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FCPA Spring Review 2024

International Alert

Featured in this Edition


In the first quarter of 2024, the Department of Justice (DOJ) evidenced continuing active FCPA-related enforcement, publicly resolving three corporate investigations involving SAP, Gunvor, and Trafigura. The Securities and Exchange Commission (SEC) resolved a parallel case with SAP. The Gunvor disposition entered the top 10 for FCPA-related penalties, and two of the three cases (involving Gunvor and Trafigura) involved relatively rare corporate guilty pleas. 

The first quarter also produced several developments in cases involving individuals, including further indictments of former foreign officials accused of receiving bribes – a focus of the current administration as set out in the U.S. Strategy on Countering Corruption (SCC) that will likely also see new prosecutions under the recently enacted Foreign Extortion Prevention Act (FEPA). The DOJ scored a guilty verdict at trial involving former Vitol trader Javier Aguilar and secured three other guilty pleas this quarter from individuals in cases involving official corruption. The SEC did not enter any FCPA-related dispositions with individuals this quarter and has not done so since 2022. 

There were relevant U.S. court decisions this quarter, as well as several international developments, including with regard to various U.K. enforcement actions, issues in Brazil, and the long-sought passage of an updated foreign bribery law in Australia. 

DOJ and SEC Public Remarks, Including New Whistleblower Reward Program

Officials from the DOJ and SEC continued to discuss policy matters in public speeches at various events, including as to their views on how companies should respond to the incentives and expectations established by recent DOJ modifications to corporate enforcement policies. 

Multiple DOJ officials spoke at the annual ABA White Collar National Institute in early March 2024. Deputy Attorney General (DAG) Lisa Monaco led off with a speech that covered DOJ actions as to individuals, a discussion of how recidivism can affect penalties, and a reminder on the potential positive impact of self-disclosures and compliance remediation. DAG Monaco then announced a new DOJ initiative: a whistleblower rewards program designed to "fill the gaps" in other such policies (most importantly, the Dodd-Frank program administered by the SEC that covers public companies). The companies most likely to be affected would be non-issuer/private companies still subject to DOJ jurisdiction, and DAG Monaco noted that the DOJ will be particularly interested in tips related to the FCPA, FEPA, "[d]omestic corruption cases, especially involving illegal corporate payments to government officials," and "[c]riminal abuses of the U.S. financial system." 

The next day, Assistant Attorney General (AAG) Nicole Argentieri, speaking at the same event, delivered a speech with more details on the new program. She confirmed that the DOJ will likely issue the formal program in early June 2024, and that the key requirements for a reward to be given will likely include:

  • Submission of "original, non-public, truthful information not already known to the [DOJ]";
  • Information that is "provided voluntarily and not in response to any government inquiry, preexisting reporting obligation, or imminent threat of disclosure"; and 
  • "[S]ome sort of monetary threshold" – noting that "both the SEC and CFTC whistleblower programs limit rewards to cases in which the agency orders sanctions of $1 million or more."

AAG Argentieri also noted that the DOJ's Money Laundering and Asset Recovery Section (MLARS) "will play a leading role in designing the nuts and bolts of the pilot" program, given that team's expertise with the forfeiture statutory structure. She reiterated that the DOJ will be in a "90-day 'policy sprint'… to gather information, consult with stakeholders, and design a thoughtful, well-informed program" with the goal of rolling out in the summer of 2024. 

In other parts of her speech, AAG Argentieri discussed DOJ efforts at "holding gatekeepers to account" via individual prosecutions involving "corporate executives, lawyers, or medical professionals" (note that these statements related to all white collar cases). She also noted that the DOJ is "bring[ing] impactful cases across a range of industries" including "the energy trading business" in which "prosecutors have entered into corporate resolutions for FCPA violations with the world's largest oil and energy trading firms — including Vitol, Glencore, Freepoint, and, just last week, Gunvor — and prosecuted multiple individuals [including ex-Vitol trader Javier Aguilar] in connection with these cases."

AAG Argentieri also highlighted some effects of the DOJ's revised Corporate Enforcement and Voluntary Self-Disclosure Policy (CEP), stating that "[i]In 2023, we received nearly twice as many [corporate] disclosures as in 2021" and detailing how the CEP affected the treatment of and penalties related to the SAP and Gunvor resolutions (some of which will be discussed in detail in the articles below). She discussed both how SAP had used the DOJ's compensation clawback pilot program and how Gunvor was credited with having "already updated and evaluated its compensation policy to better incentivize compliance with the law and corporate policies" prior to its guilty plea. 

Finally, AAG Argentieri confirmed that the Justice Manual had been amended to spell out that FEPA investigations and prosecutions will be handled "the same way we've treated FCPA cases — with centralized supervision by the Fraud Section, working in partnership with U.S. Attorneys' Offices across the country." 

As reported by Global Investigations Review (GIR), on March 21, 2024, at the GIR Live conference, FCPA Unit Chief David Fuhr stated that companies looking for guidance as to the DOJ's application of CEP factors should look to recent dispositions, including the December 2022 ABB resolution, the September 2023 Albemarle non-prosecution agreement (NPA), and the SAP case. Chief Fuhr also stated that "[t]he remediation of those cases was effective in part because each of those companies tried to address the root causes of what happened early on." The GIR article also stated that Fuhr confirmed that "the DOJ would stop short of dictating how each company manages its own internal management structures, relationships with sales agents, and use of third-party vendors."

AAG Argentieri also spoke at GIR Live and reiterated several of the themes noted above. She noted that the DOJ is "one-million-percent focused on individual accountability" and that DOJ "policies are gearing towards getting companies to tell us about criminal conduct that we don't otherwise know about so that we can hold individuals accountable." She also highlighted the increase in self-disclosures driven by the CEP, stating that "when you see these declinations…they're just a fraction of the self-reports that we're getting…with many self-reports, maybe we kick the tyres and it doesn't end up being a criminal case [or] [m]aybe it's an ongoing criminal investigation." Finally, among other topics, AAG Argentieri discussed how the DOJ's M&A Safe Harbor policy has been applied in practice, noting, for example, that even when declinations are granted, companies (including the acquirers) will likely still be required to disgorge profits from any disclosed misconduct. 

As we have noted, while these public statements do not necessarily reflect regulatory guidance (indeed, AAG Argentieri specifically denied that the DOJ was becoming a regulator at the March 21 GIR Live event), nor do they have binding effect on the agencies' actions, they provide insights into the DOJ's and SEC's expectations for responsible corporate behavior. 

Corporate Enforcement Actions

Based solely on Q1 results, in terms of overall numbers of resolved enforcement actions, the DOJ and SEC are on their best pace since 2020, with seven resolutions – involving both corporations and individuals – as of the end of the quarter. The SEC has had a slower start than in 2023, while the DOJ's pace bettered its Q1 2023 equivalent significantly. There is also evidence of several ongoing investigations based on past corporate disclosures. As always, we note that many factors underlie the timing of case dispositions, and thus changes in quarterly levels of output should not be read as longer-term indicators.

Resolved FCPA Enforcement Actions by Year, 2011-2024

For the first time since the announcement of the Glencore disposition in May 2022, there has been a change in the Top 10 largest corporate FCPA dispositions, with the Gunvor plea agreement entering at the ninth position. This position relies on some assumptions regarding the allocation of penalty credits among the various enforcement agencies (as discussed in the Gunvor article below, an Ecuador case remains open), but the overall penalty figure shows that current enforcement matters can create significant impacts. The Gunvor case also takes the ninth position on the chart of the ten largest internationally coordinated resolutions that involve the FCPA.

Top 10 Largest Corporate FCPA Settlements

Ten Largest Internationally Coordinated Resolutions Involving the FCPA

On January 10, 2024, SAP SE (SAP) announced that it reached agreements with the DOJ, SEC, and South Africa's National Prosecuting Authority (South Africa NPA) involving corruption-related charges against the company. SAP entered a three-year deferred prosecution agreement (DPA) related to two counts of conspiracy to violate the FCPA's anti-bribery provision and books and records provision related to SAP's scheme to bribe South African and Indonesian officials. SAP also accepted a Cease-and-Desist Order from the SEC for violating the FCPA's anti-bribery, books and records, and internal accounting controls provisions for conduct in various countries. SAP agreed to pay more than $220 million to resolve matters with the DOJ and SEC, including a criminal penalty of $118.8 million and $103.3 million in administrative forfeiture, though the authorities and company agreed to various credits that had the practical effect of significantly lowering the overall penalty levels paid out by the company. Despite its cited recidivist history, SAP received substantial reductions in penalty levels due to the company's extensive cooperation and remediation efforts. The remediation activities also spared SAP from the appointment of an independent compliance monitor. 

On March 1, 2024, Swiss commodities trader Gunvor S.A. (Gunvor) pleaded guilty to conspiracy to violate the FCPA and entered into a plea agreement with the DOJ. The resolution addressed alleged misconduct by Gunvor and its agents to obtain business with the Ecuador's state-owned oil company through manipulation of a complex government program "oil-backed loans." In light of the plea agreement, a U.S. federal court in New York sentenced Gunvor to over $661 million in penalties -- a criminal fine of $374,560,071 and forfeiture in the amount of $287,138,444 – though there are provisions for credits to the company for penalties paid in related cases brought by Switzerland and Ecuador. While the company did not receive credit for self-disclosure, the DOJ credited Gunvor for various significant actions involving cooperation and remediation. Gunvor's penalties were, however, impacted by the company's status as a recidivist. As AAG Argentieri noted in her March 8 speech discussed above, "Gunvor committed the scheme to bribe Ecuadorian officials, in part, while it was under investigation by Swiss authorities for a separate scheme to bribe officials in Africa, which ultimately was resolved in 2019."

On March 28, 2024, Swiss commodities trader Trafigura Beheer B.V. (Trafigura) pleaded guilty to a December 13, 2023 criminal information charging the company with one count of conspiracy to violate the FCPA's anti-bribery provisions. According to the plea agreement, Trafigura personnel and agents conspired with middlemen and foreign officials to make corrupt payments in order to secure contracts with Petrobras, the state-owned Brazilian oil company, and other business advantages. As discussed below, information in the disposition documents and media reports suggest that former senior executives of the company were involved with or approved the payments. Trafigura agreed to a criminal fine of approximately $80.5 million and forfeiture of approximately $46.5 million, although Trafigura will pay only two-thirds of the criminal fine ($53.7 million) now, and the DOJ agreed to credit up to approximately $26.8 million of any future fine Trafigura will pay to resolve a related criminal investigation in Brazil. Trafigura received only limited credit for its cooperation and remediation efforts, in part because the company took certain positions "inconsistent with full cooperation" in the earlier phases of the investigation and "was slow to exercise disciplinary and remedial measures for certain employees whose conduct violated company policy." As detailed below, public records suggest the district court had some concerns regarding the plea agreement and its implementation, creating the delay between the filing of the criminal information in December and the guilty plea in March. 

Enforcement Actions Against Individuals

There were developments in several announced DOJ cases involving individuals this quarter, including the conviction at trial of former Vitol trader Javier Aguilar and three other corruption-related guilty pleas – including one (for former Maxwell Technologies executive Alain Riedo) occurring over a decade after the initial indictment. Q1 2024 also saw two corruption-related sentencings and one new indictment by the DOJ without a guilty plea. The SEC did not  resolve any FCPA-related actions against individuals this quarter and, as noted above, has not done so since 2022.

Snapshot of Enforcement Activity Against Individuals

After a trial that lasted over seven weeks, on February 23, 2024, a federal jury in New York returned a verdict finding former Vitol trader Javier Aguilar guilty of three criminal charges: (1) conspiracy to violate the FCPA's antibribery provision; (2) violating the FCPA's antibribery provision; and (3) conspiracy to commit money laundering. The charges related to Aguilar's alleged role in paying bribes to officials of Petroecuador, Ecuador's state-owned oil company, and to officials at PEMEX Procurement International (PPI), a subsidiary of Mexico's state-owned oil company, PEMEX. In exchange for these alleged payments, the DOJ claimed that Aguilar obtained trades and lucrative oil contracts for Vitol. The trial featured testimony, in part, from former Ecuador officials who received the payments. As discussed in the article below, the trial court also issued rulings related to questions of Mexican anti-corruption law and the operation of the FCPA's affirmative defense. Per the DOJ's press release on the verdict, Aguilar faces a maximum penalty of 30 years in prison — five years each for the FCPA counts and 20 years for the money laundering count. He also faces a second trial later this year in Texas, for additional conduct. 

On February 27, 2024, Mauricio Gomez Baez (Gomez Baez), the former Senior Vice President of Stericycle's Latin America division, pleaded guilty to conspiracy to violate the anti-bribery provisions of the FCPA in connection with a scheme to bribe government officials in Mexico, Brazil, and Argentina. Gomez Baez admitted to directing, in coordination with other employees and agents of Stericycle, the payment of approximately $10.5 million in bribes intended to secure medical waste collection contracts, obtain the release of payments owed, and avoid fines. He is currently scheduled to be sentenced on May 16, 2024.

As noted above, on March 7, 2024, a plea agreement involving former Maxwell Technologies executive Alain Riedo was filed with federal district court in Southern California. Riedo pleaded guilty to falsifying the books and records of Maxwell in connection with an alleged Chinese bribery scheme – a scaled-back plea compared to the original charges. Riedo was originally indicted on October 15, 2013, in connection with Maxwell's 2011 dispositions with the DOJ and SEC. Riedo agreed to pay $55,000 in penalties and will be formally sentenced  in May.

