SEC Settles FCPA Claims With Noble Executives
Two executives of oil drilling contractor Noble Corp. settled bribery charges with the United States Securities and Exchange Commission just days before the case was set to begin trial. Former chief executive Mark A. Jackson and current director of a Nigerian subsidiary of Noble’s were charged in 2012 on allegations of bribing Nigerian customs officials to document export and import transactions of oil rigs that never actually happened. The SEC was under pressure to settle the case because the alleged conduct took place between 2003 and 2007, thus largely falling outside of the FCPA’s 5-year statute of limitations. The settlement comes four years after Noble Corp. agreed to pay the Department of Justice over $8.2 million, including $5.6 million in disgorged profits, to settle FCPA charges in 2010. Noble paid Nigerian authorities $2.5 million in 2011 to settle the same claims under Nigerian law. Former New Orleans Mayor Ray Nagin Sentenced Former New Orleans mayor Ray Nagin was sentenced to ten years in federal prison after a jury convicted the former mayor on over 20 counts of bribery, conspiracy, wire fraud, money laundering, and tax evasion. Nagin was the mayor of New Orleans during the Hurricane Katrina catastrophe in 2005 and gained notoriety for his ineffective leadership during that time. The bribery allegations against Nagin included claims that he received over $500,000 in personal cash payments in exchange for city contracts. Biomet Receives FCPA Subpoena Medical device maker Biomet, Inc. announced that it had received a subpoena from the SEC relating to an investigation into possible violations of an FCPA settlement the company reached in 2012 in which Biomet agreed to pay 2 $22.7 million to settle FCPA charges from both the SEC and the Department of Justice. The charges brought by Justice resulted in a deferred prosecution agreement. The SEC filing disclosed the investigation and also referenced disciplinary action the orthopaedic device maker had taken against employees for possible violations in Brazil and Mexico. It remains unclear whether the Department of Justice will undertake a similar investigation to determine whether the deferred prosecution agreement has been breached. BNP Fined $8.9 billion for Violation of United States Sanctions BNP Paribas – the largest bank in France – agreed to enter a guilty plea relating to criminal charges of facilitating billions of dollars in transactions on behalf of blacklisted countries Sudan, Iran, and Cuba. Along with the guilty plea, the banking giant agreed to pay an $8.9 billion penalty for violating the sanctions. BNP joins Standard Chartered, Barclays, Royal Bank of Scotland and Credit Suisse as the latest bank to be fined for dealing with sanctioned countries, although BNP is the first to plead guilty, and the $8.9 billion fine is the heftiest such fine in history. It will be interesting to see if individual charges follow against any of the executives involved, although none have been brought yet. DOJ Declines Prosecution Against Smith & Wesson Gun manufacturer Smith & Wesson announced that the DOJ has ended its FCPA investigation into the company’s dealings and has determined not to bring criminal charges. The company also announced that a parallel civil action brought by the SEC is close to settlement. The investigation followed a 2010 indictment of Smith & Wesson’s VP of sales relating to conduct in Africa. That executive is no longer with the company. When the investigation came to light, Smith & Wesson announced substantial changes to its foreign sales practices, including the termination of sales in certain countries altogether. The investigation and resultant changes to Smith & Wesson’s sales procedures have had a “material adverse effect” on foreign sales. The announcement serves to highlight the increasing costs of compliance and the recognition by many United States companies that it is better to accept these costs than to face the possibility of prosecution later. FedEx Announces Kenya Bribe Investigation FedEx announced that it has self-reported to United States authorities possible bribes paid to government officials in Kenya according to an article released by the Wall Street Journal. FedEx continues to investigate the matter and has found nothing to substantiate the allegations as of yet. The alleged bribes went to customs officials to clear shipments without inspection according to an anonymous tip received by FedEx General Counsel Christine Richards. THE UNITED KINGDOM UK regulators question Airbus staff over corruption allegations British regulators have reportedly arrested and questioned four former and current employees of an Airbus unit that operates in Saudi Arabia, as part of an investigation into allegations of corruption in the country. The reports indicate that the Serious Fraud Office (“SFO”) had questioned two employees at GPT Special Project Management, the Airbus unit that provides communications and 3 intranet services for the Saudi National Guard. The other two were former employees. The SFO commenced its investigation into allegations that Airbus’s parent at the time, European