This post highlights FCPA enforcement actions concerning conduct (in whole or in part) in Azerbaijan.
The enforcement action against Cyrus Ahsani and Saman Ahsani (the former CEO and Chief Operations Officer of Monaco-based Unaoil) concerned conduct in Iraq, Kazakhstan, Libya, Algeria, Iran, Azerbaijan, Angola, Syria, the Democratic Republic of the Congo, and elsewhere.
Although the criminal information makes general reference to a corrupt scheme in Azerbaijan, there were no specific substantive allegations in the information concerning Azerbaijan.
The enforcement action concerned conduct in Russia, Azerbaijan, China, Kuwait, South Korea, Pakistan, Thailand, and Indonesia.
As to Azerbaijan, the allegations were: “In 2012, the Azerbaijan government began to upgrade the elevators in public housing in Baku. Otis engaged in various schemes to sell Otis elevator equipment to Baku Liftremont, a municipal entity, responsible for procuring and maintaining the elevators in Baku’s public housing. The schemes involved the use of sham subcontractors and intermediaries to make improper payments to Liftremont officials. The first scheme in March 2012 was in connection with a direct sale from Otis Russia to Liftremont of elevator equipment valued at $1.8 million. At the direction of the Chief Operations Officer, the scheme was facilitated through the use of two subcontractors that were used to make payments to Liftremont officials. No due diligence was performed on the subcontractors, and they were paid over $790,000, which represented nearly 44% of the total contract value. No meaningful review was conducted on the contracts with the subcontractors, and payments to the subcontractors were made without appropriate documentation of services being provided.”
The enforcement action concerned conduct in Thailand, Brazil, Kazakhstan, Azerbaijan, Angola and Iraq.
As to Azerbaijan, the allegations were: “Rolls-Royce, RRESI, Executive, Employee 1, and others … engaged Intermediary 1 [a Monaco-incorporated oil and gas services intermediary that owned and operated a number of subsidiaries and affiliates, including a U.S.-based subsidiary], knowing that Intermediary 1’s commission payments would be used to bribe foreign officials at SOCAR [the Azeri state-owned and state-controlled oil and gas company]. From in or around 2000 through in or around 2009, RRESI made over $7.8 million in corrupt commission payments to Intermediary 1, and Rolls-Royce and RRESI understood that the payments would assist with contract awards, which RRESI ultimately won to supply approximately 45 turbines on multiple projects, resulting in total profits of over $50 million.
The enforcement action concerned conduct in Nigeria, Angola, Azerbaijan, Brazil, Kazakhstan, Russia, and Turkmenistan.
As to Azerbaijan, the allegations were: “Between in or around 2002 and in or around 2007, Panalpina Azerbaijan paid approximately $900,000 in bribes to Azeri government officials responsible for assessing and collecting duties and tariffs on imported goods. […] The purpose of many of the bribes paid to the Azeri government officials was to cause these officials to overlook incomplete or inaccurate documentation; avoid levying proper customs duties; or avoid imposition of fines relating to the failure of Panalpina, or its customer, to comply with legal requirements. In addition, Panalpina also made bribe payments to Azeri tax officials to secure preferential treatment for Panalpina Azerbaijan.”
The enforcement action concerned conduct in Azerbaijan and Nigeria.
As to Azerbaijan, the allegations were: “in 2001, 2003, and 2005, the Azeri Tax Authority [a government entity responsible for administering and collecting tax assessments and duties for the Republic of Azerbaijan] initiated tax audits of TMII’s business operations in Azerbaijan.” TMII employed the “Consulting Firm” [a U.S. consulting company incorporated in Texas and headquartered in Baku, Azerbaijan to provide a broad range of services including accounting services and tax advice and assistance] including the “Azerbaijan Agent” [the Managing Director of the Consulting Firm] to assit with the audits. “In 2001, 2003, and 2005, TMII, through its employees and agents, paid bribes to Azeri tax inspectors to improperly secure favorable tax assessments.” TMII “caused approximately $160,000 to be paid to the Dubai Entity [an entity associated with the Consulting Firm], while knowing that some or all of the money would be paid, with the assistance of the Azerbaijan Agent to Azeri tax inspectors.” “The benefit received and the potential tax liability avoided by TMII as a result of the payment of the bribes was approximately $820,000.”
The related enforcement actions concerned conduct in Azerbaijan and focused on “bribes to the Azeri Officials and/or their designees to induce the Azeri Officials to allow the investment consortium to participate in privatization, to ensure the privatization of SOCAR [the State Oil Company] and other valuable Azeri State assets, and to permit the investment consortium to acquire a controlling interest in SOCAR and other valuable Azeri State assets.”
