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Friday Roundup

Motion to dismiss denied, scrutiny alert, guilty plea, reverse, FCPA resolution template, perplexing, funny, and fake news. It’s all here in the Friday roundup.

Motion to Dismiss Denied

As highlighted in this prior post [1], in November 2017 the DOJ announced that Chi Ping Patrick Ho (of Hong Kong, China) and Cheikh Gadio (of Senegal) were criminally charged with conspiring to violate the FCPA, violating the FCPA, conspiring to commit international money laundering, and committing international money laundering.

In April 2017, Ho filed this motion to dismiss [2] certain of the FCPA and money laundering charges. In pertinent part, Ho argued that “the government has ignored the fundamental distinction between the provisions of the FCPA applicable to domestic concerns and those applicable to non-domestic concerns” by so-called double-charging Ho under both the dd-2 and dd-3 portions of the statue. This previous post highlighted the DOJ’s response [3].

Earlier this week, the trial court judge (ruling from the bench) denied Ho’s motion to dismiss as well as Ho’s various evidence motions. (see here [4]).

Scrutiny Alert

As noted here [5]:

“Japan’s largest weekly news magazine by circulation, Shukan Bunshun, has published an article accusing Caesars Entertainment of engaging in a practice which they contend effectively amounts to the bribery of Japanese politicians, but which Caesars argues is an accepted and legal practice. The substance of the allegation is that an advisor to Caesars Entertainment bought tickets to politicians’ social gatherings, which is a common fundraising method for national political campaigns in Japan.”

According to the article:

“Shukan Bunshun also claims that US government authorities are gathering information about the matter as a possible violation of the Foreign Corrupt Practices Act of 1977. […] The Shukan Bunshun article suggests that Caesars may not be alone, specifically pointing to MGM Resorts and its consultant firm GR Japan.”

Guilty Plea

As highlighted in this prior post [6] in February 2018 the DOJ announced, in a case that keeps on giving, that Luis Carlos De Leon Perez (De Leon) (described as dual citizen of the U.S. and Venezuela who was previously employed by instrumentalities of the Venezuelan government) was criminally charged with one count of conspiracy to commit money laundering; four counts of money laundering; and one count of conspiracy to violate the FCPA.

[7]

The prior post noted that the FCPA conspiracy charges against De Leon and another individual were interesting as they seem to conflict with U.S. v. Castle, 925 F.2d 831 (1991), a Fifth Circuit decision which held that “foreign officials” could not be prosecuted for conspiring to violate the FCPA. Although De Leon and the other individuals were not technically alleged to be “foreign officials,” they are both alleged to have been previously employed by instrumentalities of the Venezuelan government (which is basically saying that they were “foreign officials” without specifically saying so).

In any event, earlier this week [8] the DOJ announced that De Leon pleaded guilty to one count of conspiracy to violate the FCPA and one count of conspiracy to commit money laundering.

Reverse

Assuming the FCPA enforcement agencies have jurisdiction, it is relatively common for either the DOJ or SEC to bring FCPA charges against foreign nationals.

The reverse, a foreign law enforcement agency bringing bribery related charges against a U.S. national, is rather uncommon.

All of which makes this report [9] interesting.

“Brazilian prosecutors have filed corruption and money laundering charges against Paul Bragg, the former chief executive officer of Houston-based offshore drilling contractor Vantage Drilling. Federal prosecutors said in a Thursday night statement that Bragg was involved in the payment of $31 million in bribes to a former executive of state-owned oil company Petrobras. The statement says the bribe was paid to help Vantage win a $1.8 billion contract in 2009 to charter a drill ship to Petrobras.”

As highlighted in this previous post [3] Vantage Drilling has been under FCPA scrutiny since Summer 2015 (see here [10] for the prior post). As highlighted in this prior post [11], in August 2017 the company disclosed:

“[The company] has received a letter from the United States Department of Justice (the “DOJ”) acknowledging Vantage’s full cooperation in the DOJ’s investigation concerning possible violations by Vantage of the Foreign Corrupt Practices Act (the “FCPA”), and indicating that the DOJ has closed its investigation without any action.”

Recently the company disclosed [12]:

“We have continued our cooperation in the investigation by the SEC into the same allegations and engaged in negotiations with the staff of the Division of Enforcement of the SEC to resolve their investigation. We have reached an agreement in principle with the staff relating to terms of a proposed offer of settlement, which is being presented to the Commission for approval. While there can be no assurance that the proposed offer of settlement will be accepted by the Commission, the Company believes the proposed resolution will become final in the second quarter of 2018. In connection with the proposed offer of settlement, we have accrued a liability in the amount of $5 million.  If the Commission does not accept the proposed offer of settlement and the SEC determines that violations of the FCPA have occurred, the Company could be subject to civil and criminal sanctions, including monetary penalties, as well as additional requirements or changes to our business practices and compliance programs, any or all of which could have a material adverse effect on our business and financial condition.”

FCPA Resolution Template

Recently the DOJ announced this enforcement action [13] against US Imagina, LLC (a privately held Florida business organization previously know as MediaWorld) and Imagina Media Audiovisual SL (a privately held company based in Barcelona, Spain that has a majority interest in US Imagina) for bribing soccer officials.

Specifically, US Imagina pleaded guilty to a criminal information (the “Information”) charging it with two counts of wire fraud conspiracy in connection with the participation of two of its senior executives in schemes to pay more than $6.5 million in bribes to high-ranking officials of the Caribbean Football Union (“CFU”) and four Central American national soccer federations to secure media and marketing rights to those federations’ World Cup qualifier matches. In addition, Imagina Media entered into a non-prosecution agreement with the government in connection with one its three co-Chief Executive Officers’ (“co-CEOs”) participation in this criminal conduct.

The NPA is interesting in that it uses the same template the DOJ uses in actual FCPA enforcement actions. For instance, pursuant to Attachment C of the NPA titled “Corporate Compliance Program” Imagina Media agrees to adopt ompliance measures  “in order to address any deficiencies in its internal controls, compliance codes, policies and procedures regarding compliance with the Foreign Corrupt Practices Act … and other applicable anti-corruption laws.”

Funny

Former DOJ Compliance Counsel Hui Chen recently wrote [14] that one fundamental deficiency in the way corporate ethics is measured “is the lack of clarity on what ethical means.”

That’s funny because while at the DOJ Chen was the primary author of the DOJ’s Evaluation of Corporate Compliance Programs [15] which states that the DOJ “does not use any rigid formula to assess the effectiveness of corporate compliance programs”

Perplexing 

I find the apparent fixation of some [16] on measuring corruption perplexing.

Regardless of the specifics of the formula, does any ranking really tell you something you didn’t already know? (See here [17] for the prior post).

 As has been said “not everything that is important is measurable, and much that is measurable is unimportant.”

Fake News

The latest in media false reporting about the FCPA.

“Under the Foreign Corrupt Practices Act, even unknowingly profiting from corrupt activities in a foreign country is a federal crime.” (See here [18]).

“[T]he US Foreign Corrupt Practices Act … prohibits companies listed in the US from indulging in any illegal practices in a foreign country.” (See here [19]).

Elevate Your FCPA Research

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