On March 4, 2024, Nepmar Jesus Escalona Enriquez (Escalona), a former Major in the Venezuelan National Guard who most recently resided in Florida, pleaded guilty to money laundering conspiracy in connection with a scheme to defraud two Venezuelan financial institutions. Escalona admitted that between 2010 and 2017, he and two others coordinated to submit fraudulent applications to the Venezuelan currency regulation authority to obtain money for themselves. To facilitate the scheme and prevent detection, the conspirators paid a series of bribes to government officials in Venezuela. Escalona's sentencing hearing is currently scheduled for May 23, 2024.
On January 10, 2024, a federal grand jury in California indicted Paulinus Iheanacho Okoronkwo, an immigration and personal injury lawyer, for money laundering, tax evasion, and obstruction of justice. The allegations stem from Okoronkwo's time as the former general manager of the upstream division of the state-owned Nigerian National Petroleum Corp. (NNPC). The indictment states that Okoronkwo received a bribe of $2.1 million in exchange for influencing the negotiation for favorable drilling rights and financial terms for Addax Petroleum (Addax), an affiliate of Chinese state-owned oil company Sinopec. 

On March 19, 2024, in a case related to the Gomez Baez plea noted above, the former Finance Director of Stericycle's Latin America division, Abraham Cigarroa Cervantes (Cigarroa), was separately indicted for his role in the same scheme. The indictment charges Cigarroa with one count of conspiracy to violate the FCPA's anti-bribery provisions and one count of conspiracy to violate the books-and-records provisions, based on allegations that Cigarroa took steps to conceal the relevant bribe payments in his financial role. 

Finally, there were two significant sentencings during the first quarter. On January 17, 2024, Venezuelan businessman Tulio Anibal Farias-Pérez was sentenced to three years of probation and ordered to forfeit $1.5 million to the U.S. for his role in a scheme to pay bribes to the former manager in Citgo's Special Projects Group; he had pleaded guilty in February 2020 to one count of conspiracy to violate the FCPA. And on February 16, 2024, a judge in Florida sentenced another Venezuelan businessman, Orlando Alfonso Contreras Saab, to six months in prison, followed by three years of supervised release, for his role in bribing Venezuelan officials to obtain multi-million-dollar contracts in food and medicine distribution in Venezuela. The sentence followed a December 8, 2023 order requiring Contreras to forfeit close to $6 million, the approximate value of the proceeds traceable to his offenses. 

In other developments, on January 26, 2024, a federal judge in the Eastern District of New York postponed the sentencing of former Goldman Sachs banker Tim Leissner, a key figure in the long-running 1MDB corruption saga, to September 2024. 

Finally, we note several developments in the continuing fallout related to various convictions related to bribery at FIFA that have been called into question by recent Supreme Court precedent. On January 2, 2024, the DOJ asked the U.S. Court of Appeals for the Second Circuit to vacate the trial court's ruling dismissing the convictions of former media executive Hernán Lopez and Argentine company Full Play Group SA. On January 30, former Costa Rican football official Eduardo Li, who pleaded guilty to charges in 2016 and was sentenced in 2018, filed a motion requesting reversal of his conviction in light of the Lopez/Full Play decision. The presiding judge in various FIFA cases has indicated that no action will be taken on this or other similar requests until after the Second Circuit has ruled. 

Other Indicia of Enforcement Trends, Including Investigation Announcements

Q1 2024 saw the announcement of two new corporate FCPA investigation, as well as updates on four previously disclosed matters. On January 31, 2024, Calavo Growers, Inc. stated that the company had disclosed "certain…matters related to…operations in Mexico raised potential issues under the" FCPA to the DOJ and SEC and "intends to fully cooperate with" the agencies related to "this ongoing investigation." The public disclosure noted "that [the company's] internal audit process had identified" the matters and that the Audit Committee and a Special Committee of the company's Board of Directors were engaged in the investigation. 

In a 10-K filed on February 14, 2024, biopharmaceutical company Biogen, Inc. stated, "The Company has received a subpoena from the DOJ seeking information relating to our business operations in several foreign countries." The disclosure also noted that, "[t]he Company is also providing information relating to our business operations in several foreign countries to the SEC." Though the company's disclosure did not offer further details, it is noteworthy that in September 2022 the company paid "$900 million [in a DOJ disposition] to resolve allegations that it caused the submission of false claims to Medicare and Medicaid by paying kickbacks to physicians to induce them to prescribe Biogen drugs."

Known FCPA Investigations Initiated, 2011-2024

In an important reminder that a DOJ declination does not necessarily spell the end of a company's legal issues when potential FCPA-related misconduct arises, Lifecore Biomedical, which received a DOJ declination in November 2023, noted in a March 20 securities filing that the company "continues to cooperate in the government investigations and requests for information" that commenced after a self-disclosure to the DOJ, SEC, and Mexican authorities. As the filing notes the DOJ declination and a decision by the Mexican Office of the Attorney General not to press charges against the company, this language suggests that the SEC investigation is ongoing. Investigations by "other regulators in Mexico" also appear to be continuing. 

On February 5, 2024, aerospace and defense company RTX Corporation provided an update related to an ongoing SEC and DOJ investigation into "whether there were improper payments made by Raytheon Company, our joint venture known as Thales-Raytheon Systems (TRS), or anyone acting on their behalf, in connection with TRS or Raytheon Company contracts in certain Middle East countries since 2014." The public disclosure noted that "[a]lthough the investigation of these issues remains ongoing, information indicating that such conduct has occurred with respect to certain contracts has been identified." The company further stated, "based on the information available to date, we cannot reasonably estimate the range of potential loss or impact to the business that may result, but do not believe that the results of these inquiries will have a material adverse effect on our results of operations, financial condition, or liquidity."

On February 9, 2024, insurance broker Arthur K. Gallagher & Co. publicly disclosed that, in relation to a DOJ inquiry disclosed in November 2022 "seeking information related to our insurance business with public entities in Ecuador," the DOJ had informed the company "that it has closed its inquiry and would not be pursuing enforcement action against us." The DOJ inquiry was part of a series of investigations in the reinsurance industry that resulted in enforcement actions involving JLT, Tysers, and H.W. Wood

In mid-March, there were media reports suggesting that an ongoing DOJ probe into various affiliates of Indian conglomerate Adani Group had expanded to include FCPA issues. The company denied such reports initially, though one affiliate acknowledged in a subsequent statement that the cited investigation involved an unrelated third party rather than the company. 

Finally, on January 31, 2024, Novartis announced that its FCPA-related DPA and SEC Order's terms had ended in June 2023, and that on December 21, 2023, "the court formally dismissed the Information filed against Novartis Hellas S.A.C.I at the request of the DOJ" so that "[the FCPA] matter is now concluded."

Policy and Legislative Developments

Beyond the new DOJ whistleblower reward program announced in March (which will not formally take effect until the summer), there were no new policy initiatives announced by the DOJ or SEC directly related to the FCPA. The Southern District of New York (SDNY) announced a whistleblower pilot program effective on February 13, 2024, but that program explicitly "does not apply to individuals who provide information regarding violations of the Foreign Corrupt Practices Act…," due to the role that the DOJ's Fraud Section plays in FCPA and related cases.  

The U.S. government continues to designate foreign officials and others as subject to economic sanctions and visa/immigration restrictions under the Global Magnitsky Human Rights Accountability Act and other statutory and regulatory authorities for acts of corruption. Actions in the first quarter of 2024 focused on a former head of state and mining minister in Guatemala and the current President of Zimbabwe and related individuals and entities. 

On January 17, 2024, the Treasury Department's Office of Foreign Assets Control (OFAC) announced sanctions against former Guatemalan Minister of Energy and Mining "Alberto Pimentel Mata (Pimentel) for his role in exploiting the Guatemalan mining sector through widespread bribery schemes, including schemes related to government contracts and mining licenses." These sanctions build upon a Department of State visa ban for Pimentel and other individuals in September 2023 related to similar allegations. The OFAC announcement stated that, among other things, Pimentel "reportedly requested large bribes of more than $1 million from mining industry groups in Guatemala in exchange for mining licenses" and "reportedly engaged in retaliation against companies operating in the Guatemalan energy and mining sector that would not offer to pay him bribes." 

In addition, on the same day, the Department of State "designat[ed] Alejandro Eduardo Giammattei Falla [Giammattei], the former president of Guatemala, as generally ineligible for entry into the United States due to his involvement in significant corruption." The announcement cited "credible information indicating that Giammattei accepted bribes in exchange for the performance of his public functions during his tenure as president of Guatemala, actions that undermined the rule of law and government transparency." The visa restriction also covers the former president's adult children. 

On March 4, 2024, OFAC announced sanctions against the current President of Zimbabwe, Emmerson Mnangagwa, and others "for their involvement in corruption or serious human rights abuse." This designation occurred in the aftermath of an executive order that ended OFAC's general Zimbabwe sanctions program and is designed to "to make clear what has always been true: our sanctions are not intended to target the people of Zimbabwe." The Treasury Department's statement emphasized that "we are refocusing our sanctions on clear and specific targets: President Mnangagwa's criminal network of government officials and businesspeople who are most responsible for corruption or human rights abuse against the people of Zimbabwe." The public release further alleged that Mnangagwa "is involved in corrupt activities, in particular those relating to gold and diamond smuggling networks," "provides a protective shield to smugglers to operate in Zimbabwe and has directed Zimbabwean officials to facilitate the sale of gold and diamonds in illicit markets, taking bribes in exchange for his services." The sanctions also target 11 other individuals (including Mnangagwa's spouse) and three entities that are allegedly at the center of the President's "corrupt business network."

On February 23, the Department of State released its annual report on Global Magnitsky Act actions in 2023. 

Court Cases

While not directly tied to FCPA enforcement, a federal district court in Alabama ruled on March 4, 2024 that the beneficial ownership requirements established by the Corporate Transparency Act (CTA), which are designed to combat money laundering and illicit financing through anonymous shell companies, are unconstitutional. The DOJ, on behalf of the Treasury Department, appealed the decision days later, and Treasury's Financial Crimes Enforcement Network (FinCEN) issued a notice that the agency will continue to enforce the CTA against all companies not covered by the district court's injunction while the district court's decision is reviewed on appeal. The CTA has been touted as a key component of the SCC. 

International Developments 

There were several noteworthy international developments this quarter.

In Brazil, on February 26, 2024, Singapore company Seatrium Limited (Seatrium), an entity created by the 2023 merger of Keppel Offshore & Marine Ltd and Sembcorp Marine (Sembcorp), disclosed provisional leniency agreements with various authorities in Brazil resulting from those authorities' long-running Lava Jato investigations. The activities at issue occurred at Sembcorp, which has been the subject of investigation by the Brazilian authorities since at least 2019, related to allegations of corrupt payments involving contracts with Sete Brasil, a subsidiary of Petrobras that operates rigs. Per Seatrium's investor release, the provisional payments owed to the Brazilian authorities amount to RS$670.7 million (approximately $134.2 million). The release notes that Seatrium has also provisionally agreed to continued compliance obligations and cooperation with the authorities. 

In a related case, on March 28, 2024, it was announced that the Singapore Public Prosecutor is in DPA-related discussions with Seatrium related to Sembcorp's alleged corruption offenses in Brazil. Under the proposed DPA, Seatrium would be required to pay a penalty of $110 million, though up to $53 million of this total could be credited to the penalties tied to the provisional settlement agreements with the Brazilian authorities.

In another set-back for the Lava Jato prosecutions, on January 31, 2024, a judge of Brazil's Federal Supreme Court paused payments by Novonor S.A. (formerly Odebrecht) related to the company's December 2016 leniency agreement with the Federal Prosecution Ministry (MPF). The judge noted that there was sufficient reasonable doubt to question whether Novonor's decision to sign the leniency agreement was in fact voluntary in light of possible collusion between the prosecution and judges from Lava Jato. The judge also held that Novonor could petition the Office of the Attorney General (AGU) and Office of the Comptroller General (CGU) to reevaluate the terms of a separate leniency agreement with these authorities to correct the alleged judicial wrongdoings and abuses. 

In the U.K., on March 6, 2024, after a 12-week trial that began in November 2023, a London jury acquitted Jeffrey Cook, a former Airbus affiliate director and Ministry of Defence (MoD) employee, and former Airbus affiliate executive John Mason, of allegations that they knowingly paid bribes to public officials in Saudi Arabia. The jury did, however, convict Cook for misconduct in public office – specifically for receiving kickbacks of £45,000 and two cars between 2004 and 2008 while working for the MoD. These verdicts potentially represent the final stages of a long-running U.K. Serious Fraud Office (SFO) investigation that included a corporate guilty plea in April 2021 by the former employer of Cook and Mason, GPT Special Project Management Limited (GPT), which paid over £40 million in fines and confiscation. 

In other U.K. news, on February 20, 2024, a London jury convicted Romy Andrianarisoa, the former Chief of Staff to the President of Madagascar, of one count of requesting/accepting a bribe under the U.K. Bribery Act (UKBA). Andrianarisoa and a French associate had been accused of soliciting a bribe from U.K.-based mining company Gemfields "in exchange for their help securing an exclusive mining joint venture with the Government of Madagascar." The U.K. National Crime Agency release states that, once the bribe had been solicited, "Gemfields reported concerns about corruption to the NCA, who launched an investigation which made use of surveillance and other covert tactics" that ultimately resulted in the pair's arrest in London in August 2023, and in Andrianarisoa's resulting termination of her official position. Both defendants (the French associate pleaded guilty in September 2023) are scheduled for sentencing on May 10, 2024.

