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Issues To Consider From The Glencore Enforcement Action

Issues

This previous post highlighted the recent net $443 million Foreign Corrupt Practices Act enforcement action against Glencore.

This post highlighted the CFTC’s related enforcement action against the company.

This post discussed how the executive officer certification in the FCPA enforcement action sets up Glencore personnel to fail.

This post continues the analysis by highlighting additional issues to consider from the Glencore FCPA enforcement action.

Timeline

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Glencore Resolves An Approximately $443 Million Net FCPA Enforcement Action

glencore

In mid-2018 Glencore (a commodities company incorporated in the United Kingdom and headquartered in Switzerland disclosed that it was under scrutiny by the DOJ. (See here for the prior post).

Specifically, the company disclosed:

“Glencore Ltd, a subsidiary of Glencore plc, has received a subpoena dated 2 July, 2018 from the US Department of Justice to produce documents and other records with respect to compliance with the Foreign Corrupt Practices Act and United States money laundering statutes.  The requested documents relate to the Glencore Group’s business in Nigeria, the Democratic Republic of Congo and Venezuela from 2007 to present. Glencore is reviewing the subpoena and will provide further information in due course as appropriate.”

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Vitol Resolves Net $90 Million FCPA Enforcement Action For Conduct In Brazil, Ecuador And Mexico

vitol

Last week the DOJ announced that Vitol Inc., the U.S. affiliate of the Vitol group of companies, which together form one of the largest energy trading companies in the world, agreed to resolve a net $90 million FCPA enforcement action for conduct in Brazil, Ecuador and Mexico.

As noted in the DOJ release (and as will be explored in a future post) “Vitol has also agreed to disgorge more than $12.7 million to the Commodity Futures Trading Commission (CFTC) in a related matter and to pay the CFTC a penalty of $16 million related to trading activity not covered” by the DOJ enforcement action.

Under the heading “The Brazil Bribery Scheme” this criminal information alleges:

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Brazilian Company Bribes Brazilian Officials, U.S. Collects Net $155 Million In FCPA Enforcement Action

J&F

This recent post posed the question of whether “foreign” in the FCPA’s “foreign official” element means as it relates to the U.S. or as it relates to the specific company at issue. The post highlighted how in recent years the FCPA enforcement agencies have adopted the former interpretation in bringing FCPA enforcement actions against foreign companies for allegedly bribing their own “domestic” officials – but “foreign” as it relates to the U.S.

In yet another example, the DOJ and SEC announced yesterday (see here and here) that J&F Investimentos S.A. (J&F a private investment holding company based in Brazil that owns approximately 250 companies primarily involved in the meat and agriculture business) and a related entity resolved a net $155 million FCPA enforcement action for allegedly bribing Brazilian officials.

The enforcement action involved a: (i) DOJ component against J&F resolved through a plea agreement in which the company paid net $128.2 million; and (ii) an SEC component against J&F, a related entity, and two individuals in which the related entity paid approximately $26.8 million and the two individuals each paid a $550,000 civil penalty.

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A Foreign Official Head-Scratcher

scratchhead

The anti-bribery provisions of the Foreign Corrupt Practices Act define “foreign official” to mean in pertinent part: “any officer or employee of a foreign government or any department, agency, or instrumentality thereof … or any person acting in an official capacity for or on behalf of any such government or department, agency, or instrumentality …”.

Having reviewed the FCPA’s entire legislative history, it is clear that Congress intended “foreign” to mean non-U.S. as Congress learned of payments to: the political campaign of the President of the Republic of Korea; a Saudi Arabian general; Italian political parties; Japanese Prime Minister Tanaka; Prince Bernhard (the Inspector General of the Dutch Armed Forces and the husband of Queen Juliana of the Netherlands); Oswaldo Lopez Arellano, the President of Honduras; and Albert Bernard Bongo, the President of Gabon.

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