Acting Assistant Attorney General Kenneth Blanco recently delivered this speech which focused largely on foreign law enforcement cooperation in bribery investigations. The bulk of the speech concerned U.S. – Brazil cooperation with portions also dedicated to the DOJ’s Kleptocracy Asset Recovery Initiative.
In his speech, Blanco used much of the same rhetoric as prior DOJ officials have in talking about bribery and corruption and once again the notion that the U.S. will “push forward hard against corruption, wherever it is” is subject to interpretation.
“Whether uncovering a multinational bribery scheme or seeking to recover illegally derived assets associated with investment funds owned by a foreign government, or protecting the security of our financial system, our biggest investigations are increasingly transnational, often involving multiple foreign jurisdictions. As transnational crime continues to grow in scope and complexity, we increasingly find ourselves looking across the globe to collect evidence and identify witnesses necessary to build cases, requiring greater and closer collaboration with our foreign counterparts. As a result, we find ourselves relying more and more on the use of the various mechanisms of international cooperation with our foreign partners that permit for evidence exchange, fugitive apprehension, and asset recovery.”
Specifically about U.S. – Brazil cooperation, Blanco stated:
“It is hard to imagine a better cooperative relationship in recent history than that of the United States Department of Justice and the Brazilian prosecutors. We have cooperated and substantially assisted one another on a number of public matters that have now been resolved, and are continuing to do so on a number of ongoing investigations.
Anti-corruption prosecutors everywhere are driven by similar principles: bribery of public officials is wrong, it has a devastating effect on our national security and civilized societies, and intentional violations of anti-corruption laws must be treated as serious crimes. Those who violate the law must be punished, and their illegally obtained assets must be taken from them. As we have seen across the globe time and again, corruption inhibits fair and free competition to the detriment of innocent citizens and honest businesses that do not pay bribes.
The United States Department of Justice remains committed to enforcing the FCPA and to prosecuting fraud and corruption more generally. To succeed on this commitment, we will always seek, when appropriate, to further our investigations through cooperation with countries like Brazil – a country that shares our commitment to rooting out corruption at all levels.
The cooperation between the Department and Brazil has led to extraordinary results. In just the last year alone, for example, the Criminal Division’s Fraud Section and the Brazilian Lava Jato task force have cooperated and coordinated resolutions in four FCPA cases: Embraer, Rolls Royce, Braskem, and Odebrecht. Odebrecht is particularly noteworthy due to its breadth and scope.
Odebrecht, one of the world’s largest construction companies, paid an unparalleled amount of bribes to high-level officials in a dozen countries to secure billions of dollars’ worth of projects around the globe. Commensurate with the conduct, Brazil and the United States, together with Switzerland, were able to achieve the largest global fine ever imposed in a corruption case. The company pleaded guilty in the United States and is required to cooperate with the respective countries’ ongoing investigations of individuals, as well as to retain an independent compliance monitor for a period of three years. In Brazil, approximately 80 people have been charged in connection with the case. It is important to mention how the penalties were levied in these coordinated resolutions.
By working together, Brazil and the Department not only assisted one another in gathering evidence and building the case, but made sure to credit the fines and penalties paid to each country, rather than imposing duplicative fines and penalties. This ensures fairness to the companies, and provides the right incentives for companies to cooperate fully with the relevant jurisdictions implicated in the case.
In our prosecution of Rolls Royce, the United Kingdom-based company paid about $170 million in U.S. penalties as part of an $800 million global resolution to investigations in three countries – the United States, the UK and Brazil. As with Odebrecht, the Rolls Royce resolution, involving multiple countries, reflected the misconduct, which involved payments of $35 million in bribes to officials in half-a-dozen countries.
At the core of the tremendous cooperation between our two countries is a strong relationship built on trust. This trust allows prosecutors and agents to have direct communications regarding evidence. Given the close relationship between the Department and the Brazilian prosecutors, we don’t need to rely solely on formal processes such as mutual legal assistance treaties, which often take significant time and resources to draft, translate, formally transmit, and respond to.
At the beginning of an investigation, a prosecutor or agent from a country’s financial intelligence unit can call his or her foreign counterpart and ask for financial information that, for example, may identify bank accounts. Once the investigation has progressed to the point where prosecutors are ready to proceed to trial, the evidence may be requested through the mutual legal assistance channel so that it can be admissible at trial. This prosecutor-to-prosecutor or law-enforcement-to-law-enforcement cooperation has allowed both countries to more effectively pursue their cases.
Let’s face it, the criminals we seek to identify and bring to justice move quickly, and it is imperative that we do the same. Our respective enforcement agencies continue to cooperate fully with one another and help achieve astonishing results.
Brazilian prosecutors and law enforcement have been at the forefront of the anti-corruption fight in the past few years, and have exemplified what a prosecutor and law enforcement agent should be. Indeed, just this past week, the prosecutors in Brazil won a guilty verdict against former President Lula da Silva, who was charged with receiving bribes from the engineering firm OAS in return for his help in winning contracts with the state oil company Petrobas. It is cases like this that put Brazil at the forefront of countries that are working to fight corruption, both at home and abroad.”
Regarding the DOJ’s Kleptocracy Asset Recovery Initiative, Blanco stated:
“While the United States and Brazil are working together to investigate and bring criminal cases, particularly those involving corruption, the United States also stands ready to assist with the seizure of illegally obtained assets, even where a criminal case may not be brought in the United States. This is an important tool in fighting corruption, as well as all forms of organized crime. The Criminal Division’s Money Laundering and Asset Recovery Section’s Kleptocracy Asset Recovery Initiative, which is specifically designed to target and recover the proceeds of foreign official corruption that have been laundered into or through the United States, has proven to be an incredibly valuable tool to fight corruption. The results of this initiative have been outstanding.
In 2016, the Department filed the largest single action ever brought under the Kleptocracy Initiative, involving multiple bond offerings through which 1Malaysia Development Berhad (1MDB) raised money to benefit the people of Malaysia, but was allegedly stolen by corrupt officials and their associates. Just this year, additional complaints were filed in that case, bringing the total amount that we are working to recover to well over $1.7 billion.
I want to stress that in these kleptocracy cases, one of our goals is to return the assets to those harmed by the criminal conduct. Just last year, for example, the Department returned $1.5 million to Taiwan that constituted proceeds from the sale of a forfeited New York condominium and a Virginia residence that the United States alleged were purchased with bribe money paid to the family of Taiwan’s former President Chen Shui-Bian.”
In conclusion, Blanco stated in pertinent part:
“Something big is happening in the world today, you can feel it, it is everywhere; and so are we. The public, everyday people, are tired of having their money stolen by corrupt individuals in the public and private sector. They are tired of not having roads built to move their goods and get to places they need to be. They are tired of not having their schools built. They are tired of not having hospitals or medical care, or to have the infrastructure to be secure in their homes and neighborhoods because corrupt individuals have stolen the money out of greed and power for themselves. Money that is/was meant to improve society, the lives of everyday people, and the most vulnerable. Because of all this, people feel like they can’t advance. They have had enough.
People are demanding action, they are no longer silent. We at the Department of Justice will continue, like we have for years, pushing forward hard against corruption, wherever it is, and we welcome our fellow counterparts around the world who are fighting this important fight against corruption.”
Relevant to the above rhetoric, see here “The Uncomfortable Truths and Double Standards of [U.S] Bribery Enforcement.”
FCPA Institute - Nashville (May 3-4, 2018)
A unique two-day learning experience ideal for a diverse group of professionals seeking to elevate their FCPA knowledge and practical skills through active active. Learn more, spend less. CLE credit is available.