United States: Top Ten International Anti-Corruption Developments For November 2017

In order to provide an overview for busy in-house counsel and compliance professionals, we summarize below some of the most important international anti-corruption developments from the past month, with links to primary resources.  This month we ask:  How does the U.S. Department of Justice's (DOJ) FCPA Corporate Enforcement Policy differ from the FCPA Pilot Program that it replaced?  What are the key provisions of Argentina's new corporate anti-corruption law? Who were the first defendants to stand trial in the FIFA corruption case? The answers to these questions and more are here in our November 2017 Top Ten list.

1. DOJ Announces New FCPA Corporate Enforcement Policy.  On November 29, 2017, Deputy Attorney General Rod Rosenstein announced a new FCPA Corporate Enforcement Policy ("the Policy") that supersedes the FCPA Pilot Program announced in April 2016.  In his announcement, DAG Rosenstein explained that the Policy would be incorporated into the United States Attorneys' Manual (USAM)—the internal DOJ document that sets forth policies and guidance for federal prosecutors. In contrast, the FCPA Pilot Program had been issued as a stand-alone document by DOJ's Criminal Division, Fraud Section.  The Policy largely replicates elements of the FCPA Pilot Program—but with some key modifications.  Most notably, the Policy newly provides that when a company voluntarily self-discloses, fully cooperates, and timely and appropriately remediates, all in accordance with specified standards set forth in the Policy, there is a "presumption that the company will receive a declination," absent aggravating circumstances relating to the seriousness of the offense or the nature of the offender, including criminal recidivism.  The Policy also enshrines in the USAM "declinations with disgorgements," which was (in our view) one of the most significant changes created by the Pilot Program.  For a more in-depth discussion and analysis of the Policy, please see our December 4, 2017 Client Alert.

2. SEC Announces New Head of FCPA Unit.  On November 2, 2017, SEC announced that Charles E. Cain, who had been serving as Acting Chief of SEC's FCPA Unit since April 2017, would permanently lead the unit.  Prior to taking on his role as Acting Chief, Cain served as Deputy Chief since 2011.  Cain co-authored the joint SEC and DOJ Resource Guide to the U.S. Foreign Corrupt Practices Act in 2013.  Cain has been credited with supervising many of SEC's most significant FCPA matters over the last several years, including the combined $965 million settlement with Telia Company AB in September 2017, the combined $795 million settlement with VimpelCom Ltd. in February 2016, and the combined $90.8 million settlement with Magyar Telecom in December 2011.  While there has been much speculation regarding the direction of FCPA enforcement under the Trump administration, Cain's appointment sends an additional signal that companies should not expect drastic changes in the near future.  Steve Peikin, recently appointed Co-Director of Enforcement, made this clear in statements delivered shortly after Cain's appointment.  Peikin stated that SEC would continue its commitment to robust FCPA enforcement and its focus on individual wrongdoing.

3. Dutch Oilfield Services Company Resolves FCPA Allegations Spanning Three Continents.  On November 29, 2017, DOJ announced that SBM Offshore NV and its wholly owned U.S. subsidiary, SBM Offshore USA Inc., agreed to resolve allegations that they paid more than $180 million in commissions to intermediaries with the knowledge that a portion of those commissions would be used to pay bribes to officials in Angola, Brazil, Equatorial Guinea, Iraq, and Kazakhstan, resulting in $2.8 billion in business from state-owned oil companies.  The parent company entered into a three-year Deferred Prosecution Agreement (DPA), while the U.S. subsidiary pleaded guilty to a one-count criminal information, filed in the Southern District of Texas, charging it with conspiracy to violate the anti-bribery provisions of the FCPA.  According to DOJ, the total penalty of $238 million reflected a 25% reduction off the bottom of the Sentencing Guidelines range; $240 million paid to Dutch authorities and additional penalties that will likely be paid to Brazilian authorities; and a determination that SBM would not be able to pay a larger fine.  When SBM reached its resolution with Dutch authorities in November 2014, it announced that DOJ had declined to prosecute the company; in February 2016, however, the company announced that DOJ had reopened its investigation, a fairly unusual development that neither the company nor the Department has publicly explained.

