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DOJ To Increase Its Focus On Investigations, Prosecutions, And Asset Recoveries Relating To Corruption In Northern Triangle Countries

Presumably in connection with the visit by Vice President Kamala Harris to Guatemala, earlier this week U.S. Attorney General Merrick Garland “announced [1] a series of steps that the Department of Justice is taking to address the threats posed by both corruption and by transnational human smuggling and trafficking networks” in Central America.

The main focus of the establishment of so-called “Joint Task Force Alpha” will be “to enhance U.S. enforcement efforts against the most prolific and dangerous human smuggling and trafficking groups operating in Mexico and the Northern Triangle countries of Guatemala, El Salvador, and Honduras.”

In addition, the DOJ release states: “Joint Task Force Alpha will also complement the Justice Department’s efforts to fight corruption.  The Justice Department will increase its focus on investigations, prosecutions, and asset recoveries relating to corruption in Northern Triangle countries through its Foreign Corrupt Practices Act enforcement program, counternarcotics prosecutions, and Kleptocracy Asset Recovery Initiative.”

According to the release:

“In addition, adopting a Task Force approach, the department’s OPDAT [Office of Prosecutorial Development, Assistance, and Training] and ICITAP [International Criminal Investigative Training Assistance Program] personnel – including new Northern Triangle anti-corruption legal advisors – will work  with Northern Triangle prosecutors and investigators to build corruption cases in those countries themselves, as well as to develop leads that can be pursued by the Kleptocracy Asset Recovery Initiative.”

FCPA enforcement activity of course is, to a large degree, a reflection of the extent to which companies subject to the FCPA do business in a particular country and the type of business conducted.

Even though the Northern Triangle countries of Guatemala, El Salvador, and Honduras have not been a major location source for FCPA enforcement actions, as highlighted below a few enforcement actions have concerned activity in Guatemala and Honduras.

[2]

Guatemala

Odebrecht / Braskem

As highlighted in this prior post [3], a portion of the 2016 FCPA enforcement action against Brazil based Odebrecht/Braskem concerned Guatemala and payments to government officials in order to secure public works contracts.

Honduras

Alcatel-Lucent

As highlighted in this prior post [4], a portion of the 2011 FCPA enforcement action against France based Alcatel-Lucent concerned conduct in Honduras – specifically pursuit of business opportunities on behalf of Alcatel in Honduras with Hondutel (Empresa Hondurena de Telecomunicaciones – an alleged wholly state-owned telecommunications authority in Honduras responsible for providing telecommunications services in Honduras including evaluating and awarding telecommunications contracts on behalf of the government of Honduras) and Conatel (Comision Nacional de Telecouniciaciones – an alleged Honduran government agency that regulated the telecommunications sector in Honduras that issued licenses and concessions for fixed-line and wireless telephony, data transmission and internet services).

According to the charging documents, subsidiary employees made large commission payments to at least one consultant, knowing that all or some of the money paid to that consultant would be paid to a close relative of a Honduran government official, with the high probability that some or all of the money would be passed on to the Honduran government official, in exchange for favorable treatment of Alcatel and its subsidiaries. According to the charging documents, the consultant was retained at the request of a high-ranking government official in the Honduran executive branch; however, the consultant was an exclusive distributor of “brand name perfumes” and had no contacts in, or prior experience with, the telecommunications industry in Honduras or anywhere else.

The charging documents also alleged that subsidiary employees arranged for several other Honduran government officials to take primarily pleasure trips to France. In addition, the criminal information charged that a “high-ranking executive at Hondutel” also “received gifts and improper payments from subsidiary employees including $2,000 for an educational trip for the official’s daughter and a trip to Paris (along with the official’s spouse) that mostly consisted of “touring activities via a chauffeur-driven vehicle.” Further, the information alleged that subsidiary employees made payments to a Hondutel attorney who worked” on a contract secured by Alcatel including paying for a trip by the attorney and the attorney’s daughter to Paris.

Latin Node

As highlighted here [5], in 2009 Latin Node, Inc. (a privately-held telecommunication services company headquartered in Miami) pled guilty to violating the FCPA’s anti-bribery provisions in connection with improper payments made to officials in Honduras and Yemen in order to obtain and retain business.

As to Honduras, the charging documents detailed Latin Node’s efforts to obtain and retain business with Hondutel (the Honduran government-owned telecommunications company) and charged that despite recognized “financial weaknesses” in Latin Node’s proposal, Hondutel ultimately selected Latin Node for the agreement because of various improper payments Latin Node made or authorized to various Honduran “foreign officials.” Some have linked the Latin Node enforcement action to a change in government in Honduras. (See here [6]).

United Brands

As highlighted here [7], one of the most high profile instances of corporate bribery Congress was made aware of during the mid-1970’s when contemplating what would become the FCPA concerned United Brands. In a pre-FCPA enforcement action, the SEC charged United Brands with paying a $1.25 million bribe to government officials in Honduras to obtain favorable tax treatment on banana shipments from the country. More broadly, from an FCPA legislative history standpoint, one foreign government official specifically referenced during Congressional hearings was Oswaldo Lopez Arellano, the President of Honduras.

In addition to the above, as highlighted in this recent post [8], a short-seller has accused Ormat Technologies (a Nevada based geothermal power company) of engaging in “widespread and systematic acts of international corruption” including in Guatemala and Honduras.

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