On February 16, 2024, the SFO charged two former senior executives of U.K.-based engineering and construction company Petrofac – Marwan Chedid and George Salibi – with bribery related to their roles in "offering and paying agents over $30 million USD to influence the awarding of contracts [in the United Arab Emirates] worth approximately $3.3 billion USD in Petrofac's favour." According to media reports, both defendants pleaded not guilty and the court set a trial date of October 5, 2026. These charges follow an October 2021 guilty plea by the company under the UKBA. 

In Australia, after years of effort, on February 29, 2024, both Houses of the Australian Parliament ratified the Crimes Legislation Amendment (Combatting Foreign Bribery) Bill 2024, which brought the country's legal framework into alignment with international standards (including the Organisation for Economic Cooperation and Development (OECD) Anti-Bribery Convention) and introduced new legal obligations requiring corporations to take proactive steps to prevent bribery by their associates. Separately, on January 30, 2024, the U.S.-Australia Agreement on Access to Electronic Data for the Purpose of Countering Serious Crime entered into force, allowing U.S. and Australian authorities to obtain timely access to electronic data held by service providers in the partner country.

Finally, on January 30, 2024, Transparency International (TI) issued its 2023 Corruption Perceptions Index (CPI), a ranking list that compares the perceived levels of governmental corruption in 180 countries and territories based on a combination of surveys and assessments of businesses and experts in each country. The CPI is a composite index that looks at multiple factors, including government accountability, existence and enforcement of anti-corruption laws, access to government information, and abuse of government ethics and conflict of interest rules. The index scores countries on the level of perceived corruption on a scale of zero to 100, with zero representing the highest level of perceived corruption and 100 representing a hypothetical corruption-free country. The top scoring country (with the lowest perceived corruption) in 2023 was Denmark, with a score of 90; the countries perceived as most corrupt were Somalia (with a score of 11) and South Sudan, Syria, and Venezuela, all of which had scores of 13. 

TI's accompanying press release materials painted a grim picture, noting that the 2023 CPI "shows that only 28 of the 180 countries measured by this index have improved their corruption levels over the last twelve years, and 34 countries have significantly worsened." The TI release further states that "corruption levels remain stagnant" despite "progress made across the planet in criminalizing corruption" and that over 80 percent of the world's population lives in countries with CPI scores below the global average of 43." TI also provides commentary highlighting observed trends and corruption issues specific to various regions and countries. The TI CPI rankings and associated data continue to be a touchstone used by many companies for evaluating country corruption risks, though a number of other surveys and databases, such as the Corruption Risk Forecast and World Justice Project (WJP) Rule of Law Index, are also potentially valuable resources.

Miller & Chevalier and 14 Latin American Partner Firms Release 2024 Latin America Corruption Survey

Corruption remains pervasive throughout Latin America despite sustained efforts to criminalize, investigate, and prosecute misconduct, according to new survey data. In fact, corporate compliance – not enforcement – is the key driver for addressing these endemic issues. 

The 2024 Latin America Corruption Survey, released today by Miller & Chevalier Chartered and 14 collaborating law firms in Latin America, measures perspectives on how corruption impacts companies' ability to do business in the region. The report, which builds on previous surveys dating back to 2008, reveals that nearly half of all respondents view corruption as a significant obstacle to doing business – and less than a third say the U.S. Foreign Corrupt Practices Act (FCPA) or other anti-corruption laws significantly mitigate corruption risk.

"Having tracked this data for 15 years, the results cannot be more clear – businesspeople working in Latin America consistently perceive significant corruption risk in their operations; this, despite significant efforts over the last 10 years to strengthen local anti-corruption laws," said Matteson Ellis, Miller & Chevalier's Latin America Practice Lead. "Nonetheless, in the absence of consistent enforcement, executives in the region are confronting this pervasive problem. Eighty percent of survey respondents report that their companies are taking action to protect against corruption risk, while 56 percent say that dealing with corruption risk is a top priority for their organizations." 

The survey report is available in English, Portuguese, and Spanish.

Corporate Enforcement Actions

SAP SE Settles with DOJ, SEC, and South African Authorities For Alleged Corruption

On January 10, 2024, SAP SE (SAP) announced that it had reached agreements with the DOJ, SEC, and South Africa's National Prosecuting Authority (South Africa NPA) involving corruption-related charges against the company. On that same day, the DOJ and SEC announced their resolutions with the company. SAP is a Germany-based publicly traded global software company with its shares listed on the New York Stock Exchange (NYSE) in the form of American Depositary Receipts (ADRs). 

In resolving with the DOJ, SAP entered a three-year DPA in connection with the filing of a criminal information charging the company with two counts of conspiracy – one to violate the FCPA's anti-bribery provision, and one for violating the books and records provision – related to SAP's scheme to bribe South African and Indonesian officials. SAP also accepted a Cease-and-Desist Order (Order) from the SEC for violating the FCPA's anti-bribery, books and records, and internal accounting controls provisions for conduct in numerous countries, as noted below. Accordingly, SAP agreed to pay more than $220 million to resolve matters with the DOJ and SEC, including a criminal penalty of $118.8 million and $103,396,765 in administrative forfeiture. However, the actual amount paid under these agreements is lower. In particular, the DOJ agreed to credit up to $55.1 million of the criminal penalty against any amount that SAP pays to resolve the investigation with the South Africa NPA and will reduce the forfeiture amount based on the disgorgement SAP pays to the SEC or the South Africa NPA for the same conduct. The Order required disgorgement of $85 million plus prejudgment interest of more than $13.4 million, of which the SEC agreed to offset up to $59 million that SAP pays to the South African authorities. As a result of the myriad resolutions in South Africa for approximately $158 million (summarized below), our understanding is that SAP will pay $63,590,859 in criminal penalties under the DOJ DPA and no forfeiture amount, while paying the SEC $26 million in disgorgement and $13 million in prejudgment interest.

On January 11, 2024, the South Africa NPA also announced a resolution with SAP and its South African subsidiary, SAP SA, for the same offenses. The resolution follows the company's voluntary self-disclosure, which ultimately led to the U.S. government investigations. According to the South Africa NPA's resolution, SAP agreed to pay 2.2 billion South African rand (approximately $117,898,000) in restitution to government entities in South Africa, including a repayment of 500 million rand (approximately $26.4 million) to Eskom Holdings Limited (Eskom), one of the entities targeted in the bribery scheme. The SEC resolution notes a subset of the restitution payments, highlighting how SAP entered three prior resolutions with the South African Special Investigating Unit in 2022 and 2023. The three resolutions were related to the improper misconduct concerning the Department of Water and Sanitation (DWS), Transnet, and Eskom, as described in the Order. SAP is also required to pay 750 million South African rand (approximately $40.2 million) to South Africa's Criminal Assets Recovery Account as "punitive reparation payments," which will be credited against the $118.8 million criminal penalty the DOJ imposed. The South Africa NPA resolution also requires SAP to implement both local and international corporate compliance programs to combat future corrupt acts. 

As noted, while the DPA focuses on misconduct by SAP and its subsidiaries in South Africa and Indonesia between 2013 and 2018, the Order discusses the bribery schemes in those regions plus misconduct in Malawi, Tanzania, Ghana, and Kenya (referred to as "Greater Africa" in the Order), and Azerbaijan during the relevant period. 

Bribery Schemes in South Africa and the Greater Africa Region

The DOJ and SEC resolutions focus on various schemes orchestrated in South Africa and several other African countries (using SAP's entities based in South Africa). The resolutions detail that to secure certain high dollar valued contracts with various government entities in the South Africa and Greater Africa regions, SAP and its subsidiaries paid amounts ranging between 2.2 million South African rand (approximately $155,555) and nine million South African rand (approximately $900,000) to foreign officials through intermediaries. The intermediaries transferred the illicit funds through corporate entities or bank accounts affiliated with the foreign officials. According to the resolutions, SAP entities paid the intermediaries a "sales commission" or "consulting fees" even though the intermediaries did not provide legitimate services commensurate with the fees received. The public documents also indicate that in addition to the cash payments, employees of SAP South Africa paid for certain South African government officials' trips to New York in May and September 2015, including their "meals and golf outings." 

The following government entities and its affiliated officials implicated in the South Africa scheme include the City of Johannesburg (CoJ), Department of Water and Sanitation (DWS), City of Tshwane (CoT), and Eskom. Notably, Eskom has been involved in another FCPA-related matter, ABB Ltd. (ABB), upon a finding that a high-ranked employee of Eskom was involved in receiving bribes from ABB subsidiaries. We discuss this more in detail here. For Greater Africa, the Order states that the bribery schemes impacted several government entities: the Tanzania Ports Authority (TPA), Ghana National Petroleum Corporation (GNPC), and the Kenya Revenue Authority. 

To conceal the nature of the illicit transactions and receipt of such funds, the involved parties communicated via email and text messages. According to DOJ, in one instance, SAP employees and a director of an involved intermediary stressed the need to destroy all "documents associated with the transaction," and "fabricate an explanation for the payments." 

We also note that the South Africa NPA press statement and public reporting in 2023 indicates that Atul, Rajesh, and Ajay Gupta (the Gupta brothers) were heavily involved in the schemes to defraud various entities in the region, including Eskom and Transnet. While the Gupta brothers were arrested in Dubai in 2022, the Dubai authorities subsequently released them, despite an extradition agreement between South Africa and Dubai. Authorities in South Africa claimed they will appeal the Dubai Court of Appeal decision. 

Bribery Scheme in Indonesia 

Similarly, between 2015 and 2018, SAP Indonesia, together with third party intermediaries, improperly acquired contracts with two Indonesian government entities – BP3TI, an Indonesian state-owned and -controlled telecommunications agency, and KKP, the Indonesian Ministry of Maritime Affairs and Fisheries – by making corrupt payments to officials. 

According to the public documents, SAP Indonesia and the intermediaries used "fake training invoices" to generate funds that created slush funds to pay the bribes. In some cases, the sham invoices created "kickback payments," whereas others "paid for customer excursions, and others generated cash payments." In at least one instance, an SAP employee along with the intermediaries coordinated to transfer the bribe payments in cash. Specifically, the employee was told to meet in the lobby of KKP and to "bring an empty envelope," which was understood to be code for bribes to government officials. Additionally, an SAP employee took a BP3TI official and his wife on a trip to the U.S. and purchased luxury items for them such as "handbags, keychains, novelties, gifts, and other items," and a "luxury watch." 

Bribery Scheme in Azerbaijan 

The Order also details how SAP Azerbaijan obtained a $1,645,703 deal in May 2022 with the State Oil Company of the Republic of Azerbaijan (SOCAR) in exchange for improper gifts valued at approximately $3,000. In addition, an SAP employee created a false "Act of Acceptance" between SOCAR and an SAP Azerbaijan partner, which was reported to the SAP contract booking team on February 4, 2022, in an attempt to receive a commission from the deal. The employee fabricated this document three months prior to the actual deadline to receive a commission because her upcoming promotion with SAP Azerbaijan would have barred her from receiving the commission. SOCAR signed the "real Act of Acceptance" on May 12, 2022. 

Across the misconduct discussed herein, the DOJ and SEC both note that the corrupt payments and purchases of luxury gifts by the relevant subsidiaries of SAP were documented in text messages, messaging platforms like WhatsApp, or email. In addition, the SEC specifies that the illicit payments by the relevant SAP subsidiaries were falsely documented in SAP's books and records as legitimate "commissions" to conceal the illicit nature of the transactions. 

In describing the internal accounting controls failures, the SEC noted SAP had internal policies and procedures in place – such as conducting due diligence on third parties, requiring documentation of sales commission contracts in writing to "clearly define" all services to be provided therein, and processes for approving internal payments. However, the SEC alleged that the SAP subsidiaries violated the company's internal accounting controls when they or their representatives engaged in the bribery schemes. The SEC also noted that because payments to third parties occurred outside SAP's systems, the company did not retain sufficient records to properly assess the scope of the bribery schemes. Moreover, the SEC notes that SAP did not have the proper internal accounting controls to detect or prevent the bribe payments by the SAP subsidiaries. There was an overall lack of monitoring to ensure these wholly-owned subsidiaries were compliant with the company's internal accounting controls and relevant policies. 

Under the DPA, SAP agreed to disclose potential FCPA violations and to report annually on the state of the company's compliance program to the DOJ for three years. Moreover, the company's Chief Executive Officer (CEO) and the Chief Compliance Officer (CCO) signed the agreement, which requires both executives to certify that SAP has met the DOJ's compliance standards upon termination of the DPA. 

