United States: Top Ten International Anti-Corruption Developments For August 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: Is the U.S. Department of Justice (DOJ) still using undercover operations and wiretaps to make FCPA cases? What foreign bribery enforcement actions were brought in Sweden and Switzerland? Will the UK require companies to make stronger anti-corruption disclosures in their annual reports? The answers to these questions and more are here in our August 2017 Top Ten list.

1. Following Undercover Investigation, DOJ Charges Retired U.S. Army Colonel with Conspiring to Bribe Haitian Officials. On August 29, 2017, DOJ announced that Joseph Baptiste, a dentist and retired U.S. Army colonel, was charged in Massachusetts federal court with one count of conspiring to violate the FCPA and to commit money laundering for his role in an alleged scheme to bribe senior officials in Haiti in connection with an $84 million port development project. Baptiste's arrest followed an investigation, launched in 2014, into Haitian-American businesspeople who were offering to help bribe Haitian officials in order to obtain or retain business in that country. According to the complaint, Baptiste solicited bribes from undercover agents posing as investors and told them, during a recorded meeting at a Boston hotel, that he would funnel the bribes to Haitian officials through a non-profit he controlled in order to secure approval of the port development project. The complaint also alleges that, during telephone calls caught on a wiretap, Baptiste discussed bribing an aide to a senior Haitian official by giving him a job on the port development project after he left his position. The Baptiste case demonstrates that DOJ remains willing and able to use a broad range of law enforcement tactics, including undercover agents and wiretaps, to investigate and prosecute FCPA violations.

2. Minnesota-based Supplier of Test Systems and Sensing Solutions Discloses DOJ and SEC Declinations. In an August 7, 2017 securities filing, MTS Systems disclosed that DOJ and the U.S. Securities and Exchange Commission (SEC) had informed the company that they had closed their investigations into potential FCPA violations without further action. According to the filing, in 2012, MTS investigated gift, travel, entertainment, and other expenses incurred in connection with its operations in the Asia Pacific region and, in 2014, undertook a similar investigation regarding its business practices in China. MTS stated that it voluntarily disclosed the matters to DOJ and SEC and undertook remedial actions.

3. Texas-based Offshore Drilling Company Announces DOJ Declination. In an August 16, 2017 press release, Vantage Drilling Company announced that DOJ had informed the company that it had closed an FCPA investigation, begun in 2015, into allegations of improper payments to officials at Petróleo Brasileiro S.A (Petrobras), Brazil's state-owned oil company, in connection with the contracting of a drillship. According to the press release, SEC's parallel investigation remains open. Vantage also stated that it is fully cooperating with both agencies.

4. Former Guinean Official Sentenced to Seven Years' Imprisonment for Laundering Bribes from Chinese Conglomerate. On August 25, 2017, DOJ announced that Mahmoud Thiam, the former Minister of Mines and Geology of the Republic of Guinea, was sentenced to seven years' imprisonment following his May 2017 money laundering conviction in the Southern District of New York. Mr. Thiam, a U.S. citizen, was arrested in Manhattan in December 2016 and charged with laundering $8.5 million in proceeds from bribes he allegedly received from two companies that formed part of a Chinese conglomerate in exchange for awarding investment rights in multiple sectors of the Guinean economy, including the mining sector. In addition to the prison term, Thiam was sentenced to three years of supervised release and was ordered to forfeit $8.5 million.

5. Austrian Court Rejects Spain's Extradition Request for Ukrainian Billionaire. August saw yet another twist in the U.S.'s years-long effort to extradite Ukrainian billionaire Dmytri Firtash from Austria to face FCPA and other charges in an Illinois federal court. Firtash was indicted in 2013 in the Northern District of Illinois for allegedly conspiring to pay at least $18.5 million in bribes to government officials in India to allow the mining of titanium minerals, in violation of the FCPA and other statutes. He was arrested in Vienna in 2014, and DOJ requested his extradition to the U.S. In February 2017, an Austrian appeals court reversed a lower court decision denying the U.S. extradition request. The same day, the U.S. extradition request was put on hold when Spain issued its own extradition request for Firtash to face money laundering charges there. On August 30, 2017, an Austrian court denied Spain's extradition request. Prosecutors acting on behalf of Spain have two weeks to appeal the decision. Meanwhile, Firtash's May 2017 motion to dismiss the charges against him in the U.S. is still pending.

