Yesterday the DOJ announced the unsealing of a criminal indictment charging six individuals “with participating in an alleged international racketeering conspiracy involving bribes of state and central government officials in India to allow the mining of titanium minerals.”
According to the indictment, Dmitry Firtash, a Ukrainian businessman who was arrested in March in Austria (see here for the DOJ’s prior release), was the leader of a criminal enterprise, through his group of companies Group DF, that included:
- Andras Knopp (a Hungarian businessman)
- Suren Gevorgyan (of Ukraine)
- Gajendra Lal (an Indian national and permanent resident of the U.S.)
- Periyasamy Sunderalingam (of Sri Lanka)
- K.V.P. Ramachandra Rao (a Member of the Parliament in India who was an official of the state government of Andra Pradesh and a close advisor to the now-deceased chief minister of the State of Andhra Pradesh, Y.S. Rajasekhara Reddy)
According to the indictment, the illegal activities of the enterprise included, but were not limited to: “utilizing United States financial institutions to engage in the international transmission of dollars for the purpose of bribing Indian public officials in connection with obtaining approval of the necessary licenses for [a mining project within Andhra Pradesh], which project was forecast to generate more than $500 million in revenues per year …”
According to the indictment:
“Licenses were required for the project before mining could begin. These licenses required the approval of both the State Government of Andhra Pradesh and the Central Government prior to their issuance. The approval and issuance of such licenses were discretionary, non-routine governmental actions.”
The indictment charges all defendants with racketeering conspiracy; money laundering conspiracy; and two counts of interstate travel in aid of racketeering.
In addition, all defendants except Rao (the alleged Indian “foreign official”) were charged with conspiracy to violate the FCPA’s anti-bribery provisions.
The absence of Rao from this charge is, no doubt, a result of U.S. v. Castle, 925 F.2d 831 (5th Cir. 1991). In that case involving Canadian “foreign officials,” the DOJ acknowledged that it could not charge the officials with direct FCPA violations since the FCPA did not criminalize the receipt of bribes by a foreign official. However, the DOJ charged the Canadian officials with conspiring to violate the FCPA. The court dismissed this charge and rejected the DOJ’s position that a “foreign official” could be charged with conspiring to violate the FCPA. Based on the language and legislative history of the FCPA, the court found a “legislative policy to leave unpunished a well-defined group of persons [i.e., “foreign officials] who were necessary parties to the acts constituting a violation of the substantive law.”
As to the FCPA conspiracy charge, Lal is charged as a domestic concern and the other defendants are charged as “persons” under the 78dd-3 prong of the statute which contains the following jurisdictional element – “while in the territory of the U.S., corruptly … make[s] use of the mails or any means or instrumentality of interstate commerce or to do any act in furtherance” of an improper payment. The indictment contains various allegations relevant to this jurisdictional prong including use of U.S. bank accounts, travel in the U.S., use of e-mail accounts hosted on computer servers located within the U.S., and use of cell phones operating on interstate networks.
Among other things, the indictment seeks forfeiture of approximately $10.6 million from the defendants.
In the DOJ’s release, Acting Assistant Attorney General David O’Neil states:
“Fighting global corruption is part of the fabric of the Department of Justice. The charges against six foreign nationals announced today send the unmistakable message that we will root out and attack foreign bribery and bring to justice those who improperly influence foreign officials, wherever we find them.”
U.S. Attorney for the N.D. of Illinois Zachary Fardon states:
“Criminal conspiracies that extend beyond our borders are not beyond our reach. We will use all of the tools and resources available to us to ensure the integrity of global business transactions that involve U.S. commerce.”
Special Agent in Charge of the FBI’s Chicago Office Robert Holley states:
“This case is another example of the FBI’s willingness to aggressively investigate corrupt conduct around the globe. With the assistance of our law enforcement partners, both foreign and domestic, we will continue to pursue those who allegedly bribe foreign officials in return for lucrative business contracts.”
As noted in the release, other than Firtash, all other defendants remain at large. When Firtash was arrested in March, he released this statement through Group DF. As highlighted here, Firtash paid approximately $172 million to be released on bail.
For more on the enforcement action, see here from the Chicago Tribune, here from Reuters and here from Bloomberg.
As noted in this article, while several FCPA enforcement actions have been brought in connection with foreign license and permitting issues, the government has an overall losing record when put to its burden of proof in FCPA enforcement actions outside the context of foreign government procurement.