defense group EADS, bribed Saudi Arabian officials to win a communications contract worth $3.3 billion. A spokesman for the SFO said there had been some arrests over the weekend but declined to comment on the number of people held. Airbus was quoted in a report saying that it understood that four employees had been recently “interviewed under caution” as part of a wider SFO investigation into its unit, but could not at the moment add anything to its previous statement on the matter. Police Corruption Inquiries Underway at Scotland Yard According to reports, Scotland Yard’s anticorruption chief has disclosed “five or six” major investigations into police officers and staff which are currently underway. Assistant Commissioner Martin Hewitt stated in an interview that the investigations involved only a: “tiny, tiny percentage” of the Metropolitan Police's 50,000 employees. He added: “At the moment in terms of top level anti-corruption operations we’re running it is somewhere between five and six of those type of operations… and then there will be others in development… under no circumstances can we ever become complacent about it. We've got to understand what that threat looks like and then respond to that threat. We will always have to be operating in a way that is vigilant to people becoming corrupt in our organisation.” It has been alleged that detectives have now investigated 85 people about reports that Scotland Yard shredded large numbers of documents which may have contained information on allegations of police corruption in the Stephen Lawrence inquiry. In March 2014, an independent review of the Lawrence investigation, conducted by Mark Ellison QC, found evidence of “mass shredding” of files relating to Operation Othona, a confidential anti-corruption inquiry within the Met. Mr Hewitt said former Met commissioners Lord Stevens and Lord Blair have not been interviewed by officers investigating the shredding allegations and the wider concerns about possible police corruption in the Lawrence case and its aftermath. An administrative assistant who was ordered to shred the documents had been interviewed, Mr Hewitt told reporters. He also said that the assistant in question was the only person out of the 85 interviewees to remember the shredding incident. Mr Hewitt added that he now believed the “only logical theory” was that the “four bin bags” worth of papers were shredded as a security precaution after being entered into a computer system. Serious Fraud Office pursues investigation of Alstom The SFO is pursuing its investigation of alleged corruption at Alstom in connection with its probe into the company which commenced over four years ago. The report states that Britain’s Attorney General has given permission for the SFO to prosecute the company and former employees for alleged overseas bribery if considered appropriate. The SFO has notified seven individuals that they are under investigation.4 An Alstom spokeswoman in Paris declined to comment on the specifics of the investigation, but stated in an interview that: “Alstom continues to work constructively with the authorities to address any allegations of past misconduct.” Alstom is also co-operating with the U.S. Justice Department over allegations of bribery in Asia. According to court filings, the Justice Department holds evidence that a former Alstom executive tried to bribe officials to secure power projects in Indonesia, India and China. Two executives of Alstom’s U.S. subsidiary in Connecticut have reportedly pleaded guilty and admitted to paying bribes on behalf of the company in connection with a project on the Indonesian island of Sumatra. THE REST OF THE WORLD Argentina Further to May’s Digest which reported that Argentina’s Vice President Amado Boudou, was questioned in court about alleged influencing tactics in the acquisition of a company with a monopoly to print the national currency, Mr Boudou has allegedly been charged with bribery and conducting business incompatible with public office. It has been reported that, Mr Boudou is accused of using shell companies and middlemen to gain control of a company that was awarded contracts to print the Argentine peso, as well as information for Mr Fernandez’s election campaign. Federal judge Ariel Lijo ordered an embargo on 200,000 pesos (c. $25,000) of Mr Boudou’s property, while he waits trial in the case along with five other defendants. Mr Boudou is the first sitting Argentine vice president to face such charges. He could be sentenced to between 1 and 6 years in prison, and be banned for life from elective office if found guilty. Mr Boudou states that he is innocent despite evidence linking him to other defendants that was made public through investigative reports by Argentina’s newspapers. The charges against Mr Boudou occurred whilst the president, Mr Fernandez, is also defending other challenges. Mr Fernandez has not made any comments about the case. Reports state that potential opposition presidential candidate Julio Cobos said that the charges against Mr Boudou reflect on Mr Fernandez, and said he would seek to encourage a prosecution against Mr Boudou. According to the judge’s