4. Former Executives and Agents of Dutch Oilfield Services Company Charged in the United Kingdom and United States.  In addition to the corporate resolution discussed above, on November 9, 2017, DOJ announced that two former SBM executives, Anthony Mace and Robert Zubiate, pleaded guilty in the Southern District of Texas to conspiracy to violate the FCPA in connection with alleged misconduct in Angola, Brazil, and Equatorial Guinea.  On November 16, 2017 the UK's Serious Fraud Office (SFO) announced that two executives of Monaco-based consulting company Unaoil, Ziad Akle and Basil Al Jarah, had been charged with conspiring to pay bribes to assist SBM Offshore NV in winning oil contracts in Iraq.  According to the SFO, a third Unaoil executive, Saman Ashani, is subject to an extradition request to Monaco on related charges.  On November 30, 2017, the SFO announced that it had charged two former SBM executives, Paul Bond and Stephen Whiteley, with conspiracy to make corrupt payments in Iraq.  The U.S. defendants are expected to be sentenced in early 2018, while all of the UK defendants other than Ashani are scheduled to appear in the Westminster Magistrates' Court in London on December 7, 2017.

5. DOJ Charges Two Individuals with Bribing African Officials.  On November 20, 2017, DOJ unsealed a criminal complaint charging Chi Ping Patrick Ho, the former Hong Kong home secretary and head of a Hong Kong and Virginia-based NGO, and Cheikh Gadio, the former foreign minister of Senegal, with violating, and conspiring to violate, the FCPA and money laundering statutes in connection with a scheme to assist an unnamed Chinese energy conglomerate in winning business by bribing officials in Chad and Uganda.  According to the allegations in the complaint, Ho, with Gadio's help, offered $2 million in bribes to the president of Chad for help in securing oil rights from the Chadian government.  According to DOJ, Ho's Ugandan scheme was hatched in the halls of the United Nations in New York, when the country's current foreign minister served as the president of the U.N. General Assembly and continued upon his return to Uganda.  The scheme allegedly involved $500,000 in bribes paid via wires transmitted through New York, as well as gifts and promises of future benefits to Ugandan officials in exchange for assistance in obtaining business advantages for the unnamed conglomerate.

6. Executives and Agents of UK-Based Engineering Group Charged in connection with Kazakh Bribery Scheme.  On November 7, 2017, DOJ announced that FCPA and FCPA-related charges had been unsealed against five individuals—three former Rolls-Royce executives and employees and two third parties—in connection with an alleged scheme to bribe a Kazakh official to win a $145 million equipment contract on a gas pipeline from Central Asia to China for the benefit of a U.S. subsidiary of Rolls-Royce.  According to the announcement, the three former executives, James Finley, Keith Barnett, and Aloysius Johannes Jozef Zuurhout, and one of the third parties, Andreas Kohler, pleaded guilty under seal between June 2016 and July 2017 in the Southern District of Ohio, while the remaining defendant, Petros Contoguris, is believed to be living abroad.  Indeed, of the five charged individuals, only one was a U.S. citizen, while the other four were non-U.S. citizens residing in Taiwan, the Netherlands, Austria, and Turkey.  The DOJ's decision to keep the guilty pleas under seal for over a year likely reflects covert efforts to apprehend at least some of the defendants.  In January 2017, Rolls-Royce entered into an $800 million global settlement, which included a $169.9 million DPA with DOJ, to resolve bribery allegations involving more than a dozen countries.

7. World Bank Debars Two Entities for Bribery and Corruption.  In November 2017, the World Bank barred two different firms from participating in World Bank-funded projects for bribery and corruption-related misconduct.