Key Takeaways

  • No Independent Compliance Monitor Based on Compliance Improvements: This resolution reflects SAP's third official involvement with U.S. government authorities, as the company had settled a previous FCPA case in 2016, which we discuss in detail here, and had entered a NPA with the DOJ's National Security Division (NSD) in 2021 for alleged export control and sanctions violations. Despite SAP's history of misconduct, the DOJ determined an independent compliance monitor was unnecessary due to the "state of its compliance program." Notably, the DOJ acknowledged that the company had implemented several actions including, "conducting an analysis of the root causes…and gap analysis" and "undertaking a comprehensive risk assessment focusing on high-risk areas and controls around payment processes and enhancing its regular compliance risk assessment process…." Perhaps more significantly, the DOJ and SEC both highlighted how the company had eliminated its third-party sales commission program globally – a substantial change in business operations that addressed a core issue across the various allegations. In her March 8, 2024 speech noted in the Introduction above, AAG Argentieri also noted that SAP "expanded the data analytics capabilities of its compliance program to over 150 countries, including all high-risk countries globally,…[a] type of decision we saw only rarely 10 years ago." The Order notes various remedial efforts, such as "termination of employees and third parties responsible for the misconduct" and "implementation of analytics to identify and review high-risk transactions and third party controls," among many others. 
  • Despite Recidivist History, Favorable Reductions in Criminal Penalty Based on Cooperation Efforts: SAP did not receive voluntary disclosure credit as it failed to voluntarily and timely disclose the abovementioned misconduct to the DOJ and SEC (as opposed to the South African authorities). However, the company still received a significant 40 percent reduction in its criminal penalty with the DOJ. According to the DPA, the company "immediately [began] to cooperate after South African investigative reports made public allegations of the South Africa-related misconduct in 2017." The DOJ took into consideration SAP's proactive measures at the preliminary stages of SAP's internal investigation, which included among other things, "translating voluminous foreign language documents [and] imaging the phones of relevant custodians." The imaging of phones allowed proper preservation of the "relevant and highly probative business communications sent on mobile messaging applications," which later assisted the DOJ's investigation. SAP also received cooperation credit for "raising and resolving potential deconfliction issues" that arose between the company's internal investigation and the DOJ's own investigation. The 40 percent reduction reflects one of the largest cooperation-based reductions that the DOJ has provided recently, second only to the award of a 45 percent reduction of a criminal penalty to Albemarle, which we discuss here. The DOJ increased the maximum amount possible from 25 percent to 50 percent in 2023. Moreover, while the DOJ noted that the criminal penalty was increased because of SAP's recidivist history (and the fine was calculated using the 10th percentile in the Sentencing Guidelines range, rather than the low end, as is common), this too was a favorable result in comparison to other recidivist resolutions. For example, in the Gunvor resolution, the DOJ used a much higher starting point in the Sentencing Guideline range (the 30th percentile) due to other factors, as discussed below. 
  • Incentive under DOJ's Clawbacks Pilot Program (Pilot Program): The DPA specifies that SAP "withheld bonuses totaling $109,141" from key employees who were affiliated with the bribery scheme and "engaged in substantial litigation to defend its withholding from those employees." As a result, the DOJ reduced SAP's criminal penalty by $109,141 under the DOJ's Pilot Program. This highlights an incentive for corporate entities with respect to the DOJ's Pilot Program, though there is no public information related to the extent of SAP's legal and other costs incurred with regard to this "substantial litigation." 
  • U.S.-South Africa Cross-Border Cooperation: According to the DOJ, "[t]his successful resolution against SAP is another example of the power of relationships and persistence. The sustained diligence by the prosecution team and continuous collaboration with South African law enforcement, regulators and prosecutors identified corrupt activity in multiple countries." This resolution marks the DOJ's second coordinated resolution with authorities in South Africa, following their December 2022 resolution with ABB Ltd. The DOJ has also recently established the International Corporate Anti-Bribery Initiative (ICAB), as discussed in our FCPA Winter Review 2024, an effort to deepen relationships with prosecutors around the globe. It is possible that the U.S.-South Africa enforcement relationship may grow even stronger, if U.S. prosecutors are dedicated to working with South African prosecutors under this initiative. 

Gunvor Reaches Resolution with U.S. and Swiss Authorities for Misconduct in Ecuador

On March 1, 2024, Swiss international commodities trading company Gunvor S.A. (Gunvor) pleaded guilty to a one-count criminal information charging Gunvor with conspiracy to violate the FCPA and entered into a plea agreement with the DOJ. The resolution related to misconduct by Gunvor to obtain business with Ecuador's state-owned oil company, Empresa Publica de Hidrocarburos del Ecuador (Petroecuador). The U.S. District Court for the Eastern District of New York (EDNY) sentenced Gunvor to pay a criminal fine of $374,560,071 and to forfeit $287,138,444. The DOJ required Gunvor to pay 50 percent of the criminal fine ($187,280,036) within 10 days of the judgment and agreed to credit the remaining amount (up to 25 percent of the criminal fine or $93,640,017 each) for amounts that Gunvor pays to the Swiss and Ecuadorian authorities within one year of the judgment. Also on March 1, the Office of the Attorney General of Switzerland announced a parallel resolution with Gunvor, requiring the company to pay the Swiss authorities $98 million. Meanwhile, the Ecuadorian Attorney General noted – also on March 1, 2024 – in a press release that they have an ongoing case, the Alianza case, against Gunvor and other related individuals, which has not yet been resolved. Thus, the total amount paid to the U.S. authorities will be $474,414,480, assuming there is a resolution in Ecuador that exceeds $98 million. In addition to coordinating with Ecuador and Switzerland, we note that the DOJ thanked authorities in the Cayman Islands, Colombia, Panama, Portugal, and Singapore for their assistance in the matter. 

According to the resolution's public documents, between 2012 to 2020, personnel associated with Gunvor paid bribes totaling approximately $97 million to Ecuadorian officials in order to obtain business with Petroecuador. The scheme involved a program where state-owned entities from outside of Ecuador provided loans to Petroecuador in exchange for oil, which the state-owned entities could then market and sell (referred to as "oil-backed loans" in the plea agreement). According to the guilty plea, Petroecuador could enter into transactions with fellow state-owned entities without following processes for competitive bids. In turn, Gunvor, acting through three employees (Raymond Kohut and two unnamed "Managers"), conspired with two agents (and brothers) – Antonio Pere Ycaza (Antonio Pere) and Enrique Pere Ycaza (Enrique Pere) – to secure business between Petroecuador and two state-owned entities based in Asia (referred to as "State-Owned Entity #1" and "State-Owned Entity #2" in the plea agreement and which press accounts indicate may have been Chinese and Thai entities). Thus, Gunvor would enter into separate agreements with the state-owned entities to "pre-finance" their loans to Petroecuador and then used "back-to-back" agreements to market and sell the oil products. As a result of this scheme, Gunvor avoided Petroecuador's competitive bidding process and earned $384 million in profits, according to the DOJ. 

The criminal information states that, in order to secure the business and obtain confidential information about Petroecuador, Kohut and the Gunvor Managers transferred funds to the two agents through false service agreements, with the knowledge that at least some of the funds would be used to bribe at least five Ecuadorian officials, including Nelson Arias Sandoval (Arias), a senior manager at Petroecuador. Specifically, the Pere brothers are alleged to have set up two shell companies (OIC and EIC) that entered into service agreements with Gunvor, created fake invoices, and created email accounts. The information notes that the service agreements "provided for certain pre-payments and success fees, but the bulk of the compensation was through per-barrel 'volume fee' payments…that depended on the amount of oil purchased by [the state-owned entities] in connection with the oil-backed loan contract." The Pere brothers then shared some of the "volume fees" with Arias and other Petroecuador officials, either directly or indirectly. 

The case documents note that, in order to conceal the scheme, the Gunvor personnel and the agents used aliases, "personal and pseudonymous" email accounts, and "mobile messaging applications" (including WhatsApp). These personnel also made efforts to "avoid speaking about bribery" and "avoid explicit mention[s] of bribery." 

The plea agreement and criminal information state that, "[b]etween in or about May 2018 and in or about May 2020, Gunvor executives and compliance personnel made requests to [the Pere brothers] (i) for supporting documentation to justify the commission payments [under the services agreements] and (ii) to meet with executives and compliance personnel." However, the Pere brothers "failed repeatedly to provide complete responses to Gunvor's documentary requests and would not travel to Gunvor's headquarters for the requested meeting." "Notwithstanding these repeated failures," Gunvor continued to make payments to the Pere brothers until January 2020, ultimately terminating the last services agreement in May 2020. Notably, these payments continued even while Gunvor concluded a separate resolution with the OAG in 2019 for different conduct, as noted below. 

The plea agreement notes that Gunvor did not receive voluntary disclosure credit as it failed to voluntarily and timely disclose the conduct. However, Gunvor did receive cooperation credit due to its acceptance of responsibility and other increasingly-standard cooperation measures (for example, "producing documents…from multiple foreign countries expeditiously while navigating foreign data privacy and criminal laws" (which may have included Chinese and Thailand laws), factual presentations to the DOJ, "arranging for the interview of an employee based outside of the [U.S.]," production of financial information and forensic firm analysis, and – notably, given the recent emphasis on ephemeral messaging – imaging phones of relevant custodians "at the beginning of" Gunvor's internal investigation"). Gunvor also provided the DOJ with "all non-privileged facts" related to the individuals involved in the conduct. The plea agreement also highlights "timely and appropriate" remedial measures, including by "engaging resources to review the Company' s compliance program and test the effectiveness of the Company's overall reporting process, its reporting hotline and the effectiveness of the investigation of reports made through the hotline" and "developing and implementing a risk-based business communications policy that addresses the use of ephemeral and encrypted messaging applications." 

Among other obligations in the plea agreement, Gunvor agreed to continue cooperating with the DOJ until the end of any investigation or the three-year term (whichever is later), and to cooperate with any foreign authority at the DOJ's request for the three-year term. Gunvor also agreed to report — in accordance with Attachment D of the plea agreement — to the DOJ and MLARS annually during the term regarding the "remediation and mediation of the compliance measures described in Attachment C" of the plea agreement. Finally, Gunvor agreed to report any evidence or allegation of a violation of the FCPA, and consistent with recent DOJ requirements, Gunvor's Chairman of its Board of Director and its CFO must certify at the end of the three-year term that they have met these disclosure obligations. 

Key Takeaways

  • Effect of Gunvor's Prior Misconduct. Gunvor's prior history of corruption and controls issues, which were not previously the subject of a U.S. enforcement action, was a key factor in the DOJ's decision to charge Gunvor and require the company to enter a guilty plea. During the period in which the misconduct was occurring in Ecuador, Gunvor reached a resolution with the Swiss authorities in 2019 for a bribery scheme in Republic of Congo and Ivory Coast between 2009 and 2012. According to the plea agreement, Gunvor admitted in the Swiss resolution that it "lacked sufficient controls" and did not take "reasonable organizational measures" to prevent the misconduct. The DOJ notes that they took into account this prior history in deciding on the fine, and the DOJ also set the fine at the 30th percentile in the range of fines set by the U.S. Sentencing Guidelines (rather than using the low-end of the range, which is common). In a speech after the resolution, AAG Argentieri stated that Gunvor paid a higher fine based on its prior misconduct. 
  • Individuals Convicted for Their Involvement in the Scheme. Gunvor's plea agreement represents another step in a four-year effort by the DOJ to prosecute the conduct at issue, with four individuals involved in the Gunvor-related scheme having already been convicted for their role in the conduct. The Pere brothers each pleaded guilty in October 2020 to one count of conspiracy to violate the FCPA and one count of conspiracy to commit money laundering. Discussed further below, the Pere brothers were also involved in the conduct at issue in Vitol's DPA. As detailed in our Summer 2021 issue of Money Laundering Enforcement Trends, Raymond Kohut pled guilty to one count of conspiracy to commit money laundering for his role, and he remains the sole Gunvor employee facing charges to date. The plea agreement notes that two other Gunvor executives involved have been residents of Switzerland, but as of the time of publishing there is no public information as to indictments of the executives. Finally, per the DOJ press release, former Petroecuador official Arias pleaded guilty to one count of conspiracy to commit money laundering in January 2022. Several other Petroecuador officials remained unnamed in the plea agreement, but the Ecuadorian Attorney General's press release indicates that the Alianza case is targeting "several former Petroecuador officials" and Gunvor. In November 2022, seven individuals (five of whom were government officials) were arrested for their role in the bribery scheme related to Arias. In September 2023, the Swiss authorities published a press release stating that they had indicted an unnamed former Gunvor employee for the misconduct at issue in the 2019 resolution — related to the Republic of Congo — with the Swiss Attorney General.     
  • Emphasis on Personal and Encrypted Means of Communication. The plea agreement demonstrates the DOJ's continuing focus on how companies are managing employee's use of personal and encrypted means of communication, and the DOJ's emphasis on providing access to such data when evaluating companies' cooperation in investigations. The use of such communication modes in many potentially illegal activities and the DOJ's expectations around the retention of these messages highlight the importance of prompt data collection during internal investigations. The plea agreement details how the co-conspirators used personal or alias email accounts and WhatsApp to communicate about the scheme in order to avoid detection. As noted above, the DOJ credits Gunvor for its "imaging of the phones of relevant custodians at the beginning of the Defendant's internal investigation, thus preserving business communications sent on mobile messaging applications" (emphasis added). The DOJ also highlights the remediation efforts that Gunvor has taken to implement a policy to manage such forms of communication in the future – a topic also discussed in the DOJ's 2023 Guidelines on the evaluation of compliance programs. 

Trafigura Pleads Guilty to Foreign Bribery Scheme

On March 28, 2024, Trafigura Beheer B.V. (Trafigura), a Swiss commodities trading company registered in the Netherlands, pleaded guilty to a December 13, 2023 criminal information charging the company with one count of conspiracy to violate the FCPA's anti-bribery provisions. Pursuant to the plea agreement, Trafigura has agreed to a criminal fine of approximately $80.5 million and forfeiture of approximately $46.5 million, although Trafigura will pay only two-thirds of the criminal fine ($53.7 million) now, and the DOJ agreed to credit up to approximately $26.8 million of any future fine Trafigura will pay in connection with an open criminal investigation in Brazil stemming from related conduct. Thus, barring surprises in the Brazil investigation, Trafigura will pay a net amount of $100.2 million to the U.S. Treasury under the guilty plea. 

According to the plea agreement – signed by Trafigura’s CEO and both Co-General Counsels – between approximately 2003 and 2014, Trafigura personnel and agents knowingly and willfully conspired with middlemen and foreign officials to secure and retain improper business advantages in contracts with Petrobras, the state-owned Brazilian oil company. According to the agreement, Trafigura and its co-conspirators made corrupt payments to Brazilian officials to secure these advantages and to unjustly enrich themselves. The total amount of "corrupt commissions" paid was approximately $19.7 million, a portion of which was used for improper payments to officials. And although Trafigura is a Dutch entity with the company's headquarters in Switzerland, the improper payments were coordinated and planned – at least in part – during meetings held in the U.S., and various payments were made through U.S. banking institutions. Based on this background and other facts, the DOJ asserted jurisdiction for the matter under 15 USC 78dd-3. 