investigation, Mr Boudou acted to facilitate the Ciccone Calcografica printing company’s purchase by a shell company so he and other partners could benefit from tax exemptions and lucrative government contracts. The shell company, The Old Fund, was led by businessman Alejandro Vandenbroele, who is accused of covertly representing Mr Boudou in business deals. Others who were charged include Mr Boudou’s friend and business partner Jose Maria Nunez Carmona; Vandenbroele; former tax agency official Rafael Resnick Brenner; printing company co-founder Nicolas Ciccone, and his son-in-law Guillermo Reinwick. The Ciccones have said Mr Boudou was personally involved in the negotiations that 5 persuaded them to sell 70 percent of the family company to The Old Fund. Federal Judge Ariel Lijo is considering whether Mr Boudou acquired Ciccone Calcografica through associates to negotiate favourable contracts with the state and the ruling party to print money and official documents. According to reports, prosecutors allege that Mr Boudou: “took advantage of his condition as a public official” to favour the company, as stated in the summons issued for him to appear. Once all 7 suspects are questioned, the judge will have 10 days to decide whether to proceed to a trial. As president of the Senate, Mr Boudou can be tried but not arrested unless his position is terminated by the legislature, which is controlled by the ruling party. Czech Republic Jana Nečasová, chief of staff to former Czech Prime Minister Petr Nečas, was reportedly charged with abuse of power for ordering surveillance on the prime minister’s wife and two coworkers. Ms Nečasová allegedly had an affair with Mr Nečas. In addition to the abuse of power allegations, Ms Nečasová and Mr Nečas still face charges of having bribed three former members of parliament to resign. Despite Mr Nečas denying that he has knowledge of any criminal activity, Mr Nečas stepped down in June 2013 following an investigation by anti-corruption authorities that resulted in the arrest of the chief of staff, two former heads of military intelligence, and the three former MPs. The three former MPs were accused of accepting bribes in the form of high-paying jobs at staterun companies in exchange for their resignation, but were ruled to be protected by parliamentary immunity. Ondrej Páleník and Milan Kovanda, the military intelligence officers, were acquitted due to an absence of proof of malicious intent. China It has been reported that Fang Fang, former chief executive officer for JPMorgan Chase & Co.’s China investment bank (“JPM”), was arrested by Hong Kong’s anti-corruption agency. Mr Fang is out on bail after he was released by the Independent Commission Against Corruption (“ICAC”). The reports suggest that the arrest may be linked with probes into banks’ hiring practices. Mr Fang, after 12 years’ of employment with JPM, resigned from the firm in March, according to reports. His departure allegedly came amid a U.S. investigation into whether the firm employed people in Asia so that their relatives in government would steer business to the bank. JPM has not been charged with any wrongdoing. The ICAC allegedly searched a JPM office in Hong Kong in March. The agency seized computer records and documents after searching Mr Fang’s office, according to reports. France Former French President Nicolas Sarkozy has reportedly been placed under formal investigation on suspicions he tried to use his influence to hinder an investigation of his 2007 election campaign. Mr Sarkozy denies all wrongdoing in a string of investigations in 6 which he is either directly or indirectly implicated. Investigating magistrates are considering whether Mr Sarkozy used his influence to secure details of an inquiry into alleged irregularities in his 2007 election campaign. He is suspected of influence peddling, corruption and benefiting from: “the breach of professional secrets,” the prosecutor’s office said in an interview. Specifically, magistrates will seek to establish whether Mr Sarkozy tried to get a judge promoted to the bench in Monaco in exchange for information on that campaign finance inquiry. There are allegedly five other legal cases, involving Mr Sarkozy. Mr Sarkozy’s attorney and a judge involved in the case were also placed under formal investigation on suspicion of influence peddling, according to reports. Paul-Albert Iweins, the attorney for Mr Sarkozy’s attorney, Thierry Herzog stated: “These events only rely on phone taps ... whose legal basis will be strongly contested,” he added: “There’s not a lot in this dossier, since none of the material elements of what I’ve seen, and what we could contest, support the accusations”. Placing a suspect under formal investigation means there exists “serious or consistent evidence” pointing to probable implication of a suspect in a crime. Influence-peddling can be punished by up to five years in prison and a fine of 500,000 euros ($682,000). Greece According to reports an Athens prosecutor, Aristidis Koreas, investigating alleged offences in Greek soccer has been authorised by judges to use secretly recorded telephone conversations that provide evidence as to the