A strange scenario, scrutiny alert, and Odebrecht related. It’s all here in the Friday roundup.
A Strange Scenario
FCPA enforcement actions have concerned some interesting family relationships. Husband/Wife as co-defendants. Brother/Sister as co-defendants. Father/Son as co-defendants.
But a wife bribing a husband? To my knowledge, this has never occurred in an FCPA enforcement action.
Until, that is … this week’s FCPA (and related) enforcement action against various individuals in relation to Griffiths Energy International’s bribery scheme involving Chad. (See here for the prior post).
Nouracham Bechir Niam was among the individuals charged with conspiracy to violate the FCPA’s anti-bribery provisions. Niam is the wife of Mahamoud Adam Bechir (who served as the Republic of Chad’s Ambassador to the United State and Canada who served at the Embassy of Chad located in Washington D.C. between 2004 and 2012).
According to the criminal indictment, Niam (and another defendant) and their co-conspirators made “corrupt payments to Chadian officials, including Bechir (and another individual) in order to obtain lucrative oil contracts for [GEI] from the government of Chad, thereby increasing the value of their respective holdings and property interests in [GEI].”
As highlighted in this prior post, earlier this year Japan-based Toyota Motor Company disclosed in a prospectus in connection with a U.S. securities offering:
“In April 2020, Toyota reported possible anti-bribery violations related to a Thai subsidiary to the SEC and the U.S. Department of Justice (“DOJ”), and is cooperating with their investigations. The investigations could result in the imposition of civil or criminal penalties, fines or other sanctions, or litigation by the DOJ or the SEC. Toyota cannot predict the scope, duration or outcome of the matter at this time.”
According to this recent article:
“U.S. authorities are ramping up their Foreign Corrupt Practices Act investigation of Toyota, with federal prosecutors impaneling a grand jury in Texas as they seek any evidence the carmaker bribed top Thai judges to overturn a $350 million tax judgment, according to a U.S. law enforcement official and documents related to the investigation.
According to the law enforcement documents, the ongoing investigations by the U.S. Department of Justice and U.S. Securities and Exchange Commission, which Toyota disclosed in a public filing earlier this year, appear to be premised on the findings of an internal company investigation conducted by WilmerHale. The findings were presented by Debevoise & Plimpton LLP to U.S. authorities in April 2020.
In particular, Toyota suspected senior attorneys for Toyota Motor Thailand, or TMT, may have funneled bribes through a private Thai law firm to Thailand Supreme Court judges in an effort to influence the decision on a still-pending appeal of the tax judgment, according to sources familiar with the matter and documents describing the company’s inquiry.
The grand jury was impaneled as part of the investigation in the Northern District of Texas, which encompasses Dallas, near Toyota’s U.S. headquarters, according to the U.S. source.
The internal Toyota investigation found that TMT contracted with Annanon Law Office to help establish a backchannel to Thailand’s highest ranking judge via a former chief judge and an advisor, law enforcement documents show. TMT paid nearly $18 million on the $27 million contract, according to the documents, with $9 million to be paid if Toyota won the appeal, which relates to import taxes on Prius car parts.
Federal investigators are reportedly now seeking to determine if TMT, either directly or through the Annanon law firm, paid former Supreme Court of Thailand President Direk Ingkaninan and Supreme Court senior advisor Chaiyasit Trachutham to persuade high court president Slaikate Wattanapan to accept Toyota’s argument and have the court rule in its favor within a year, sometime after Slaikate’s term began in October 2019, according to the U.S. official and documents related to the investigation.”
As highlighted in this prior post, in late 2016 the DOJ and SEC brought an FCPA enforcement action against Odebrecht S.A. (a Brazilian holding company) and Braskem S.A. (a Brazil-based petrochemical company with shares traded on the NYSE in which Odebrecht owned a majority of voting shares).
The conduct at issue was egregious and largely centered on a business unit, the Division of Structured Operations, housed within an Odebrecht subsidiary that allegedly served as little more than a bribe-paying department for the benefit of Odebrecht and Braskem. According to the resolution documents, former senior executives authorized approximately $788 million in bribes, largely through the Division of Structured Operations, to alleged foreign officials in at least twelve countries. While the principal focus of the DOJ’s action (and the exclusive focus of the SEC action) concerned conduct in Brazil including the companies relationships with Petrobras, the DOJ action also alleges improper payments in Angola, Argentina, Brazil, Colombia, Dominican Republic, Ecuador, Guatemala, Mexico, Mozambique, Panama, Peru, and Venezuela.
Recently, the DOJ announced the unsealing of criminal charges against Austrian citizens Peter Weinzierl and Alexander Waldstein for their alleged “participation in a conspiracy to launder hundreds of millions of dollars through the U.S. financial system as part of a scheme to pay bribes around the world and defraud the Brazilian government.”
According to the DOJ release:
“Weinzierl served as chief executive officer and Waldstein as officer of an Austrian bank, and both served as board members of an Antiguan bank. According to the indictment, between approximately 2006 and 2016, Weinzierl and Waldstein conspired with Odebrecht and others to launder money in a scheme to defraud Brazil’s tax authority of more than $100 million in taxes and to create off-books slush funds used by Odebrecht to pay hundreds of millions of dollars in bribes for the benefit of public officials around the world.
According to the indictment, Weinzierl, Waldstein, and their co-conspirators used fraudulent transactions and sham agreements to move more than $170 million from bank accounts in New York held in the name of Odebrecht, through the Austrian bank, to offshore shell company bank accounts secretly controlled by Odebrecht. As part of the scheme, Odebrecht used the slush funds funneled to the offshore shell company bank accounts to pay bribes. Odebrecht falsely recorded the hundreds of millions of dollars in international wire transfers sent to the Austrian bank as legitimate business expenses and deducted the fraudulent payments from the overall profits that it reported in Brazil, thus reducing its tax liability and evading more than $100 million in taxes. Shell company bank accounts involved in the scheme and used to pay bribes to foreign officials were held at the Antiguan bank that Weinzierl, Waldstein, and their co-conspirators controlled and used to promote the scheme. Weinzierl and Waldstein also caused millions of dollars in criminal proceeds to be transferred from the Antiguan bank to a brokerage account located in the United States to purchase U.S. Treasury securities and corporate stocks and bonds on U.S. exchanges. In exchange for their role in the scheme, Weinzierl and Waldstein collected substantial fees for the benefit of the Austrian and Antiguan banks.”
According to the DOJ, Weinzierl was arrested in the United Kingdom pursuant to a provisional arrest request from the United States and Waldstein remains at large.
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