Origin of the Scheme 

According to the plea agreement, in or about 2003, Co-Conspirator 1, who at that time worked for a Petrobras subsidiary in Houston, Texas, informed Trafigura Executive 2 that Trafigura would need to pay bribes to Co-Conspirator 1 if Trafigura wanted to obtain business in the Caribbean market. News sources suggest that Trafigura Executive 2 is Mariano Marcondes Ferraz, a former Trafigura management board member who was convicted in 2018 of related corruption charges in Brazil. Trafigura Executive 2 then agreed to pay approximately 5 to 10 cents per barrel of oil bought from or sold to Petrobras. Between approximately 2003 and 2008, Trafigura Executive 2 paid Co-Conspirator 1 about $500,000 in bribe payments, which were described as "commissions" in their communications. During this time, Trafigura Executive 2 also paid bribes to another Petrobras employee (Brazilian Official 1) based on agreed-upon prices for oil trades and corresponding bribe payment amounts. Furthermore, Trafigura Executive 2 directed Co-Conspirator 1 to deliver bribe payments on behalf of Trafigura to additional Petrobras officials in cash. In addition to wire transfers, Trafigura Executive 2 used "doleiros" – or exchangers working in Brazilian "illicit-market" money exchange – to generate cash for the bribe payments. After the completion of the trades, cash deliveries would take place at meetings in Brazil.

Second Phase of the Scheme

The plea agreement states that, in 2009, Trafigura Executive 2 – after leaving Brazil and moving to Europe – had become the CEO of a "Trafigura-affiliated joint venture in Singapore," and Co-Conspirator 1 "left Petrobras and begin working as an agent for Trafigura in Brazil," becoming an employee of Trafigura in 2010. At that time, there was another personnel change at Petrobras, with Brazilian Official 2 replacing Brazilian Official 1. Brazilian Official 2 "told Trafigura Executive 2 that Trafigura would have to pay a bribe on every deal," and Trafigura Executive 2 "agreed to pay up to 20 cents for each barrel of oil products" that Trafigura bought from or sold to Petrobras. 

According to the plea agreement, Co-Conspirator 1 made bribe payments to Brazilian Official 2 on Trafigura's behalf at the request of Trafigura Executive 2. The parties also agreed to conceal the bribe payments by orchestrating them through various shell companies or through another agent (Co-Conspirator 3). Co-Conspirator 1 would ultimately procure cash in Brazil from these transactions and pay bribes using the cash. The plea documents note that, around this time, Co-Conspirator 1 also began paying bribes to Rodrigo Berkowitz, a Petrobras fuel oil trader based in Houston and Rio de Janeiro, in cash, through one of Berkowitz's relatives. Berkowitz would then pick up the payments in Brazil. Co-Conspirator 1 and Berkowitz also met in Houston to discuss bribe payments "on numerous occasions." 

New Petrobras Officials Included in 2011 

Additionally, starting in or around 2011, Brazilian Officials 3 and 4 "came into positions of influence at Petrobras." According to the guilty plea, in October 2011, Co-Conspirator 1 met with Berkowitz and Brazilian Officials 3 and 4 in Miami Beach where they agreed to continue the bribe payments on a per-barrel rate. After this meeting, Trafigura Executive 2 sent an email regarding an agency agreement with Co-Conspirator 2, saying that Trafigura Executive 1, who press reports speculate is  late Trafigura founder and former CEO Claude Dauphin, and other Trafigura employees had given their approval. 

The guilty plea also states that in 2012, Trafigura Executives 1 and 2 "caused Trafigura Singapore" to enter into an agreement with Co-Conspirator 2 for commissions that would be shared in part with foreign officials. Co-Conspirator 2 signed invoices addressed to Trafigura Singapore for purported consultancy services, including one transaction for $500,000. Various people – including a Petrobras official – shared spreadsheets showing commission amounts owed to different persons. In total, Trafigura Singapore paid more than $1.63 million in commissions to Co-Conspirator 2. Co-Conspirator 2 worked with Co-Conspirator 3 to move the funds in Brazil. The payment chain included moving Euro-denominated amounts through financial institutions in the U.S., even though some of the payments were directed to a Hong Kong bank account in the name of a Chinese company associated with Co-Conspirator 3. For example, on or about February 10, 2014, Co-Conspirator 3 sent Co-Conspirator 2 a $390,240 invoice from a Hong Kong company for purported consulting services for prospecting "floor and wall tiles" in Brazil. On February 12, 2014, Trafigura Singapore paid approximately $390,240 (in Euros) to Co-Conspirator 2 on behalf of Trafigura. On February 17, Co-Conspirator 2 transferred $390,240 from a Hong Kong bank account for the Hong Kong consulting company through a financial institution in the U.S. for eventual benefit of Petrobras officials. 

Criminal Fine and Forfeiture

The guilty plea and the DOJ's press release on this matter noted that Trafigura obtained over $61 million in profits from the scheme. The DOJ used this number to calculate the criminal fine, using a Sentencing Guideline range of $85,172,530 (min) to $170,345,061 (max) after multiplying the profits by different factors. The DOJ next calculated the fine using the fifth percentile above the lower limit, based on Trafigura's prior misconduct (in other words, increasing the fine from the low end of the range to the 5th percentile). Specifically, regarding prior misconduct, the guilty plea notes a guilty plea for Trafigura Aktiengesellschaft in 2006 for violating a U.S. customs law, 18 U.S.C. §542, or entry of goods by means of false statements (while also noting that it was many years ago) as well as Trafigura's conviction for violating Dutch export and environmental laws in 2010 related to petroleum discharge in Côte D'Ivoire. 

In calculating the fine, the DOJ then provided Trafigura with limited credit for cooperation and acceptance of responsibility, at 10 percent, setting the fine at $80.5 million. The guilty plea notes that Trafigura did not voluntarily disclose the conduct at issue, and we summarize the key reasons for the relatively low cooperation credit below. However, DOJ did credit Trafigura's cooperation and remediation, citing numerous categories of such efforts, including "producing relevant nonprivileged documents and data to the government, including documents located outside the United States in ways that navigated foreign data privacy laws" and "proactively discontinuing the use of third-party agents for business origination." 

While the DOJ calculated the criminal fine using profits of approximately $61 million, the DOJ and Trafigura agreed to the forfeiture of criminally-derived proceeds at approximately $46.5 million, without providing any detail regarding how the amount was established. 

Other Compliance-Related Commitments 

The guilty plea states that Trafigura has a compliance and ethics program that meets the minimal elements set forth in Attachment C to the guilty plea, and that the company will continue to implement the program. Trafigura also agreed to self-reporting requirements for the three-year term in accordance with Attachment D to the guilty plea. The agreement also contains two certifications to be used at the term of the agreement, which are now standard in such resolutions – Attachment E, affirming that Trafigura has disclosed all information regarding potential FCPA violations (to be signed by the CEO and CFO); and Attachment F, certifying that the compliance program meets the standards set under Attachment C (to be signed by the CEO and the CCO). 

Judicial Review of Guilty Plea

The DOJ filed the Information against Trafigura on December 11, 2023, and a hearing was scheduled for December 22, 2023. In a forfeiture memo prior to the hearing, the DOJ stated that Trafigura intended to plead guilty at the hearing. Instead, based on information currently available in the docket, it appears that Judge Kathleen Williams requested additional briefing on aspects of the proposed agreement, including the level of court supervision over Trafigura's compliance obligations. In January, the DOJ and Trafigura submitted letters to the court, with the DOJ asserting that similar "plea agreements … have been reviewed and approved by this Court [the Southern District of Florida] and numerous others throughout the country for corporate pleas." The DOJ noted that "each of these plea agreements imposed contractual obligations on the defendant, requiring, among other things, compliance program improvements, and did not provide for the Court's continuing jurisdiction." The DOJ thus stated that the court "should not refrain from approving the Guilty Plea due to the additional contractual obligations contained in the Plea" and that the DOJ "has tools at its discretion to ensure compliance with the Plea Agreement." Trafigura made similar points, while also explaining the process and findings for why "the Government determined that it was unnecessary to require independent oversight of [Trafigura's] efforts to fulfill its compliance obligations" and that "modifying the structure of the Plea Agreement would not reflect the parties' intent." Transcripts for the December 22 hearing that discuss this determination were not available at the time of this publication. As noted, the guilty plea was subsequently accepted by the court on March 28, 2024. 

Related Enforcement Actions Involving Trafigura

As we discussed in our FCPA Winter Review 2024, the Swiss Office of the Attorney General filed an indictment in its Federal Criminal Court on December 5, 2023 against Trafigura and three individuals related to a Trafigura bribery scheme in Angola. According to a Trafigura press release, the company is currently involved in an ongoing civil case in Brazil, and the DOJ guilty plea suggests forthcoming criminal resolutions there as well. In December 2023, the company acknowledged that the international investigations "stem in part from statements made by Mariano Marcondes Ferraz… as a part of a plea agreement" related to his corruption conviction in Brazil. 

Key Takeaways

  • DOJ Press Release Regarding Commodity Trading Firms: Following the announcement of this plea agreement, the DOJ issued a press release on the same day (March 28) highlighting that the DOJ's "investigation" (singular) into international commodities trading schemes has resulted in six corporate resolutions and the convictions of 20 individuals (including "six government officials, eight corrupt intermediaries, and five trading company employees" in addition to ex-Vitol trader Javier Aguilar, whose conviction is covered below). In addition to the resolution for Trafigura, we have covered the resolution in this quarter for Gunvor and in prior FCPA Reviews for Sargent Marine, Vitol, Glencore, and Freepoint. The DOJ also noted that the aggregate fines, forfeitures, and other penalties from the combined investigation exceed $1.7 billion. We noted in previous FCPA Reviews that Rodrigo Berkowitz, the Petrobras official named in the Trafigura guilty plea, also featured in the December 14, 2023 Freepoint DPA and the August 29, 2023 superseding indictment against the Oztemel brothers and Eduardo Innecco, for their conduct related to Freepoint. Moreover, Berkowitz was also tied to the Vitol bribery case resolved in 2020. Vitol's arrangement in Ecuador was facilitated by the Pere brothers (who were unnamed in the Vitol DPA at the time) and involved a similar scheme as the oil-backed loans used by Gunvor. This DOJ press release suggests an industry sweep, but does not use that term, and is consistent with AAG Argentieri's March 8, 2024 speech, discussed in the Introduction, that asserts the DOJ is "bring[ing] impactful cases across a range of industries" including "the energy trading business." AAG Argentieri also noted in that speech that the relevant "schemes were strikingly similar."
  • Another Corporate Resolution for a Non-U.S., Non-Issuer Company Headquartered Outside the U.S. There have been an unusually high number of resolutions using 15 USC 78dd-3 for companies that are not headquartered or registered in the U.S,, and not listed on U.S. stock exchanges, but who have some other connection to the U.S. that establishes jurisdiction. In addition to Trafigura, recent examples include Gunvor this quarter, and Tysers Insurance Brokers Limited and HW Wood Limited last quarter. Each of these four cases involve business in Latin America with some connection to the U.S. that created opportunities for DOJ prosecutors to pursue charges. Tysers and HW Wood are headquartered in the U.K., whereas Gunvor and Trafigura are both headquartered in Switzerland. 
  • DOJ Criticisms of Trafigura's Delayed Cooperation and Remediation. The 10 percent fine reduction that Trafigura received in its sentencing is small compared, for example, to SAP at 40 percent and Gunvor at 25 percent. In explaining the cooperation credit of 10 percent, the DOJ noted that, particularly in the earlier phase of the investigation, Trafigura did not preserve and produce certain documents and took certain positions "inconsistent with full cooperation." Moreover, the plea agreement also noted that "the Defendant was slow to exercise disciplinary and remedial measures for certain employees whose conduct violated company policy." The guilty plea also states that "while [Trafigura] ultimately accepted responsibility for its criminal conduct, its prior posture in resolution negotiations also caused significant delays and required the Offices to expend substantial efforts and resources to develop additional admissible evidence before [Trafigura] constructively reengaged with the Offices." These facts may have also influenced the decision to require a guilty plea rather than a deferred prosecution agreement, although Gunvor also resulted in a guilty plea. Nonetheless, the DOJ did provide some cooperation credit, stating that Trafigura "cooperated with the investigation and demonstrated recognition and affirmative acceptance of responsibility for its criminal conduct" and also "because [Trafigura] engaged in remedial measures," as discussed above. 

Enforcement Actions Against Individuals

Trial of Former Vitol Trader Ends with Conviction for FCPA and Related Offenses; Court Issues Rulings on Mexican Law Definition of Officials and FCPA Affirmative Defense

On January 5, 2024, the much-anticipated trial of Javier Aguilar, a former commodities trader for Vitol S.A.'s U.S. subsidiary, began in the EDNY. Roughly seven weeks later, on February 23, 2024, the jury returned a verdict finding Aguilar guilty of all three counts: (1) conspiracy to violate the FCPA's antibribery provision; (2) violating the FCPA's antibribery provision; and (3) conspiracy to commit money laundering. Now, Aguilar awaits sentencing. Per the DOJ's press release on the verdict, he faces a maximum penalty of 30 years in prison — five years each for the FCPA counts and 20 years for the money laundering count.