6. Acting Chairman of Korea-based Conglomerate Convicted and Imprisoned. On August 25, 2017, Lee Jae-yong, Samsung's acting chairman, was convicted and sentenced to five years' imprisonment on charges of bribery, embezzlement, illegal overseas transfer of assets, concealment of criminal proceeds, and perjury. Lee was accused of making large donations of over $35 million to foundations run by Choi Soon-sil, a close friend and advisor to former South Korean president Park Geun-hye, who was impeached in December 2016 and indicted on criminal corruption charges in April 2017. Lee allegedly sought political favors and the approval of the merger of two Samsung affiliates in exchange for the donations to the Park-supported foundations. The Park scandal has been dubbed "Choi-gate," and Lee's trial has been called South Korea's "trial of the century." Samsung's lawyers said that they would appeal the conviction.

7. Sweden Charges Employee of Canada-based Aircraft and Train Manufacturer with Foreign Bribery. On August 18, 2017, Swedish prosecutors announced that they had charged Evgeny Pavlov, an employee of Bombardier Transportation Sweden AB, a subsidiary of Canada's Bombardier Inc., with foreign bribery. The charges arise from allegations that Pavlov, a Russian citizen, had bribed an Azerbaijani official in order to secure a train signaling contract worth around $350 million. Pavlov was originally detained in March 2017 following a report by the Organized Crime and Corruption Reporting Project alleging that Bombardier Sweden sold equipment to a UK-based intermediary, which then sold the equipment back to the company in Azerbaijan at an inflated price and channeled money to Azerbaijani officials to influence the award of the contract. Pavlov has pleaded not guilty to the bribery charges.

8. China-based Petroleum Company Resolves Swiss Bribery Probe, Closes Several Offices. In August 2017, Addax Petroleum announced that it would be shutting its offices in Geneva, Houston, and Aberdeen, a month after it settled charges in Switzerland related to suspected foreign bribery. In July 2017, Addax agreed to pay CHF 31 million to resolve an investigation, led by the Geneva prosecutor's office, into tens of millions of dollars allegedly paid to a company and several lawyers in Nigeria. According to reports, the payments were allegedly intended to resolve a $4 billion dispute between the company and the Nigerian government over the division of royalties and other issues. The Swiss investigation found that the payments were not sufficiently documented and that there were outstanding doubts as to their legality, but the Swiss authorities were unable to establish criminal intent. U.S. enforcement authorities are reportedly investigating the payments.

9. UK Financial Reporting Council Announces Plans to Require Increased Anti-Corruption and Bribery Disclosures. On August 15, 2017, the UK Financial Reporting Council (FRC) announced a consultation on amendments to its Guidance on the Strategic Report. The FRC oversees the UK Company Act, which was amended in December 2016 to incorporate an EU directive requiring large companies and financial institutions to disclose anti-corruption and other matters in their annual reports. As noted in the announcement, "the proposals reflect the enhanced disclosures that certain large companies are required to make in respect of the environment, employees, social matters, respect for human rights and anti-corruption and anti-bribery matters." The amendments will update the FRC's 2014 guidance on how firms should prepare their strategic reports. Comments on the draft amendments are due by October 24, 2017.

10. Brazil Update

  • Brazilian President Michel Temer Narrowly Avoids Trial for Corruption. On August 2, 2017, Brazil's lower house of Congress voted 263 to 227 against having President Michel Temer suspended so he could stand trial on corruption charges. As a result, allegations of corruption lodged against him in June 2017 will have to wait until his term concludes in 2018. Mr. Temer faces allegations that he received millions of dollars in bribes from a Brazilian meat-packing company. As previously reported, Temer was allegedly caught on tape approving of the payment of hush money to Eduardo Cunha, the former speaker of Brazil's lower legislative house. Mr. Temer has denied any wrongdoing.
  • Another Former Brazilian President Faces Corruption Charges. On August 22, 2017, Senator Fernando Collor, Brazil's president from 1990 to 1992 and a Senator since 2007, was charged with passive corruption, money laundering, and participation in organized crime for allegedly receiving $9 million in bribes between 2010 and 2014 in connection with transactions at a Petrobras subsidiary. Collor allegedly used the money to buy luxury cars. Collor is the third senator to be charged with corruption associated with the Petrobras scandal. In 1992, Mr. Collor resigned from his presidency after facing allegations of corruption and, after conviction by the Senate, faced an 8-year disqualification for elected office. He was acquitted on related charges in criminal court.

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
Julie A. Nicholson
 
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
Check to state you have read and
agree to our Terms and Conditions

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.

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 by clicking here .

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.

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.