The United Nations has a number of anti-corruption initiatives. For starters, there is the United Nations Convention Against Corruption, it hosts the Conference of the States Parties (COSP) (the main policy-making body of the Convention), and the U.N.’s Global Compact states that “businesses should work against corruption in all its forms, including extortion and bribery.”
Instead of looking outward, perhaps the United Nations should look more inward as several Foreign Corrupt Practices Act enforcement actions, highlighted below, have involved U.N. officials or U.N. programs.
The most recent FCPA enforcement action to involve the United Nations was the November 2017 DOJ action (see here) against Chi Ping Patrick Ho and Cheikh Gadio. Ho is associated with China Energy Fund Committee (CEFC) and, according to the DOJ, CEFC holds “Special Consultative Status” with the United Nations (UN) Economic and Social Council. Among other things, the DOJ alleged that: “Ho caused a $500,000 bribe to be paid, via wires transmitted through New York, New York, to an account designated by the Minister of Foreign Affairs of Uganda, who had recently completed his term as the President of the UN General Assembly.” According to the DOJ:
“Ho’s Ugandan scheme was hatched in the halls of the United Nations in New York, when the country’s current Foreign Minister served as the President of the U.N. General Assembly, and then continued unabated upon his return to Uganda.”
As highlighted in this previous post, in July 2017 a federal jury convicted Ng Lap Seng of two counts of violating the FCPA, one count of paying bribes and gratuities, one count of money laundering and two counts of conspiracy “for his role in a scheme to bribe United Nations ambassadors to obtain support to build a conference center in Macau that would host, among other events, the annual United Nations Global South-South Development Expo.”
As stated by the DOJ:
“According to the evidence presented at trial, Ng, the chairman of the Sun Kian Ip Group, conspired with and paid bribes to Francis Lorenzo, a former UN Ambassador from the Dominican Republic, and John W. Ashe, the late former Permanent Representative of Antigua and Barbuda to the UN and the 68th President of the UN General Assembly (“UNGA”). With the assistance of Jeff C. Yin, an accountant and co-conspirator who worked with Ng and others and previously pleaded guilty, Ng orchestrated a scheme with the principal objective of obtaining the formal support of the UN for a multi-billion dollar facility that Ng hoped to build in Macau using the Macau Real Estate Development Company (the “Macau Conference Center”). Ng wanted the Macau Conference Center to serve as a location for meetings, discussions, forums, and other events associated with the UN. In particular, he wanted it to serve as the permanent home of the annual “Global South-South Development Expo,” which is run by the UN Office for South-South Cooperation, and is hosted in a different country or city every year.”
Armor Holdings / Bistrong (2009, 2011)
As highlighted in this previous post, in 2011 the DOJ and SEC announced an FCPA enforcement against Armor Holdings. The aggregate settlement amount was approximately $16 million ($10.3 million via a DOJ non-prosecution agreement and $5.7 million via a settled SEC civil complaint). The conduct related to, as stated by the DOJ:
“the making of, and agreement to make, improper payments by Armor employees and agents to a procurement official of the United Nations in connection with efforts to obtain and retain body armor contracts for an Armor subsidiary from the U.N. in 2011 and 2003, and related accounting and record-keeping associated with these improper payments …”.
Likewise, the SEC alleged:
“From 2001 through 2006, certain agents of Armor Holdings participated in a bribery scheme in which corrupt payments were authorized to be made to an official of the United Nations (“U.N.”), for the purpose ofobtaining and retaining U.N. business. Armor Holdings generated more than $7.1 million in improper revenues, and realized over $1.5 million in improper profits, through the award of U.N. body armor contracts to its subsidiary during this period.”
In connection with the matter, then SEC Director of Enforcement Robert Khuzami stated: “illicit payments to U.N. officials are no less reprehensible than bribes to foreign government officials.”
In February 2009, Richard Bistrong a former employee of Armor Holdings Inc. (a former publicly-traded company, currently a subsidiary of BAE Systems) pleaded guilty to charges he conspired with others to, among other things, obtain United Nations body armor contracts valued at $6 million by causing his employer to pay $200,000 in commissions to an agent while knowing that the agent would pass along a portion of that money to a United Nations procurement officer to cause the officer to award the contracts. (See here and here for the prior posts).
Various Iraq Oil-For-Food Actions
The Oil-for-Food Program (“OFFP”) was set up in 1995 by the United Nations and provided certain limited exceptions to the Iraq sanctions regime that allowed Iraq to sell its oil on the condition that the proceeds from the oil sales be used by the Iraqi government to purchase various humanitarian supplies for the Iraqi people. Under the OFFP program, a supplier of humanitarian goods contracted with a Iraqi government ministry or other department of the Iraqi government to sell goods to the government. According to the allegations in the OFFP enforcement actions, beginning in 2000 the “Iraqi government demanded that the suppliers of humanitarian goods pay a kickback, usually valued at 10% of the contract price, to the Iraqi government in order to be awarded a contract by the government.” The actions further alleged that these kickbacks were often termed “after sales service fees” (“ASSFs”), but did not represent any actual service being performed by the supplier. According to the allegations, “some suppliers labeled the ASSFs as such, thereby leading the U.N. to believe that actual after-sales services were being provided by the supplier” whereas “other suppliers disguised the ASSFs by inserting fictitious line items into the contracts for goods or services that were not being provided” whereas “other suppliers simply inflated their contract prices by 10% to account for the payments they would make, or cause to be made, to the Iraqi government.”
Numerous companies in various industries that participated in the Iraqi OFF program (such as AkzoNobel, Johnson & Johnson, ABB, Innospec, Textron, El Paso, Weatherford, Flowserve, Ingersoll-Rand, Volvo, Chevron, General Electric, Fiat, and Novo Nordisk) resolved FCPA books and records and internal controls enforcement actions based, in whole or in part, the OFFP.
FCPA Institute - Zoom (April 5-7, 2022)
Elevate your FCPA knowledge and practical skills. Nine hours of integrated and cohesive instruction led by Professor Koehler (an FCPA expert with teaching experience). Learn more, spend less. Professional credential available.