  • World Bank Debars Canada-Based Financial Management Software Company for Liberian Misconduct.  On November 9, 2017, the World Bank announced that it had debarred FreeBalance Inc. based on allegations that the company failed to disclose the identity and payment terms of a local agent in Liberia in connection with the company's development of financial management software for Liberia's public finances.  As part of a Negotiated Resolution Agreement (NRA), the company will be debarred for six months and then enter a 12-month probationary period during which it can participate in World Bank-financed projects so long as it does not violate the terms of the NRA.  The company also agreed to enhance its integrity compliance program and fully cooperate with the World Bank.
  • World Bank Debars French Digital Security Firm for Bangladeshi Misconduct.  On November 30, 2017, the World Bank announced that it had debarred Oberthur Technologies for 2.5 years for allegedly corrupt and collusive practices related to its development of a national ID system for the People's Republic of Bangladesh.  As part of an NRA, the company acknowledged that it had made improper payments to a subcontractor to obtain and modify bid specifications to narrow competition and ultimately secure the contract.  The World Bank credited the company with extensively cooperating with the World Bank's investigation, voluntarily acknowledging its misconduct, pursuing corrective action, conducting an internal investigation, and holding the responsible individuals accountable.  The company also committed to implementing an integrity compliance program and cooperating fully with the World Bank.

8. Argentina Enacts New Anti-Bribery and Corruption Legislation.  On November 8, 2017, Argentina's legislature passed a law targeted at corporate corruption.  The new legislation, which will come into effect in early 2018, provides that companies that have been found to have engaged in corrupt activities can be fined by up to five times the amount they obtained by illicit means or barred from bidding for public contracts for up to 10 years.  The legislation also permits companies to sign "leniency agreements" which would lessen their punishments in exchange for providing helpful information to Argentine prosecutors.  As discussed in our March 2017 Top Ten, the OECD had urged Argentina to pass the law in order to bring Argentina into compliance with the OECD Anti-Bribery Convention.  President Mauricio Macri stated that the new legislation was necessary given the ongoing and wide-reaching corruption investigation into Brazilian construction company Odebrecht S.A. (detailed in our previous alerts here, here, and here).  The legislation follows the arrest of two different Argentine officials on corruption charges over the last month.

9. French Authorities Announce First DPA.  On November 14, 2017, France's Public Prosecutors' Office (PNF) announced that a Paris high court had approved the country's first-ever deferred prosecution agreement. The DPA is the first reached by French authorities since France adopted deferred prosecution agreements as part of new anti-corruption legislation in November 2016.  The legislation was motivated in part by concerns that France was not doing enough to combat domestic corporate wrongdoing.  Although not an anti-bribery case, given that French companies have been at the center of some of the largest FCPA resolutions in history, this first DPA indicates a willingness by French authorities to rely on its enhanced authority that may eventually lead to corporate foreign bribery resolutions in France.  (See our April 2017 and September 2017 for discussions of other countries' interest in DPAs.)

10. FIFA Trial Begins.  In November 2017, trial began in the Eastern District of New York against three defendants in the FIFA prosecution that shocked the soccer world when it was announced in May 2015.  The defendants, Jose Maria Marin (former head of Brazil's soccer association), Juan Angel Napout (former FIFA Vice President), and Manuel Burga (former head of Peru's soccer association), are accused of accepting millions of dollars in bribes in exchange for lucrative contracts for the hosting rights of South American soccer tournaments.  The trial was marked by dramatic moments, from one of the defendants being accused of witness intimidation to the reported suicide of a former Argentine soccer official after he was implicated in trial testimony as a bribe recipient.  On November 16, 2017, a judge in Paraguay approved a DOJ request to extradite Nicolás Leoz, the former president of that country's soccer association, pending a medical examination given Leoz's advanced age and health issues.  According to trial testimony, Leoz was one of three South American soccer officials who received $1 million bribes in exchange for their votes to award the 2022 World Cup to Qatar.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP. All rights reserved

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
James M. Koukios
Lauren Navarro
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

    Disclaimer

    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

    Registration

    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

    Cookies

    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

    Links

    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

    Mail-A-Friend

    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

    Emails

    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

    Security

    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions