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The DOJ Uses Its Full Toolbox


The Foreign Corrupt Practices Act Guidance rightly notes that “the FCPA does not cover every type of bribe paid around the world for every purpose.”

Among other limitations, the FCPA’s anti-bribery provisions require the existence of a “foreign official” and the FCPA’s books and records and internal control provisions apply only to issuers.

Moreover, the FCPA is a supply-side statute and does not capture the demand-side of bribery (i.e. the foreign officials who received the bribes, see U.S. v. Castle).

Two enforcement actions announced by the DOJ earlier this week demonstrate these points and how the U.S. government’s fight against bribery and corruption is broader than just the FCPA.

In the first action, the DOJ announced that Torneos y Competencias S.A. (Torneos), a sports media and marketing business headquartered in Argentina, was criminally charged with wire fraud conspiracy in connection with a “15-year scheme to corrupt international soccer through the payment of bribes and kickbacks to high-ranking officials of FIFA, the organization responsible for the regulation and promotion of soccer worldwide, as well as leading officials of the continental confederations and other soccer governing bodies that operate under the FIFA umbrella.”

According to the criminal information, “tens of millions of dollars in bribes and kickbacks were paid to high-ranking soccer officials  to obtain lucrative media and marketing rights to international soccer tournaments and matches.

As highlighted in this previous post regarding the DOJ’s original May 2015 FIFA related criminal charges, contrary to the critiques of many, the charges do not actually represent extraterritorial application of U.S. law as the DOJ alleges various overt acts with a U.S. nexus.

As alleged, Torneos and its co-conspirators used the wire facilities of the U.S. to facilitate and effect certain payments in furtherance of the criminal scheme.

According to the DOJ:

“Such use of United States wire facilities included, among other things, the use of the bank accounts of Torneo’s subsidiaries and afliliates held at United States financial institutions to transfer tens of millions of dollars in payments related to contracts secured through bribery, as well as the use of the bank accounts of co-conspirators … held at United States financial institutions to transfer millions of dollars in bribe payments. Torneos and its co-conspirators also relied, in part, on the growing market for soccer in the United States to generate profits from the scheme, and conducted meetings in furtherance of the scheme in the United States.”

The criminal charges were resolved via a 4 year DPA that followed the same general template as in a typical corporate FCPA enforcement action. Under relevant considerations, the DOJ noted that Torneos did not voluntarily disclose as well as the “years-long involvement in the conduct by officials at the highest levels of Torneos and the high-dollar amount of the bribes.”

Under the heading remedial measures, the DPA states:

“Torneos promptly terminated its entire senior management team, which included the then-President of the Company’s Board of Directors, as well as numerous other employees; Torneos hired a new leadership team, including a new General Manager, Chief Financial Officer, Legal Director and Chief Compliance Officer, and Compliance Manager, who have established a new ‘tone at the top” and ensured that a culture of compliance has taken hold at the Company.”

As noted in the DOJ’s release: “Torneos has agreed to forfeiture of $89,062,616, which represents profits it made from corrupt contracts, and to pay a criminal penalty of $23,760,000 to the government over the term of the agreement.”

In the DOJ’s release:  Robert Capers (U.S. Attorney for the Eastern District of New York) stated:

“Today’s announcement marks another important step in our continuing effort to root out corruption in international soccer and sends a clear message that corporate entities that rely on the U.S. financial system to enrich themselves through bribery will be held to account. Today, Torneos is being held to account for its conduct, but under new management it is also being given a chance to change the way the business of soccer is done in the future.  This corporate resolution reflects the seriousness and sustained nature of Torneos’s criminal conduct as well as the prompt and decisive actions the company undertook to cooperate after the charges in this investigation were first unsealed last year.  We are following the evidence where it leads and will continue to bring the individuals and entities who have corrupted soccer to justice.”

William Sweeney (Assistant Director-in-Charge, FBI, New York Field Office) stated:

“The only people who should be scoring in a soccer match are the players on the field, not the myriad of companies behind the scenes who see the game as an easy payday.  As alleged in this case, we won’t allow businesses to use our financial systems for corrupt practices, and we will continue our search for those entities who are still doing so.”

Richard Weber (Chief, Internal Revenue Service (IRS) Criminal Investigation) stated:

 “As today’s agreement reflects, Torneos y Competencias undermined the process of fair and open competition when they engaged in corrupt schemes to pay bribes in order to secure lucrative contracts. The IRS is committed to aggressively investigating corporations that use a complex web of offshore entities and foreign and domestic bank accounts to enrich themselves through bribery.”

In the second action, the DOJ announced that Mahmoud Thiam, the former Minister of Mines and Geology of the Republic of Guinea was arrested and charged … with laundering proceeds from bribes that he allegedly received from two Chinese companies that are part of a Chinese conglomerate in exchange for official actions he took to secure valuable mining rights for the conglomerate.”

What is interesting is that Thiam is a U.S. citizen.

According to the DOJ:

“The complaint alleges that in 2009 and 2010, Thiam took part in a scheme to launder, into the United States and elsewhere, approximately $8.5 million in bribes he received from senior representatives of a Chinese conglomerate.  In exchange for the bribes, Thiam allegedly used his official position in the Guinean government to enable affiliates of the Chinese conglomerate to obtain exclusive and highly-valuable investment rights in a wide range of sectors of the Guinean economy, including near total control of Guinea’s valuable mining sector.

In order to conceal the bribes, Thiam allegedly opened a bank account in Hong Kong and misreported his occupation to conceal his status as a government official.  Thiam later transferred millions of dollars in bribe proceeds into the United States, where he allegedly lied to two U.S. banks to conceal both his position as a foreign government official and the source of the funds.  Thiam allegedly spent the bribe proceeds on, among other things, construction work on his estate in upstate New York.”

In the DOJ’s release, Assistant Attorney General Leslie Caldwell stated:

“Former Minister Thiam is accused of enriching himself at the expense of the people of the Republic of Guinea. We cannot allow the United States to be a safe haven for the spoils of official corruption.  The department is committed to pursuing both those who pay bribes, and also the corrupt officials who receive them.”

U.S. Attorney Preet Bharara of the Southern District of New York stated:

“Mahmoud Thiam, a former high-ranking official of Guinea, allegedly used his position to accept millions in bribes from a Chinese conglomerate and laundered the money through New York. Thiam, a U.S. citizen, will now face justice in a federal court.”

Assistant Director Stephen Richardson of the FBI’s Criminal Investigative Division stated:

“This arrest exemplifies the commitment to personnel and resources the FBI continues to make towards combating corruption. The FBI looks forward to the development of those relationships with our partners both in the United States and around the world.”

Assistant Director in Charge William Sweeney of the FBI’s New York Field Office stated:

“Today’s action shows that the FBI, along with our partners, is committed to investigating all levels of corruption. The United States will be relentless in its efforts to uphold fair, equal and competitive markets.  The actions of a few who use corruption for personal gain will not be tolerated.”

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