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: Which company resolved a foreign bribery case in Scotland? What was the outcome of a three-year foreign bribery trial in Italy? Why is Brazil's former president free to run for office again, despite multiple corruption convictions? The answers to these questions and more are here in our March 2021 Top 10 list.
1. Scottish Oil and Gas Company Resolves Kazakhstan Bribery Allegations in Scotland. On March 16, 2021, Scotland's Crown Office & Procurator Fiscal Service announced that WGPSN, a subsidiary of John Wood Group PLC, had agreed to pay £6.46 million to the Service's Civil Recovery Unit in connection with allegations that one its subsidiaries, PSNA Limited, had made payments to Unaoil to secure contracts in Kazakhstan in 2008 and 2010. The £6.46 million payment represents the dividends and retained profits from those two contracts. According to the press release, the contracts were secured before Wood acquired the PSN business, and the potential misconduct came to light in March 2016 when media reports indicated widespread corruption by Unaoil. (For more on the Unaoil investigation, see our November 2017, May 2018, June 2018, December 2018, July 2019, March 2020, May 2020, July 2020, August 2020 , and February 2021 Top 10s. See also below.)
2. UK Serious Fraud Office Ends Foreign Bribery Investigation into U.S.-Based Engineering Company. On March 18, 2021, the UK's Serious Fraud Office (SFO) announced that it had closed its four-year corruption and bribery investigation into UK subsidiaries of KBR, a U.S.-based engineering company. In August 2020, the SFO had informed KBR that it was no longer investigating allegations of corruption involving Unaoil, but that some lines of inquiry remained open. And in February 2021, the UK Supreme Court held in KBR v. SFO that the SFO cannot use its statutory power under section 2(3) of the Criminal Justice Act 1987 to require a non-UK company that does not have a registered office or carry out business in the UK to produce documents from abroad. This ruling may have contributed to the SFO's conclusion that "the evidence in this case did not meet the evidential test as defined in the Code for Crown Prosecutors."
3. UK to Launch Corruption Sanctions Regime in 2021. On March 16, 2021, the UK's Prime Minister released a report titled, " Global Britain in a Competitive Age: The Integrated Review of Security, Defense, Development and Foreign Policy." Among other things, the Review states that "In 2021, the UK will launch a second global sanctions regime on corruption, giving us powers to prevent those involved in corruption from freely entering the UK or channeling money through our financial system. This will complement existing anti-corruption tools, including law enforcement powers, and enable us to work with allies who have similar regimes, such as the U.S. and Canada." The UK has faced criticism, including from within the UK, for allowing the proceeds of foreign bribery and corruption to proliferate through the country. (See, for example, the discussion of a UK parliamentary report on the proceeds of Russian corruption in our May 2018 Top 10.) The UK launched its first autonomous "Magnitsky-style" sanctions regime in July 2020, giving the UK the ability to impose targeted asset freezes and travel bans on people involved in serious human rights violations or abuses.
4. Former CFO of New York-Based Hedge Fund Ordered to Pay Civil Penalty. On March 16, 2021, the U.S. Securities and Exchange Commission (SEC) ordered that Joel Frank, the former chief financial officer (CFO) of Och-Ziff Capital Management, pay a civil money penalty in the amount of $35,000 for failing to fulfill his responsibilities regarding Och-Ziff's internal accounting controls and its books and records. SEC announced in September 2016 that Frank had resolved the allegations, but that his penalty would be assessed at a later date. According to the March 2021 Order, between 2007 and 2011, Och-Ziff paid bribes through intermediaries and partners to high ranking government officials in Africa in order to win or retain business. The Order alleges that Frank authorized and approved each payment that was improperly recorded in the hedge fund's books and records and failed to ensure that required information regarding transactions was documented, that appropriate business partner information was obtained, and that ongoing due diligence and audits were performed properly.
5. Ecuadorian Nationals Charged in Bribery Scheme Involving Ecuador's Public Police Pension Fund. On March 2, 2021, DOJ announced that John Luzuriaga Aguinaga and Jorge Cherrez Miño had each been charged in the Southern District of Florida with one count of conspiracy to commit money laundering for their roles in an alleged bribery and money laundering scheme involving Ecuador's public police pension fund (ISSPOL). Cherrez, an investment advisor, allegedly paid more than $2.6 million in bribes to the public pension fund's officials, including nearly $1.4 million to the fund's Risk Director and a member of its Investment Committee, in order to obtain and retain investment business from ISSPOL. According to the complaint, the payments were received in an account in the United States and bribes were paid using Florida-based companies and bank accounts.