The DOJ initially brought charges against Aguilar  in July 2020. All three counts were connected to Aguilar's alleged role the payment of bribes to officials of Petroecuador, Ecuador's state-owned oil company. The third money laundering count related to bribes made to officials at PEMEX Procurement International (PPI), a subsidiary of Mexico's state-owned oil company, PEMEX. In exchange for these alleged payments, the DOJ claims that Aguilar obtained trades and lucrative oil contracts for Vitol. 

Aguilar's is the first trial in a series of upcoming DOJ prosecutions for bribery schemes between trading firms and state-owned oil companies. The trial of Freepoint Commodities LLC's Glenn Oztemel and Gary Oztemel, along with Brazilian-Italian intermediary Eduardo Innecco, is scheduled for the second half of 2024. In fact, Aguilar's own FCPA-related trials are not yet complete. In August 2023, after the federal district court judge in the EDNY dismissed some of the Mexico-related FCPA charges against Aguilar due to lack of venue, the DOJ brought additional charges against Aguilar in a federal court in Texas. The Texas trial was originally scheduled to begin in mid-April 2024, but likely will be pushed back in light of the EDNY verdict and post-trial motions there. 

Other parties implicated in the Mexican and Ecuadorian bribery schemes previously have reached resolutions with the DOJ. In December 2020, Vitol, entered into a three-year DPA with the DOJ and an Order with the U.S. Commodity Futures Trading Commission (CFTC) – a first of its kind joint DOJ and CFTC resolution. More recently, as discussed elsewhere in this Review, trading company Gunvor entered a guilty plea and agreed to pay over $661 million in fines and forfeiture related to a parallel bribery scheme in Ecuador. Per the DOJ press release, "[s]even of [Aguilar's] co-conspirators have pleaded guilty to their role in the scheme and are awaiting sentencing [and] [t]hese individuals have agreed to forfeit more than $63 million." One of these individuals, per the DOJ's Gunvor press release, former senior Petroecuador executive Nilsen Arias Sandoval (Arias), pleaded guilty on Jan. 19, 2022 to conspiracy to commit money laundering. Arias was a key DOJ witness during the trial of Aguilar. 

Rulings Related to Mexican Law and Affirmative Defense under the FCPA

The EDNY trial court analyzed two connected legal issues related to the money laundering and FCPA charges towards the close of Aguilar's trial. While neither court ruling constitutes formal precedent, each is worth examining. 

The first issue related to the money laundering count, under which (per the trial court's memorandum and order) Aguilar was charged with "conspiring to launder money 'with the intent to promote the carrying on of,' among other things, an 'offense[] against a foreign nation involving bribery of a public official . . . in violation of the . . . Mexican Penal Code.'" The two sides presented alternative views as to whether the recipients of payments from Aguilar at PPI were "public officials" (or "public servants" per the Mexican Penal Code provisions) under Mexican law, thus compelling the court's ruling as to the appropriate Mexican legal interpretation. 

The court held that PPI's employees are not "public servants" under Mexico's penal code, meaning that the payments to PPI employees did not meet the definition of bribery under the relevant section of that code. 

The court concluded that because PPI is best classified as an "affiliate" of PEMEX under Mexican law, its employees are not public servants. The memorandum noted that Mexico's antibribery criminal provision, Article 221(II) of the Mexican Federal Penal Code, criminalizes paying bribes to "public servants." Article 212 of the Code defines public servants as "any person who holds a job, position or commission of any nature" in any public entity listed in the Article. From that list, the court narrowed the issue to whether PPI was either a "majority state owned company" or a "an organization or entity assimilated to" such an entity. The court then cited and analyzed Mexican law on public administration, PEMEX's regulatory framework (which had loosened state controls in the mid-2010s), a U.S. court decision (in a different context – related to sovereign immunity) holding that a different PEMEX subsidiary could not be considered an instrumentality of the Mexican state by the sole virtue of being wholly owned by PEMEX, and a non-precedential opinion from a Mexican judge. Based on this analysis, the court determined that PPI, while an affiliate of PEMEX, is neither a "majority state owned company" nor a "an organization or entity assimilated to" one within the meaning of the Mexican Federal Penal Code — and thus PPI's employees are not "public servants" covered by the relevant Code's anti-bribery provisions. 

As a result of this ruling, Aguilar requested that the court issue a "partial judgment of acquittal" related to the money laundering conspiracy count, asserting that the court finding meant "that no rational, properly instructed jury could convict him of conspiring to launder money in connection with [underlying] violations of Mexican antibribery law." Aguilar also argued that the finding "compels [Aguilar's] acquittal on the Mexico-related FCPA specified unlawful activity, citing the application of the FCPA's affirmative defense related to legality under local law. Aguilar argued that to successfully raise this affirmative defense, "a defendant need show only that a foreign country's written laws do not proscribe his conduct." Aguilar claimed that principles of statutory construction, legislative history, and certain commentators supported his view that "[t]he FCPA thus does not require a defendant to show that a foreign country's written laws affirmatively permit his conduct." Thus, the court's "ruling on Mexican law establishe[d] that Mr. Aguilar's alleged conduct concerning PPI and its employees was "lawful" under (that is, "not contrary to") Mexico's written criminal law, and…that the FCPA's affirmative statutory defense applies." 

The DOJ submitted a response noting, first, procedural and timing issues, pointing out that the court's ruling only covered one aspect of Mexican law, while "the defendant is raising an affirmative defense that concerns not just [the covered article], but the entire corpus of Mexican criminal, administrative and constitutional law, and he is doing so for the first time after the close of evidence." The DOJ also noted that Aguilar himself had argued before the court previously, in a briefing related to the Mexican law issue, that "'Article 212 . . . is not the only law that proscribes bribery," and "PPI employees are subject to the same criminal, civil, and employment sanctions that apply to all private-company employees who steal from or defraud their employers by engaging in bribery, embezzlement, or other forms of corrupt conduct.'" Thus, the defendant's own arguments could not be ignored when seeking to prevail on a different issue. 

The DOJ then stated that "the defendant has provided no evidence or other authority that it was legal under Mexico's 'written laws' to pay bribes to help Vitol win the contracts in question" and thus Aguilar had not met his burden of proof, which the FCPA assigns to the defendant. As to Aguilar's reading of the defense itself, the DOJ argued that "a defendant must affirmatively show that written law permits the payment in question" citing language from the relevant 1988 conference report that "expressly stated that the 'Conferees wish to make clear that the absence of written laws in a foreign official's country would not by itself be sufficient to satisfy this defense.'" Thus, "the 'absence of written laws,' standing alone, may be (and is) insufficient to invoke the affirmative defense, even if the defense does not go so far as to require that written laws and regulations 'expressly permit' a payment." 

The court denied Aguilar's request on February 20, 2024. Focusing on the nature of the payment, rather than Aguilar's liability as the payer, the court held that its "determination … under one section of Mexico's penal code is insufficient to satisfy the defendant's burden to show that the payments at issue were lawful" under Mexican law. Moreover, the court highlighted that Aguilar failed to cite any written law or regulation in Mexico that would make his payments to PPI employees lawful. Therefore, Aguilar was not successful in raising an affirmative defense under the FCPA to the jury. 

One Former Stericycle Executive Pleads Guilty and Another Indicted for Roles in Latin America Bribery Scheme

The DOJ has progressed charges against a former Senior Vice President and a former Finance Director from Stericycle, Inc. (Stericycle) this quarter. These charges followed a corporate resolution in 2022, in which Stericycle resolved charges with the DOJ, SEC, and Brazilian authorities related to the same bribery scheme. Stericycle's resolutions, which included $84 million in penalties and disgorgement and a two-year monitorship , are discussed in more detail in the FCPA Summer Review 2022. In the DOJ press release at the time, the DOJ noted, "Stericycle has agreed to continue to cooperate with the department in any ongoing or future criminal investigations relating to this conduct," while also noting that Stericycle "received full credit for its cooperation with the department's investigation." 

On February 27, 2024, Mauricio Gomez Baez (Gomez Baez), the former Senior Vice President of Stericycle's Latin America division, pleaded guilty to conspiracy to violate the anti-bribery provisions of the FCPA in connection with a scheme to bribe government officials in Mexico, Brazil, and Argentina. Gomez Baez was originally charged on February 9, 2024, with a superseding information filed several days later. Gomez Baez admitted to directing, in coordination with other employees and agents of Stericycle, the payment of approximately $10.5 million in bribes intended to secure medical waste collection contracts, obtain the release of payments owed, and avoid fines. He is currently scheduled to be sentenced on May 16, 2024. 

The payments at issue in the Gomez Baez charges were facilitated by the former Finance Director of Stericycle's Latin America division, Abraham Cigarroa Cervantes (Cigarroa), who was separately indicted for his role in the scheme on March 19, 2024. In addition to Cigarroa, Gomez Baez admitted that the scheme was also carried out by other employees of Stericycle's subsidiaries in Mexico, Brazil, and Argentina, often with the assistance of third-party vendors. Specifically, per Gomez Baez's factual proffer, Stericycle's subsidiaries in Mexico and Brazil entered into "sham" contracts with local vendors, which then issued fake invoices to the relevant Stericycle subsidiary to facilitate the payment of corrupt funds to government officials. The bribes were typically paid in cash, sometimes on a monthly basis, and the amounts were often based on related contract payments or amounts owed, though in some cases they were correlated to the amount of waste collected or provided as a fixed fee. The bribes were ultimately documented in tracking spreadsheets under code names, such as "IP." According to the DOJ, Cigarroa is also alleged to have inaccurately recorded the bribe payments in the company's books and records in an attempt to conceal their true nature, as well as incorrectly representing that the books and records were in fact accurate. Cigarroa is charged with one count of conspiracy to violate the FCPA's anti-bribery provisions and one count of conspiracy to violate the books-and-records provisions. 

Former Maxwell Technologies Executive Pleads Guilty to FCPA Charge

More than ten years after his original indictment, Alain Riedo pleaded guilty to falsifying the books and records of California-based Maxwell Technologies, Inc. (Maxwell) in connection with a Chinese bribery scheme – a scaled-back plea compared to the original charges, as discussed below. From 2006-2009, Riedo served as the Senior Vice President and General Manager of the Switzerland-based subsidiary Maxwell Technologies S.A. (Maxwell S.A.). Under the plea agreement, Riedo admitted to knowing that a Chinese individual, identified as "Agent 1" – who Maxwell S.A. used to facilitate sales of high-voltage/high-tension capacitors to customers located in China – was receiving payments from Maxwell S.A. that were falsely captured in Agent 1's invoices as "commissions or extra payments." As a result of the inaccurate categorization, payments to Agent 1 were incorrectly recorded in Maxwell S.A.'s books and records as sales expenses or commissions. For example, Riedo admitted to being aware of a particular incident where Maxwell S.A. falsely recorded a $346,000 payment to Agent 1, who in turn paid the funds to Pinggao Group Co. Ltd., a Chinese state-owned and controlled entity. (Presumably this guilty plea – and the fact that the payment was made to a state-owned entity and not to individual officials – was carefully negotiated between the prosecutors and Riedo.) Riedo further admitted to having caused another Maxwell S.A. employee to transmit Maxwell S.A.'s financial records to Maxwell for consolidation with its own financial data, and as a result, violating the FCPA's books-and-records provisions. As part of the plea agreement, the parties agreed that Riedo would pay a $55,000 fine either on or before his sentencing. The sentencing hearing is currently scheduled for May 20, 2024.

As discussed in the 2014 FCPA Winter Review, Riedo was originally indicted on October 15, 2013. At the time, he was charged with nine counts of conspiracy and substantive violations of the FCPA. The indictment alleged Riedo was involved in authorizing and falsely characterizing over $2 million worth of payments, which Agent 1 used to bribe government officials at state-owned and/or controlled utility companies in order to obtain sales contracts. Under the plea agreement, DOJ agreed to dismiss other eight charges that were pending against Riedo. At the time Riedo was indicted, press accounts indicated that he remained a fugitive. According to GIR, Riedo has lived in Switzerland and did not enter the U.S. until recently.

Previously, in 2011, Maxwell agreed to pay over $14 million to resolve related charges with the DOJ and SEC. Maxwell's resolutions are discussed in more detail in the 2011 FCPA Spring Review. No other Maxwell executives have had charges made public, to the best of our knowledge. 

Former Venezuelan National Guard Major Pleads Guilty to Money Laundering Conspiracy in Venezuelan Bribery Scheme

On March 4, 2024, Nepmar Jesus Escalona Enriquez (Escalona), a former Major in the Venezuelan National Guard who most recently resided in Florida, pleaded guilty to money laundering conspiracy in connection with a scheme to defraud two Venezuelan financial institutions, the Central Bank of Venezuela and Banesco Bank. Escalona admitted that between 2010 and 2017, he and two others coordinated to submit fraudulent applications to CADIVI, the Venezuelan currency regulation authority, that requested the release of U.S. dollars to the conspirators' account in Brazil in order to purportedly finance the import of Aldehyde C10, a food additive, to Venezuela. After CADIVI granted the permits to release the requested funds, Banesco Bank wired $1.677 million from Venezuela to the conspirators' Brazilian account. To facilitate the scheme and prevent detection, the conspirators paid a series of bribes to government officials in Venezuela. Rather than using all or any of the funds to import Aldehyde C10 into Venezuela, Escalona and his co-conspirators enriched themselves. In particular, at Escalona's direction, $420,847.44, which constituted a portion of the scheme's proceeds as well as bribe payments, was then transferred to five other bank accounts, none of which were held in Escalona's name. 

Escalona's sentencing hearing is currently scheduled for May 23, 2024. Under the plea agreement, both Escalona and the DOJ agreed to jointly recommend that the court require Escalona to pay $841,694.88 in forfeiture and find that Escalona was not the organizer of the conspiracy.