involvement of officials from a Super League club as part of an ongoing investigation that certain soccer officials have been involved in bribery. Aristidis Koreas asked the Council of Misdemeanor Court Judges for permission to use the recordings after encountering evidence that “the president of a Super League club and close associates approached and tried to use policemen, judges, politicians and other powerful figures for their own ends as part of the planning and organization of their team.” In his bill of indictment, Mr Koreas explains that his investigation was triggered by an August 2012 Kathimerini report. At that time the former deputy president of the Hellenic Football Federation’s (“EPO”) Central Refereeing Committee, Christos Savvas, had made allegations concerning how referees were appointed to officiate matches during the 2012- 2013 season. Mr Koreas has reportedly questioned 15 people, including EPO officials, referees and club executives. Reports state that two club chairmen told Mr Koreas that there is a criminal organisation operating within Greek soccer with the aim of controlling the game. Further, a Super League referee told Mr Koreas that shortly before what transpired to be the last match he officiated, two EPO officials approached him separately and told him that he should ensure a specific team won the game. The recordings referred to by Mr Koreas include conversations involving the officials of a particular Super League club. Among the issues discussed are: the election of the EPO president in October 2012, the election of a Super League president in July 2012 and the hiring by another Super League team of a coach 7 half of whose salary would be paid by another club. Italy The former chairman of Finmeccanica, Italy's state-controlled defence and industrial company, Pierfrancesco Guarguaglini has been placed under house arrest over alleged links to corruption involving a government project. According to reports, Pierfrancesco Guarguaglini, who headed Finmeccanica for nine years, has been linked to alleged bribery in relation to contracts for Sistri, a satellite monitoring project for waste transportation commissioned by the environment ministry. Mr Guarguaglini, who was last year cleared of false accounting at the firm, is accused of receiving an €800,000 bribe from businessman Vincenzo Angeloni, who was arrested in March 2014 as part of the investigation. Investigators are also looking into whether money from “secret slush funds” was used to fund political parties. Earlier this month, Venice’s mayor Giorgio Orsoni resigned following a sweeping corruption investigation into a multi-billioneuro flood barrier project to save the island city from rising sea levels as reported in June’s Digest. Japan Japanese prosecutors allegedly pressed charges against a Tokyo-based consultancy company and three of its executives for bribing Vietnamese officials to secure contracts funded by Japanese official development assistance (“JODA”). It has been reported that the suspects, including Tamio Kakinuma, the former president of Japan Transportation Consultants Inc. (“JTC”), were charged with providing tens of millions of Yen to officials of the state-owned railway corporation, Vietnam Railways. Vietnam has suspended officials involved in the alleged bribery and arrested 6 people, including Tran Quoc Dong, deputy general director of Vietnam Railways. JTC had allegedly paid around 160 million Yen (c. US$1.58 million) in bribes to officials in Vietnam, Indonesia, and Uzbekistan between February 2008 and February 2014. The officials based in Vietnam reportedly received 80 million Yen (c. $782,000) for a Japan-funded city highway project worth 4.2 billion Yen in Hanoi. Edward Feasel, an expert at Soka University of America who studied JODA told reporters that: “I believe Japan decided it must take some serious action to be able to point to in the face of criticism at home and potentially from other donors given that scandal”. He added: “it is unlikely Japan will suspend aid in any serious form or length of time given that Vietnam is one of its most important aid partners and models of success”. The case echoes the corruption in 2008 involving the former deputy director of the Ho Chi Minh City’s transport department and head of a major Japanese ODA-backed highway project, Huynh Ngoc Si. Huynh Ngoc Si was convicted of receiving bribes amounting to $262,000 in 2003 from executives at Pacific Consultants International, which was hired as the project consultant. Spain A Spanish court upheld corruption charges against Cristina de Borbon, sister of newlycrowned King Felipe VI, and her husband, Inaki Urdangarin.4843-8463-9512\1 8 Reports indicate that the court said it had formalised charges of tax fraud and money laundering against Princess Cristina who was implicated in an investigation of her husband’s business dealings. Mr Urdangarin, a former Olympic handball player, is accused of using his connections to win public contracts to put on events through his non-profit organisation Noos Foundation, and of embezzling several millions of euros in public funds. The couple both denied wrongdoing and are now reportedly