6. Former Ecuadorian Official and Business Executive Receive Prison Terms for Bribery at State-Owned Surety Company. On March 23, 2021, DOJ announced that Juan Ribas Domenech, an Ecuadorian and Italian national who was chairman of Seguros Sucre, Ecuador's state-owned surety company, and an advisor to the then-president of Ecuador, had been sentenced to 51 months in prison following his September 2020 plea of guilty in the Southern District of Florida to one count of conspiracy to commit money laundering. Ribas allegedly accepted over $5 million in bribes in exchange for using his official position to help three UK reinsurance companies to obtain and retain reinsurance contracts with Seguros Sucre. The bribe payments were allegedly paid through various intermediaries and partially laundered through the United States. On March 26, 2021, José Vicente Gómez Avilés was sentenced to 46 months in prison following his June 2020 plea of guilty to a related conspiracy charge. Gómez allegedly helped bribe Domenech to help secure a contract for the Colombian subsidiary of one of the UK reinsurance companies.
7. Former Venezuelan Official Pleads Guilty in Connection with International Bribery and Money Laundering Scheme. On March 23, 2021, DOJ announced that Jose Luis De Jongh Atencio, a former official at Citgo Petroleum Corporation, a Houston-based subsidiary of Petróleos de Venezuela S.A. (PDVSA), had pleaded guilty in the Southern District of Texas to one count of conspiracy to commit money laundering. De Jongh, a dual U.S.-Venezuelan citizen, allegedly accepted more than $7 million in bribe payments and gifts, including Super Bowl, World Series, and U2 concert tickets, in exchange for assisting the bribe payers in procuring contracts with Citgo and providing other business advantages. DeJongh allegedly directed the bribe payments into the bank accounts of Panamanian and Swiss shell companies. Charges against De Jongh were unsealed in August 2020. Sentencing is scheduled for August 19, 2021.
8. Former Procurement Chief at PDVSA Joint Venture Sentenced to Prison for Bribery Scheme. On March 23, 2021, Lennys Rangel, a former procurement chief at Petrocedeño, a joint venture between PDVSA, Venezuela's state-owned oil company, and two European oil companies, was sentenced to 23 months in prison following her August 2020 plea of guilty in the Southern District of Florida to one count of conspiracy to commit money laundering.1 Rangel allegedly received bribes from various contractors in exchange for awarding them Petrocedeño business.
9. Oil Companies Acquitted in Italy over Nigeria Deal. On March 17, 2021, an Italian court acquitted Royal Dutch Shell and Eni of corruption charges following a three-year trial. Eleven other defendants, including Eni's current CEO, his predecessor, and a former Nigerian oil minister were also acquitted. In December 2017, Shell and Eni initially answered charges brought by Italian prosecutors, who alleged that roughly half of a $1.3 billion deal to obtain the rights to an oil field that holds nearly a quarter of Nigeria's oil reserves was converted into cash and used to pay bribes and that several hundred million more dollars were used to bribe a former oil minister. The court has 90 days to issue its reasoning in the case, after which the prosecutors may appeal.
10. Brazil Update.
- Brazilian National Oil Company Recovers $920 Million. On March 2, 2021, Petrobras announced that it had recovered 5.3 billion reals ($920 million) to date as part of a series of reimbursements related to the Lava Jato investigation. The sum, announced in March, includes 360 million additional reals ($65 million) that Petrobras recently received pursuant to a February 2021 leniency agreement with South Korean shipbuilder Samsung Heavy Industries. This sum is just the first installment from a total 705.9 million reals ($122.8 million) Petrobras will receive from Samsung Heavy Industries under that agreement.
- Former President's Charges Related to Operation Car Wash Annulled. On March 9, 2021, a Supreme Court Justice in Brazil annulled corruption convictions against Luis Inácio Lula da Silva, the former president of Brazil. The Justice agreed with Lula's lawyers that jurisdiction was improper in this case, since he was tried and convicted in Curitiba, Paraná state, for crimes that allegedly occurred in Brasilia, where Lula was living when he was president of Brazil. The prosecution can appeal the decision, or Lula can be retried in Brasilia on the corruption charges. In the meantime, however, Lula is once again free to run for political office. (See our April 2016, August 2016, September 2016, October 2016, December 2016, June 2017, July 2017, September 2017, January 2018, and September 2020 Top 10s for previous discussions of charges against Lula.)
1. United States v. Rangel, No. 19-cr-20726, ECF No. 42 (S.D. Fla. Mar. 24, 2021).
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.
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