California Lawyer and Former Nigeria Official Indicted for Receiving $2.1 Million Bribe

On January 10, 2024, a federal grand jury indicted Paulinus Iheanacho Okoronkwo, a dual citizen of the U.S. and Nigeria and an immigration and personal injury lawyer based in California, for money laundering, tax evasion, and obstruction of justice. Okoronkwo allegedly received a bribe of $2.1 million when he was the general manager of the upstream division of the state-owned Nigerian National Petroleum Corp. (NNPC) in exchange for influencing the negotiation of favorable drilling rights and financial terms for Addax Petroleum (Addax), which is a Switzerland-based subsidiary of Sinopec — a Chinese state-owned oil company. 

Nigeria's government develops its fossil fuel and natural gas reserves through NNPC, including through partnerships with foreign companies. As general manager at NNPC, Okoronkwo was a foreign public official, per the indictment. In October 2015, Addax "wired a payment of $2,105,263 to an Interest on Lawyers' Trust Account (IOLTA) in the name of Okoronkwo's Los Angeles law firm purportedly for his work as a consultant who negotiated and completed a settlement agreement with the NNPC with respect to Addax's drilling rights in Nigeria." The engagement letter between Addax and the law firm was executed in order to allegedly disguise the bribe as a payment for legitimate legal services. Two years later, Okoronkwo allegedly used $983,200 of the bribe payment to purchase a house in Valencia, California.

Okoronkwo is also facing tax evasion and obstruction of justice charges because he allegedly omitted the bribe payment from his federal income tax return and lied to investigators during an interview in June 2022. If convicted, Okoronkwo could be sentenced to ten years in federal prison for each of the three money laundering counts, ten years for obstruction of justice, and five years for tax evasion.

This enforcement action shows again that in some instances, even without any reliance on the recently passed FEPA, some foreign officials can be (and have been) prosecuted for receiving bribes via money laundering charges, especially if the relevant foreign official has a connection to the U.S. However, this is also a unique case, given that a Nigerian official was also a practicing attorney in California. 

Venezuelan Businessman Tied to Citgo Bribery Sentenced

On January 17, 2024, Tulio Anibal Farias-Pérez (Farias), was sentenced to three years of probation and ordered to forfeit $1.5 million to the U.S. for his role in a scheme to pay bribes to the former manager in Citgo's Special Projects Group, Jose Luis De Jongh Atencio (De Jongh). Farias is a Venezuelan national who resided in Houston during the relevant time. 

In our 2020 FCPA Spring Review, we noted that, on February 19, 2020, Farias pleaded guilty in U.S. federal court to one count of conspiracy to violate the FCPA. The DOJ had charged Farias in a criminal information filed on February 7, 2020. According to the Information, Farias had helped to arrange for bribes to officials at Petróleos de Venezuela S.A. (PDVSA), the Venezuelan state-owned and state-controlled oil company, and Citgo, a U.S.-based subsidiary of PDVSA, in exchange for "lucrative contracts and other business advantages with PDVSA [including Citgo]."

The contracts were secured through several closely held companies, some of which were U.S.-based companies. The DOJ alleged that Farias controlled these companies together with his business partner Jose Manuel Gonzalez Testino (Gonzalez). Both co-conspirators paid several bribes to PDVSA officials, including wire transfers to bank accounts controlled by PDVSA officials and Super Bowl and other sports tickets.

According to GIR, Farias' lawyer said that the prosecutors sought three years in prison for Farias, but defense counsel argued that Farias had only worked at one of Gonzalez's companies and that Farias paid the bribes at Gonzalez's direction.

Gonzalez, a U.S-Venezuelan citizen, was arrested on July 31, 2018 at the Miami International Airport and pleaded guilty in May 2019, in a federal court in Houston, to three criminal counts related to this scheme. Gonzalez, while on bond pending sentencing, died by suicide in March 2023, weeks before he was scheduled for sentencing. 

Additionally, in our 2021 FCPA Spring Review, we noted that De Jongh admitted to directing his co-conspirators, one of whom was Farias, to send bribe payments to accounts in the names of overseas shell companies that De Jongh controlled. According to the indictment, De Jongh also directed Farias to send payments to U.S. bank accounts in the names of his relatives and associates, in some instances creating fake invoices to disguise the illicit funds. De Jongh allegedly laundered the funds through U.S. bank accounts and used the proceeds to purchase real estate in the Houston area and to make other investments. In January 2023, a court sentenced De Jongh to four years in prison and one year of supervised release. At the same time, another businessman, Roberto Enrique Rincón Fernández (Rincón), was sentenced to 18 months in prison minus time served, and one year of supervised release, in part due to Rincón's extensive cooperation with the ongoing investigations into corruption at PDVSA.

As stated in the criminal judgment, the U.S. District Judge for the Southern District of Texas, Gray H. Miller, did not sentence Farias to prison but to probation for a term of three years. Additionally, as noted in the Order Imposing Money Judgment, Farias agreed to a money judgement in the Plea Agreement, finally agreeing to forfeit $1.5 million, the amount of money obtained from the criminal conspiracy.

Venezuelan Businessman Orlando Contreras Saab Sentenced for FCPA Conspiracy Violation

On February 16, 2024, Judge Rodolfo A. Ruiz of the U.S. District Court for the Southern District of Florida, sentenced Venezuelan businessman Orlando Alfonso Contreras Saab (Contreras) to six months in prison, followed by three years of supervised release, for his role in a bribery scheme in Venezuela. Additionally, in a Preliminary Order of Forfeiture issued on December 8, 2023, Contreras was ordered to pay an amount close to $6 million, which was the approximate value of the proceeds that were traceable to his offenses. 

As previously reported, federal prosecutors in the Southern District of Florida filed a criminal information on September 11, 2023, charging Contreras with one count of conspiracy to violate the FCPA. According to the information, from early to mid-2016 until at least September 2019, Contreras conspired with Colombian and Venezuelan individuals to bribe Venezuelan officials for the purpose of obtaining multi-million-dollar contracts in food and medicine distribution in Venezuela.

On November 13, 2023, Contreras agreed in a guilty plea and related factual proffer that he had participated in a conspiracy to pay bribes to Venezuelan government officials between 2016 and 2019 in exchange for "contracts and business advantages." Per the proffer and criminal information, Contreras served as the intermediary of Jose Gregorio Vielma-Mora, the former Governor of the State of Tachira in Venezuela, who recruited Contreras to design a business proposal for the import of boxes of food to be sold through the Venezuelan government-controlled food and medicine distribution program CLAP ("Comité Local de Abastecimiento y Producción"). 

Vielma-Mora, alongside with four other co-conspirators, were also indicted for laundering the proceeds of the bribery scheme back in 2021. To the best of our knowledge, these individuals are still fugitives and charges are pending.

Court Cases

Corporate Transparency Act Held Unconstitutional, but Impact is Limited — For Now

On March 1, 2024, a federal district court judge in the Northern District of Alabama held that the Corporate Transparency Act (CTA) — a law designed to combat money laundering and illicit financing through anonymous shell companies — is unconstitutional. The CTA has been touted as a key component of the Biden administration's SCC. 

The impact of the ruling is limited for now to members of the National Small Business Association (NSBA), which filed a lawsuit in November 2022 seeking to invalidate the CTA. The NSBA alleged that the CTA's reporting requirements, which mandated disclosure of beneficial ownership information (BOI) for all companies formed or registered to do business in the U.S., exceeded Congress's constitutional powers and violated the First, Fourth, and Fifth Amendments. The district court agreed with regard to the limits on Congress' powers under the Constitution; the court did not address the NSBA's argument regarding other alleged constitutional violations. The DOJ (on behalf of the Department of the Treasury's Financial Crimes Enforcement Network (FinCEN), which administers the BOI requirements) appealed the decision on March 11, 2024 to the Eleventh Circuit Court of Appeals. 

The court's injunction is narrowly tailored: FinCEN is enjoined from enforcing the CTA only with respect to the 65,000 member companies of the NSBA. Indeed, FinCEN issued a notice on March 11 confirming that the agency will continue to enforce the CTA against all other companies while the district court's decision is reviewed on appeal. Although the ruling has cast a shadow on the future of the CTA, companies that are not expressly subject to the injunction — that is, the vast majority of companies — should continue to comply with the mandatory BOI reporting requirements under the CTA until and unless FinCEN issues guidance advising otherwise. It is possible that in the wake of this decision, other plaintiffs might attempt to leverage the Alabama court ruling to seek a nationwide injunction on CTA implementation, but as of this date, no such injunction has occurred.

International Developments

Seatrium Announces Provisional Lava Jato-Related Resolutions in Brazil and Singapore

On February 26, 2024, Seatrium Limited (Seatrium), the Singapore company created by the 2023 merger of Keppel Offshore & Marine Ltd (Keppel) and Sembcorp Marine (Sembcorp), disclosed provisional leniency agreements with various authorities in Brazil resulting from those authorities' Lava Jato (Operation Car Wash) investigations. As we noted in our 2018 FCPA Winter Review, on December 22, 2017, Keppel and its wholly-owned U.S. subsidiary, Keppel USA, settled FCPA-related charges with the DOJ. That global disposition also included authorities in Brazil and in Singapore. Keppel agreed to pay $211 million to Brazil, more than $105 million to Singapore, and $105 million to the U.S. Keppel finalized its leniency agreements with the Brazilian authorities in December 2022, as we noted in our 2023 FCPA Winter Review

Sembcorp, the other company that formed Seatrium, has been the subject of a Lava Jato investigation since at least July 2019, when Brazilian authorities raided the offices of its Brazilian subsidiary, Estaleiro Jurong Aracruz Ltda (EJA). Media reports suggest that the investigation related to corruption allegations involving contracts with Sete Brasil, a subsidiary of Petrobras that operates rigs. The authorities also investigated and charged a former third party and the former CEO of EJA, though per a December 2023 release from Seatrium, a Brazilian federal trial court acquitted those individuals on all charges. The MPF may appeal that ruling. 

Per Seatrium's investor release, the provisional leniency agreements announced in February involve one agreement with both the AGU and CGU and a second agreement with the MPF. The provisional payments owed to the Brazilian authorities amount to RS$670.7 million (approximately $134.2 million). The release notes that Seatrium has also provisionally agreed to continued compliance obligations and cooperation with the authorities. Brazil's Federal Court of Accounts (TCU) has 90 days to review the CGU and AGU agreement, while the agreement with the MPF is dependent on the Fifth Chamber for Coordination and Review's ratification, which does not face a statutory period for ratification. According to the release, once the leniency agreements are approved, Seatrium does not expect further "grounds for liability" to the Brazilian authorities related to the matters within the scope of the agreements. Furthermore, the announcement states that once the agreements are executed, the company should be able to participate in public bids and contracts in Brazil.

The announcement also notes that, as part of the merger agreement, Sembcorp had indemnified Keppel's parent company, Keppel Corporation Limited (KCL), "for claims against [Sembcorp] in respect of certain other identified contingent liabilities [relating] to [Sembcorp's] discussions with the Brazilian Authorities on the Operation Car Wash investigations." The release notes that Seatrium made a provision for its FY 2023 of "S$82.4 million [roughly $61.3 million] for the agreed Brazilian settlement and the KCL indemnity."

Per a June 1, 2023 announcement, the Singapore Corruption Practices Investigation Bureau (CPIB) launched an investigation of Seatrium related to Sembcorp's Brazilian issues. The February 2024 Seatrium release noted that the company is still assisting Singaporean authorities with their investigation and "remains committed to the highest standards of compliance… including zero tolerance for bribery and corruption." On March 28, 2024, the CPIB announced that the Public Prosecutor, the party responsible for bringing all public prosecutions in Singapore and part of the Attorney General's Chambers (AGC), is in DPA discussions with Seatrium related to Sembcorp's alleged corruption offenses in Brazil. Under the proposed DPA, Seatrium would be required to pay a penalty of $110 million. Up to $53 million of this total could be credited to the approximately $134.2 million reached in the in-principle settlement agreements with Brazilian authorities. Seatrium announced on March 28 that the company had made a provision of S$76.5 million (approximately $56.2 million) to cover the DPA penalty terms. 

In addition to announcing the provisional DPA, the CPIB also announced that two former executives who worked at Jurong Shipyard (a subsidiary of Sembcorp in Brazil), Wong Weng Sun and Lee Fook Kang, were charged with conspiring to pay bribes to Brazilian middleman Guilherme Esteves de Jesus to advance Jurong Shipyard's business interests with Sete Brasil/Petrobras from 2009 to 2014. Wong was also charged with obstruction of justice for allegedly instructing two employees to delete an email with evidence of bribes in 2014.

Brazilian Federal Court Pauses Payments Owed by Novonor under 2016 Leniency Agreement

On January 31, 2024, Judge José Antonio Dias Toffoli of the Brazilian Federal Supreme Court (STF) paused payments owed by Novonor S.A. (Novonor, formerly known as Odebrecht) as a result of the company's December 2016 leniency agreement with the MPF. Judge Toffoli also held that Novonor could petition the AGU and CGU to reevaluate the terms of a separate leniency agreement with these authorities to correct alleged judicial wrongdoings and abuses.

As Miller & Chevalier noted in the 2024 FCPA Winter Review, the STF held that evidence obtained in Odebrecht's leniency agreement was inadmissible in other cases, citing concerns regarding the integrity of the MPF raised by "Operation Spoofing," an investigation that called into question the integrity and impartiality of the corruption investigations by the Lava Jato Task Force, particularly by former judge Sérgio Moro. Judge Toffoli held that the terms of the Odebrecht-MPF leniency agreement should be suspended until Novonor could access information from Operation Spoofing relevant to the question of whether the alleged wrongdoing may have impacted the company's case.

