Last week, Bariven S.A. (a subsidiary of Petroleos de Venezuela, S.A. (“PDVSA”) – the state-owned oil company of the Venezuela) made this filing in the DOJ’s Foreign Corrupt Practices Act prosecution against Enrique Rincon Fernandez, Abraham Jose Shiera Bastidas, Moises Abraham Millan Escobar and related prosecution against others moving “the Court to recognize Bariven’s rights as a victim and enter an order of restitution requiring [the defendants] jointly and severally, to make restitution [to the tune of $600 million] to Bariven as a victim of the offenses to which these Defendants have plead guilty.”
If this general issue sounds familiar, congratulations you have a good memory.
As highlighted in prior posts here, here, and here, Instituto Constarricense de Electricidad (“ICE”) of Costa Rica tried the same thing in connection with the Alcatel-Lucent FCPA enforcement action and its petition received a chilly reception by both the trial court the 11th Circuit.
PDVSA’s petition likewise faces an uphill climb.
First, a bit of background.
As highlighted in this 2015 post, the underlying criminal indictment relevant to PDVSA’s petition alleged a conspiracy between 2009 and 2014 in which Rincon, Shiera and others enriched themselves “by obtaining and retaining lucrative energy contacts with PDVSA through corrupt and fraudulent means, including by paying bribes to PDVSA officials.” The alleged bribes to PDVSA officials were to “influence acts and decisions of the PDVSA officials in their official capacities and to induce the PDVSA officials to do and omit to do certain acts, including, but not limited to:
- assisting Rincon’s and Shiera’s companies in winning PDVSA contracts;
- providing Rincon and Shiera with inside information concerning the PDVSA bidding process;
- placing one or more of Rincon’s and Shiera’s companies on certain bidding panels for PDVSA projects;
- helping to conceal the fact that Rincon and Shiera controlled more than one of the companies on certain bidding panels for PDVSA projects;
- supporting Rincon’s and Shiera’s companies before an internal PDVSA purchasing committee;
- preventing interference with the selection of Rincon’s and Shiera’s companies for PDVSA contracts;
- updating and modifying contract documents, including change orders to PDVSA contracts awarded to Rincon’s and Shiera’s companies;
- assisting Rincon’s and Shiera’s companies in receiving payment for previously awarded PDVSA contracts, including by requesting payment priority for projects involving Rincon’s and Shiera’s companies.
In early 2016, the DOJ added Moises Abraham Millan Escobar to the case and all three FCPA defendants have pleaded guilty.
In pertinent part, PDVSA’s petition states:
“Petroleos de Venezuela, S.A. (“PDVSA”) is the state-owned oil company of the Bolivarian Republic of Venezuela (“Venezuela”). Bariven is a Venezuelan entity and the subsidiary of PDVSA in charge of, among other things, procuring and acquiring parts, materials, and equipment needed by some of PDVSA’s subsidiaries and affiliates for their exploration, production, and refining activities, as well as for their gas-production related activities. As the procurement arm of the sixth largest oil and gas company in the world, Bariven’s procurement activities provide it with considerable economic clout. The Defendants devised several schemes to capitalize on that economic clout by conspiring to defraud Bariven through bribery and fraud as discussed in more detail below.
The scope of this criminal enterprise is staggering. Rincon, Shiera and Millan have admitted to improperly paying bribes and other things of value to former employees of a subsidiary of Bariven—Maldonado, Gravina and Ramos—for the purpose of illegally obtaining procurement contracts from Bariven. In fact, based on Bariven’s extensive forensic analysis, Bariven’s losses directly and proximately caused by the Defendants due to systemic overcharging and other schemes are close to $600 million ($600,000,000). Count 1 in the original Indictment (which is the same Count 1 to which Rincon, Shiera and Millan pled guilty in their respective Informations) outlines these Defendants’ conspiracy to violate the FCPA. It makes clear that Bariven was victimized by the Defendants’ systemic overcharging on its invoices submitted to Bariven for payment. The conspiracy charge lays out in detail how their bribes were deliberately concealed by such acts as updating and modifying contracts, including change orders, calling bribes “commissions,” and by requesting or receiving invoices for equipment not provided and services not rendered. (See ECF No. 1-Indictment at ¶¶ 28, 36, 66, 76, and 96) (hereinafter referred to as Indictment).
The conspiracy to money launder charge to which the three former employee Defendants pled guilty is presumably the same or similar money laundering conspiracy charge initially filed against Rincon and Shiera, but to which neither Rincon nor Shiera pled guilty. Nevertheless, this conspiracy charge describes how these three Bariven employee Defendants, along with Rincon, Shiera and others conspired to launder the bribe payments. Id. ¶¶ 92-98.
By every measure, Bariven is a victim of all these Defendants’ criminal conspiracies. As a victim of these criminal acts to which all these Defendants have pled guilty, Bariven moves this Court to recognize its status as a victim, afford it all rights to which a victim is legally entitled, and grant it restitution for the direct and proximate losses caused by these Defendants.
It is not necessary for the Court to decide now the amount of restitution Bariven is ultimately entitled to because the sentencing has been continued to July 14, 2017, at the request of the Government. But Bariven is entitled to a ruling now confirming its status as a victim for purposes of the Crime Victims’ Rights Act of 2004, 18 U.S.C. § 3771, and be given the rights of a victim henceforth. We recognize there is a split of authority on whether these rights attach prior to any charge or during the investigatory stage, but the case law consistently holds that CVRA rights attach no later than the time when the criminal complaint or indictment is filed. See Jordan, 173 F. Supp. 3d at 51. With regard to the requirement that the Court entertain our CVRA claim now, see § 3771(d)(3) (“The district court shall take up and decide any motion asserting a victim’s right forthwith.”)”
Even though PDVSA’s petition faces an uphill battle, the DOJ is expected to respond to the petition and in doing so might reveal some interesting information.
At least that is what happened when the DOJ responded to ICE’s prior petition. (See here for the prior post).