose these violations.

US Government wins forfeiture case of Iranian-owned tower in Manhattan  

On 29 June 2017, the DOJ announced that a Manhattan jury has found that a 36-story office building at 650 Fifth Avenue (the “Building”) in Manhattan, worth at least $500 million, and other real property and bank accounts are forfeitable to the United States as proceeds of violations of the Iran sanctions and property involved in laundering the proceeds of those sanctions violations. The building is managed by a charity determined by the jury to be controlled by the Iranian government, which is subject to complete asset freeze under US sanctions.