Few corporate Foreign Corrupt Practices Act enforcement actions involve related criminal charges against company employees.
Perhaps sensitive to its individual FCPA prosecution numbers, the DOJ sure seems to cluster enforcement around a few discreet instances of bribery almost always involving private business entities.
This dynamic was first highlighted in this 2014 post and further discussed in this 2016 statistical post.
Examples of clustering individual FCPA enforcement actions around discreet instances of bribery involving private business entities include the following:
- 22 individuals were in the failed (and manufactured) Africa Sting case;
- 9 individuals (minus the “foreign officials” charged) were in the Haiti Teleco case;
- 8 individuals were in connection with the Control Components case;
- 5 individuals were associated with DF Group in the Indian mining licenses case;
- 5 individuals were associated with Direct Access Partners;
- 4 individuals were in connection with the Lindsey Manufacturing case;
- 4 individuals were in connection with the Nexus Technologies case;
- 4 individuals were in connection with the BizJet case;
Yesterday there was two further examples of this dynamic. This post is about first instance announced by the DOJ and a future post will further explore the second instance announced by the DOJ a few hours later.
In the first instance, the DOJ announced yesterday two additional guilty pleas in connection with its long-standing enforcement action in connection with corrupt schemes to secure contracts from Venezuela’s state-owned and state-controlled energy company, PDVSA.
Prior to yesterday’s announcement, the DOJ criminally charged and announced guilty pleas by, among others, Abraham Jose Shiera Bastidas, Roberto Enrique Rincon Fernandez, and Moises Abraham Millan Escobar (March 2016) in connection with the same core conduct. (See here and here).
According to the DOJ release, Juan Jose Hernandez Comerma pleaded guilty to one count of conspiracy to violate the FCPA and one count of violating the FCPA for conspiring with Shiera and Rincon to pay bribes and other things of value to PDVSA purchasing analysts. As stated in the release:
“This ensured that Shiera’s and Rincon’s companies were placed on PDVSA bidding panels, which enabled the companies to win lucrative energy contracts with PDVSA. From 2008 until 2012, Hernandez admitted that, while general manager and later partial owner of one of Shiera’s companies, he provided recreational travel and entertainment and offered bribes to PDVSA officials, including Alfonzo Eliezer Gravina Munoz (Gravina), based on a percentage of contracts the officials helped to award to Shiera’s companies.”
As alleged in this criminal information, Hernandez served as the general manager of one of Shiera’s companies and became a business partner of Shiera. According to the indictment, Hernandez and others would and did discuss:
- the need to provide things of value to PDVSA officials;
- the identity of the PDVSA officials whom they would target;
- the particular things of value to provide to those officials; and
- the manner and means by which things of value would be provided.
The information then alleges that Hernandez and others: (i) “pay bribes based on a percentage of any contracts the PDVSA officials helped award …”; (ii) “caused bribe payments to be wired from the bank accounts of Shiera’s companies to the bank account of PDVSA officials, their relatives, or other individuals or entities designated by the PDVSA officials who received the bribes”; (iii) “would and did provide PDVSA officials things of value, including recreational travel [including at the Marriott Marquis in New York City and the Fontainbebleau Hotel in Miami Beach], meals and entertainment, in order to obtain and retain business …”; and (iv) “would and did attempt to conceal the bribery scheme by creating and using private e-mail accounts to communicate about the scheme.”
In addition, the DOJ announced that Charles Beech III pleaded guilty to one count of conspiracy to violate the FCPA. As stated in the release:
“According to admissions made in connection with Beech’s plea, from 2011 to 2012, Beech paid bribes to multiple PDVSA officials, including Gravina, in exchange for their assistance in placing Beech’s companies on PDVSA bidding panels and assisting Beech’s company or companies in receiving payment for previously awarded PDVSA contracts. Beech also admitted that he agreed with others, including PDVSA officials, to engage in financial transactions to conceal the nature, source and ownership of the bribe proceeds.”
As alleged in this criminal information, “Beech paid bribes to PDVSA officials” to:
- assist Beech’s company or companies in winning PDVSA purchase orders;
- provide Beech with inside information concerning the PDVSA bidding process;
- place one or more of Beech’s companies on certain bidding panels for PDVSA projects;
- assist Beech’s companies in receiving payment for previously awarded PDVSA contracts, including by requesting payment priority for projects involving Beech’s companies.
The information alleges two overt acts:
- causing $15,000 to be transferred from a bank account in the name of a company owned by Beech to a bank account in the name of one of [the foreign official’s] relatives in exchange for [foreign official’s] assistance in awarding PDVSA purchase orders to a company or companies owned by Beech; and
- causing $132,240.32 to be wired from a U.S. bank account in the name of a company owned by Beech to a Swiss bank account in the name of a company controlled by [foreign official] in exchange for [foreign official’s] assistance in giving payment priority to a company or companies owned by Beech ahead of other PDVSA vendors with outstanding invoices.
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