Ecuador.
It is on the smaller side of countries in South America in terms of population and land area. However, it has the third largest oil reserves in South America and thus many companies subject to the Foreign Corrupt Practices Act do business in the country.
This post summarizes FCPA enforcement actions regarding conduct (in whole or in part) in Ecuador.
Sargeant Marine and Various Individuals (2020)
As highlighted in this prior post, Sargeant Marine (SMI) and various individual associated with the company resolved a net $16.6 million enforcement actions regarding conduct in Brazil, Venezuela and Ecuador.
As to Ecuador, the DOJ alleged:
“In or about 2014, SMI, through certain of its employees and agents, knowingly and willfully conspired and agreed with others to corruptly offer and pay bribes to, and for the benefit of, foreign officials in Ecuador, including Petroecuador Official #1, to secure an improper advantage in order to obtain and retain business with Petroecuador and win lucrative contracts with Petroecuador.
To facilitate the bribery scheme and to conceal the true nature of the bribe payments, SMI and its co-conspirators, among other things, created fake consulting contracts and fake invoices and made payments from bank accounts in the United States to offshore bank accounts held in the name of shell companies that were controlled by [an] Intermediary and the Intermediary close relative.”
Javier Aquilar (2020)
As highlighted in this prior post, the DOJ announced that Javier Aguilar (identified in certain reports as a former employee of Vitol Inc.) was criminally charged for “his alleged participation in a five-year international bribery and money laundering scheme involving corrupt payments to Ecuadorian officials” associated with PetroEcuador.
Frank Chatburn and Armengol Cevallos (2018-2019)
As highlighted in prior posts here and here, the DOJ charged Chatburn with conspiring with others by making corrupt payments to PetroEcuador officials in order to obtain and retain contracts for Galileo (described as an Ecuadorian company that provided services in the oil and gas industry) from PetroEcuador. Similarly, the DOJ charged Cevallos with conspiring with others to “unlawfully enriched themselves by making corrupt payments to PetroEcuador officials in order to obtain and retain contracts from PetroEcuador for companies controlled by or associated with Cevallos and others.
Odebrecht/Braskem (2016)
As highlighted in this prior post, the related companies resolved a net $420 million FCPA enforcement action primarily focused on Brazil, but also involving conduct in Angola, Argentina, Brazil, Colombia, Dominican Republic, Ecuador, Guatemala, Mexico, Mozambique, Panama, Peru, and Venezuela.
As to Ecuador, the DOJ alleged:
“In or about and between 2007 and 2016, Odebrecht made and caused to be made more than $33.5 million in corrupt payments to government officials in Ecuador. Odebrecht realized benefits of more than $116 million as a result of these corrupt payments.
For example, in or about and between 2007 and 2008, Odebrecht experienced a number of problems related to a construction contract, and agreed with an intermediary to an Ecuadorian government official with control over public contracts to make corrupt payments to the government official to solve the problems. Odebrecht later delivered these payments in cash to the government official.”
Alcatel Lucent (2010)
As highlighted in this prior post, the telecommunications company resolved an approximate $137 million enforcement action regarding conduct in Costa Rica, Honduras, Malaysia, Taiwan, Kenya, Nigeria, Bangladesh, Ecuador and Nicaragua.
As to Ecuador, according to the DOJ:
“Alcatel conducted business in Ecuador with three major telecommunications customers, all of which were state-owned: Andinatel, Pacifictel, and Empresa Municipl de Telecomunicaciones, Aqua Potable, Alcantarillados y Saneamiento. The information alleges that Alcatel retained a consultant in Ecuador (“a wealthy businessman”), but that the consultant and the entities he controlled “did little legitimate work for Alcatel.” The information alleges as follows. “Instead, it was anticipated that Ecuadorian Consultant would funnel a portion of the funds Alcatel paid him to officials of the Ecuadorian state-owned telecommunications companies in order to secure business and other benefits for Alcatel. Improper payments were anticipated to be made or offered in connection with at least nine contracts with government-owned telecommunication companies.”
In addition, the information alleged:
“Alcatel also paid for trips taken by officials of the three telecommunications companies that were principally for pleasure. For example, both the Vice-President and the Chairman of the Board of Pacifictel received improper all-expenses paid trips to France.”
Misao Hioki (2008)
In 2008 the DOJ criminally charged Hioki (the General Manager of the International Engineered Products Department (“IEP”) of Bridgestone Corp. who oversaw international sales of marine hose and other marine products) with antitrust and FCPA violations.
As to the FCPA, the DOJ alleged that Hioki and is co-conspirators “negotiated with employees of government-owned businesses, who are foreign officials under the FCPA, in at least the following Latin American countries, Argentina, Brazil, Ecuador, Mexico, and Venezuela, to make corrupt payments to those foreign officials to secure business …”.
In 2008, Hioki pled guilty and was “sentenced to serve two years in jail and to pay an $80,000 criminal fine.” (See here).
As highlighted in this prior post, in 2011 Bridgestone agreed to pay $28 million to resolve an antitrust and FCPA enforcement action. The FCPA conspiracy charged was based on “corrupt payments to foreign government officials in Latin America and elsewhere.” However, Mexico is the only country specifically mentioned.
Willbros Group & Brown (2006-2008)
As highlighted here, the oil and gas services company resolved a $22 million enforcement action regarding conduct in Nigeria and Ecuador.
As to Ecuador, the DOJ alleged:
“[C]ertain Willbros employees based in South America agreed to make approximately $300,000 in corrupt payments to Ecuadoran government officials of the state-owned oil company PetroEcuador and its subsidiary, PetroComercial, to assist in obtaining the Santo Domingo project, which involved the rehabilitation of approximately sixteen kilometers of a gas pipeline in Ecuador, running from Santo Domingo to El Beaterio.”
As highlighted here, in 2006, Jim Bob Brown, a former Willbros executive, pleaded guilty to one count of conspiracy to violate the FCPA, in connection with his role in making corrupt payments to Nigerian government officials to obtain and retain the EGGS contract and in connection with his role in making corrupt payments in Ecuador.