According to Judge Toffoli's ruling, in its entirety, Operation Spoofing collected over 7TB of relevant data, but Novonor had only received access to 270GB of that data to date. Judge Toffoli held that the entire 7TB of data must be turned over to Novonor, and determined that Novonor needed to access this information before the leniency agreements could be reevaluated. Furthermore, Judge Toffoli noted that there was sufficient reasonable doubt to question whether Novonor's decision to sign the MPF's leniency agreement was in fact voluntary. Judge Toffoli stated that possible collusion between the prosecution and judges from Lava Jato resulted in pressure for Novonor to sign a leniency agreement, the terms of which it could not fairly negotiate, thus tainting the "voluntary" nature of the agreement. According to Judge Toffoli this doubt justified, for the moment, pausing Novonor's payments. 

This decision could plausibly jeopardize other key resolutions obtained by the Brazilian authorities as a result of the Lava Jato investigation, as those resolutions may be affected by the same alleged prosecutorial misconduct. In his January 31 decision, the judge cited the argument made by J&F Investimentos (J&F) that supposedly resulted in a December 2023 decision to pause payments, stating that both Odebrecht and J&F faced judicial abuses that compromised the integrity of their leniency agreements. Companies involved in cases with similar fact patterns may succeed in making similar arguments, potentially leading to reversals and pauses in payments under other leniency agreements. 

It is important to note that this Brazilian court decision will not affect the 2016 U.S.-Novonor [Odebrecht] agreement. As mentioned in our 2017 FCPA Spring Review, Odebrecht represented at the time that the company could not pay more than $2.6 billion of the originally ordered $3.5 billion. At an April 17, 2017 sentencing hearing on the above charges, EDNY Judge Raymond Drearie imposed a $2.6 billion penalty – $93 million of which was to be paid to the U.S., $116 million to Switzerland, and approximately $2.4 billion to Brazil.

U.K. Jury Acquits Two Individuals of Paying Bribes to Public Officials in Saudi Arabia, Convicts One for Misconduct in Public Office 

On March 6, 2024, after a 12-week trial, a U.K. jury in London's Southwark Crown Court acquitted Jeffrey Cook, a former Airbus affiliate director and U.K. Ministry of Defence (MoD) employee, and accountant John Mason of allegations that they knowingly paid bribes to public officials in Saudi Arabia. The jury trial potentially brings to an end a long-running SFO investigation that included a guilty plea in April 2021 by the former employer of Cook and Mason, GPT Special Project Management Limited (GPT), which paid over £40 million in fines and confiscation.

The jury did convict Cook for misconduct in public office – specifically for receiving kickbacks of £45,000 and two cars between 2004 and 2008 while working for the MoD.  On April 12, 2024, the Southwark Crown Court judge issued a 30-month prison sentence to Cook related to this conviction, along with a confiscation order requiring Cook to pay £123,000. 

The cases against GPT, Cook, and Mason stemmed from long-running cooperation between the U.K. and Saudi Arabia governments, which in 1978 signed a Memorandum of Understanding whereby the U.K. would provide billions of pounds sterling of military communications equipment, maintenance, and training to the Saudi Arabian National Guard (SANG), with the MoD running the project on the U.K. side. From the 1990s until 2019, GPT – an Airbus affiliate since 2007 – contracted with the MoD to deliver the MoD's commitments under the SANG contract, with general oversight from the MoD. Airbus wound down GPT's operations in 2020.  

In 2011, a whistleblower, Ian Foxley, who was a senior executive at GPT and a retired military officer, alleged that GPT had paid millions of pounds sterling to two Bahrain-registered companies, Simec and Duranton, between 2007 and 2010, with no corresponding services performed. The case was reported to MoD and Airbus, with both reporting the case for investigation to the SFO. 

However, the SFO's investigation stalled in 2018, when the U.K. Attorney General reportedly withheld consent for prosecution. The Attorney General gave consent in 2019, however, and the SFO then brought cases against GPT, Cook, Mason, and a third person in 2020 (although the SFO later decided not to prosecute the third person). Cook, GPT's former managing director, and Mason, GPT's former financial officer and 10 percent owner of Simec, were charged with corruptly giving or conspiring to give payments in the amount of £9.7 million to senior officials in the SANG via the two intermediary companies, Simec and Duranton. 

After a number of procedural actions and delays, in part due to the MoD's slow disclosure of information to the prosecution, the SFO started the trial of Cook and Mason in November 2023, ending on March 6, 2024 with the jury finding Cook and Mason not guilty of making corrupt payments. A significant part of the defense strategy was to emphasize that the U.K. government was aware of the payments, which were alleged to be part of the Memorandum of Understanding with the Saudis, and thus that Cook and Mason were merely implementing the MoD's wishes.  However, as a result of procedural rulings at trial, the issue of the U.K. MoD's involvement was not formally put to the jury. That said, in remarks about GPT's conduct when resolving the GPT plea – which appear to have been posted online by Spotlight on Corruption – the judge stated that the U.K. government "was substantially involved in the historic corrupt arrangements which led to GPT's offending conduct. … There is evidence to demonstrate that knowledge and at least tacit approval of the arrangements within H[is] M[ajesty's] G[overnment] continued (even if many within H[is] M[ajesty's] G[overnment] were unaware of the true purpose of the … payments) into the indictment period."

As noted, Cook was found guilty of misconduct in public office, but this separate charge related to Cook's conduct prior to work at GPT, while Cook was serving at the MoD. 

The original whistleblower, Ian Foxley, has filed civil claims against the MoD, the U.K. Department of International Trade, and GPT over his treatment as a whistleblower after raising his concerns about corrupt activities, alleging that his coming forward caused him financial and psychological harm, so the matter will remain in the courts for some time. 

Australia's Combatting Foreign Bribery Act and Data Agreement with the U.S.

Australia made a significant stride in fortifying its legal framework against corruption with the enactment of the new Combatting Foreign Bribery Act (the Act), which, after several years of effort, finally passed both Houses of the Australian Parliament on February 29, 2024. This legislative leap, documented in the "Crimes Legislation Amendment (Combatting Foreign Bribery) Bill 2024," which is accompanied by an Explanatory Memorandum and its Addendum, marks a pivotal moment in Australia's ongoing battle against global corruption. Through this act, Australia not only aligns itself with international anti-bribery standards but also sets a new benchmark for the country's corporate governance and ethical business practices.

Key Legislative Amendments

At the core of this new legislation is the comprehensive amendment of the Criminal Code Act 1995 and the Income Tax Assessment Act 1997. The key points of the Combatting Foreign Bribery Act are:

  1. Broadens the definition of bribery. The bill broadens the definition of bribery in various ways, such as providing a comprehensive definition of "advantage", extending beyond mere property benefits. Also, it clarifies the meaning of "associate" and repeals previous definitions of benefit and business advantage to ensure clarity and broad applicability in law enforcement. Particularly, Section 70.2 of the Criminal Code, which details the offense of bribing a foreign public official, is revised. Now the legislation specifies that an intent to influence does not need to be directed at a particular official or to obtain a specific business advantage, broadening the scope of prosecutable offenses. 
  2. Enhances prevention and due diligence duties. The act's new Section 70.5A mandates that corporations take proactive steps to prevent bribery by their associates. Failure to implement adequate procedures to prevent bribery can result in conviction and significant penalties. 
  3. Substantial penalties are included for both corporation and individuals. For individuals, the penalties for violating these provisions include imprisonment for up to 10 years, a significant fine, or both. Corporations face considerable fines, calculated based on the value of benefits obtained from the bribery or a percentage of the annual turnover. 
  4. Introduces tax implications. The Income Tax Assessment Act 1997 is amended to ensure that expenses related to bribing foreign official are not tax-deductible, thereby reinforcing the financial disincentives for engaging in corrupt practices. 
  5. Announces review and guidance. The legislation mandates a review of its operations and requires the publication of guidance to assist corporations in implementing measures to prevent foreign bribery.

Explanatory Memorandum: Elucidating the Act's Intentions

The Explanatory Memorandum accompanying the Act sheds light on the motivations behind these legislative enhancements. It underscores Australia's commitment to fulfilling its obligations under the OECD Anti-Bribery Convention. For example, the legislation extends the scope of a bribery offense to include candidates for public office and personal advantages.

Addendum to the Explanatory Memorandum: Clarifying Defensive Measures

Responding to recommendations from the Senate Legal and Constitutional Affairs Legislation Committee, the Addendum to the Explanatory Memorandum offers important clarifications regarding the defense for companies based on implementing adequate procedures to prevent foreign bribery. This section emphasizes that the occurrence of foreign bribery does not automatically negate the presence of effective preventative measures within a corporation. This key clarification encourages businesses to proactively establish robust anti-bribery frameworks, reinforcing the act's goal of fostering an ethical business environment.

Implications for the Australian Business Landscape and Global Anti-Corruption Efforts

The Act mandates a proactive approach to compliance and governance, urging Australian companies to implement comprehensive anti-bribery measures. For the international community, Australia's legislative advancements serve as another model for integrating ethical practices into the fabric of global commerce, drawing upon elements used in the U.S., the U.K., and elsewhere.

Enhancing International Cooperation: The US-Australia Data Access Agreement

In conjunction with the significant strides made by the Act, Australia's efforts to fortify its legal framework against corruption are further bolstered by collaboration with the U.S. On January 30, 2024, an Agreement on Access to Electronic Data for the Purpose of Countering Serious Crime entered into force (originally signed on December 15, 2021), marking a significant advancement in the collaborative efforts between the U.S. and Australia to combat serious crimes, including terrorism and child sexual abuse.

This landmark agreement represents a significant step in international cooperation, allowing U.S. and Australian authorities to obtain timely access to electronic data held by service providers in the partner nation. This enhanced access is crucial for the prevention, detection, investigation, and prosecution of serious crimes.

The agreement incorporates stringent privacy and oversight protections to ensure that any data collected adheres to the agreement's robust requirements. These measures reflect an attempt by the state parties to balance between the need for security and the protection of individual rights.

Supported by the domestic legislative frameworks of the U.S.'s Clarifying Lawful Overseas Use of Data (CLOUD) Act and Australia's Schedule 1 of the Telecommunications (Interception and Access) Act 1979 (Cth), the agreement complements existing law enforcement collaborations and represents a key component of the two countries' broader strategy to tackle serious crime in the digital age.

Miller & Chevalier Upcoming Speaking Events, Recent Publications, and Podcasts


EMBARGOED! is intelligent talk about sanctions, export controls, and all things international trade for trade nerds and normal human beings alike, hosted by Miller & Chevalier. Each episode will feature deep thoughts and hot takes about the latest headline-grabbing developments in this area of the law, as well as some below-the-radar items to keep an eye on. Subscribe for new bi-monthly episodes so you don't miss out: Apple Podcasts | Spotify | Amazon Music | YouTube

Upcoming Speaking Engagements

04.17.2024 The Implications of Sanctions on Global Shipping: Do They Work and What Comes Next? (Laura Deegan)
04.18.2024 The Challenges of Negotiating Multinational Non-Prosecution Agreements (Joshua Drew)
04.18.2024 The Sanctions in Disputes Forum 2024 (Tim O'Toole)
04.19.2024 PLI's Global Capital Markets and U.S. Securities Laws 2024 (Paul Leder)
05.02.2024 SCCE Webinar: Managing the Most Difficult and Most Important Anti-Corruption Due Diligence Projects (Daniel Patrick Wendt)
05.09.2024 2024 ABA International Law Section Annual Conference (James Tillen, Daniel Patrick Wendt, FeiFei Ren, Mary Mikhaeel)

Recent Publications

04.10.2024 Money Laundering Enforcement Trends: Spring 2024 (Ann Sultan, Ian Herbert, Leah Moushey, William Barry, Kirby Behre, Annie Cho, Julia Herring, Brittany Huamani, Aditi Patil, FeiFei Run, Rebecca Tweedie)
04.03.2024 Self-Reporting of FCPA Issues – Some Thoughts on Current Incentives and Expectations (John Davis)
04.02.2024 Trade Compliance Flash: Spring 2024 UFLPA Enforcement Trends (Richard Mojica, Brittany Huamani, Aditi Patil)
04.02.2024 2024 Latin America Corruption Survey (Alejandra Montenegro Almonte, Matteson Ellis, James Tillen, Gregory Bates)
03.27.2024 Companies Seeking M&A Safe Harbor Should Follow DOJ’s Signals (Daniel Patrick Wendt, FeiFei Ren)
03.26.2024 Interview: Ricardo Rincón of Miller & Chevalier Discusses Anti-Corruption Efforts in International Arbitration (Ricardo Rincón)
03.26.2024 Femicide Does Not Prescribe (Margarita R. Sánchez)
03.12.2024 Recent FCPA Action Highlights Corruption Risks in Customer Relationships (Daniel Patrick Wendt, Annie Cho)
03.12.2024 Trade Compliance Flash: OFAC Announces Hundreds of Russia-related Sanctions to Mark the Second Anniversary of the Invasion of Ukraine (Tim O'Toole, Laura Deegan, Melissa Burgess, Manuel Levitt, Rebecca Tweedie)
02.27.2024 FCPA Enforcement Trends for Boards and Management to Follow in 2024 (John Davis)

Editors: Ann SultanDaniel Patrick WendtJohn DavisAbi Hollinger, Alexandra Beaulieu, and Ricardo Rincón

Contributors: Anton Berezin,* Annie Cho, Facundo Galeano,** Julia Herring, Therese Kuester, Aditi Patil, Sandeep Prasanna, and FeiFei Ren

*Former Miller & Chevalier attorney
**Law clerk

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