facing trial. Defense attorneys for Cristina de Borbon and Mr Urdangarin told reporters they would appeal the ruling, as did the anti-corruption prosecutor of the Balearics, where the investigation is centred. The prosecutor has said repeatedly that he does not believe there is evidence that the princess committed a crime. Under Spanish law, prosecutors can file briefs on behalf of the defense if they disagree with the examining magistrate who is investigating a case and who has a dual role as prosecutor and judge. However, according to reports, in the judge’s ruling, Palma Examining Magistrate Jose Castro said there was evidence that the couple had paid for several personal items, such as: parking tickets, children’s birthday parties and a trip to Rio de Janeiro via a shell company the judge said was used to launder proceeds from the Noos Foundation. The judge said in a statement that: “Everything indicates that Doña Cristina de Borbon y Grecia was an active participant in organizing and budgeting these events which were clearly of a personal nature”. Princess Cristina and Mr Urdangarin, if found guilty in a trial, could face years in prison. Judge Castro reportedly charged Mr Urdangarin and one of his main associates, Diego Torres, with breach of legal duty, embezzling public funds, fraud and influence peddling. The judge said Mr Urdangarin and his partners overcharged local governments for putting on conferences about sports and business, then allegedly hiding the proceeds abroad. In April 2013, Judge Castro filed preliminary charges against Princess Cristina, saying she had aided and abetted Mr Urdangarin. A higher court, however, dismissed the charges due to lack of evidence. South Korea It has been reported that the nominee for chief of the National Intelligence Service (“NIS”), Lee Byung-kee, was questioned by prosecutors over his past involvement in a bribery scandal. Lee Byung-kee was accused of delivering 500 million won (c. $494,707) in bribes to a rival party lawmaker on behalf of the presidential candidate Lee Hoi-chang during the 2002 presidential campaign. Lee Byung-kee acted as a special assistant to the candidate at the time. The prosecution investigation concluded, however, that the Lee Byung-kee was simply a messenger. Lee Byung-kee was quoted saying during the hearing at the National Assembly: “I deeply regret my involvement in the delivery of political funds in the past, and because I am fully aware of how wrong it is, I have always lived with an apologetic heart to the people.”9 Tanzania Tanzania’s transport minister has reportedly suspended 13 officials from the country’s international airport for allegedly soliciting bribes while inspecting vaccination cards and imported produce. According to reports, Harrison Mwakyembe, the country’s transport minister, said the officials, who have been suspended pending an investigation, were extorting bribes from foreign travelers at Julius Nyerere International Airport in Dar es Salaam. The ministry has received several complaints from foreign visitors from India, China and the United Arab Emirates who claimed they were being harassed and often had their food products and medicine confiscated if they failed to pay bribes. Mr Mwakyembe told reporters that the officials allegedly demanded bribes from passengers who did not have yellow fever vaccination cards, and at times even threatened to administer the vaccines themselves unless the passengers handed over money. The officials in charge of inspecting agricultural and livestock products were soliciting bribes from passengers whom they accused of carrying fake products. The transport minister was quoted saying: “In accordance with the law, if it is proved the products are fakes they should be destroyed. But surprisingly, after the passengers bribed the officers they were allowed to keep their products while those who refused to offer bribes lost their goods. It is alleged that the officers were taking such products for their home use”. Edward Hosea, director general of the Prevention and Combating of Corruption Bureau, said his agency had launched a formal investigation into the matter and was questioning the suspended officials. He stated: “If we find the enough evidence against them they will be prosecuted”. Corruption issues are also addressed in the Anti-Fraud Network’s newsletters: see www.antifraudnetwork.com for current and archived material; see also the Computer Fraud website at http://computerfraud.us and www.secactions.com.10 CONTACTS LONDON Nicholas Burkill Partner +44 (0)20 7826 4583 firstname.lastname@example.org Sarah Dalton Trainee Solicitor +44 (0)20 7031 3755 email@example.com MINNEAPOLIS Beth Forsythe Associate +1 (612) 492 6747 firstname.lastname@example.org Mike Stinson Associate +1 (612) 492 6624 email@example.com NEW YORK Nick Akerman Partner +1 (212) 415-9217 firstname.lastname@example.org WASHINGTON DC Thomas Gorman Partner +1 (202) 442-3507 email@example.com This update is provided for general informational purposes and is not intended to constitute advice. If you require advice on any of the matters raised in this update, please let us know and we will be delighted to assist.