This post provides a summary of Foreign Corrupt Practices Act enforcement activity and related developments from the first quarter of 2023.
DOJ Enforcement (Corporate)
The DOJ announced one corporate enforcement action in the first quarter. DOJ recovery in this action was $1.2 million.
Corsa Coal (March 8)
As discussed here, the DOJ released a so-called declination with disgorgement letter involving Corsa Coal in connection with an alleged bribery scheme in Egypt. As stated in the letter, “the Government calculated that Corsa earned profits totaling approximately $32.7 million from the criminal scheme. Corsa, however, met its burden of establishing an inability to pay the full disgorgement of ill-gotten gains sought by the Government, despite agreeing that the amount was otherwise appropriate based on the law and the facts. Accordingly, Corsa agrees to disgorge $1,200,000.”
Although not a new enforcement action, as highlighted here, the DOJ announced that Ericsson pled guilty and agreed to pay an additional $206 million in connection with its 2019 FCPA enforcement action after the DOJ alleged a breach of the 2019 deferred prosecution agreement . This post takes a closer look at the “factual basis” for breach as stated by the DOJ.
DOJ Enforcement (Individual)
The DOJ announced FCPA charges against three individuals in the first quarter.
As highlighted here, the DOJ added an FCPA conspiracy charge against Samuel Bankman-Fried (criminally charged in December 2022 with a variety of offenses in connection with an alleged financial fraud scheme). As alleged by the DOJ: “In or about 2021, Bankman-Fried authorized and directed a bribe of at least $40 million to one or more Chinese government officials. The purpose of the bribe was to influence and induce one or more Chinese government officials to unfreeze certain Alameda trading accounts containing over $1 billion in cryptocurrency, which had been frozen by Chinese authorities. Bankman-Fried and others sought to regain access to the assets to fund additional Alameda trading activity, in order to assist Bankman-Fried and Alameda in obtaining and retaining business.”
As highlighted here, Glenn Oztemel (an individual previously employed by Freepoint Commodities LLC) and Eduardo Innecco (a dual Brazilian and Italian citizen who worked as an oil and gas broker and agent for Freepoint) were charged with FCPA and related offenses for an alleged Brazil bribery scheme.
SEC Enforcement (Corporate)
The SEC brought two corporate FCPA enforcement action in the first quarter. SEC recovery in these actions was $19 million.
Rio Tinto (March 6)
See here and here for prior posts.
Charges: None (administrative order findings violations of the FCPA’s books and records and internal controls provisions)
Settlement: $15 million civil penalty.
Origin: Rio Tinto previously disclosed: “On 29 August 2016, Rio Tinto became aware of email correspondence from 2011 relating to contractual payments totalling US$10.5 million made to a consultant providing advisory services on the Simandou project in Guinea. The company launched an investigation into the matter led by external counsel. Based on the investigation to date, Rio Tinto has today notified the relevant authorities in the United Kingdom and United States and is in the process of contacting the Australian authorities.
Individuals Charged: No
Related DOJ Enforcement Action: Yes
Flutter International (March 6)
See here and here for prior posts.
Charges: None (administrative order findings violations of the FCPA’s books and records and internal controls provisions)
Settlement: $4 million civil penalty.
Origin: The company previously disclosed: “By at least 2016, the Company’s Board undertook a review of whether the Company, any of its subsidiaries, or any of its personnel had made improper payments, directly or through external consultants, to government officials in certain foreign jurisdictions. As a result of this review, the Company voluntarily contacted the Commission and other U.S. and Canadian regulators …”.
Individuals Charged: No
Related DOJ Enforcement Action: Yes
SEC Enforcement (Individual)
The SEC did not bring any individual FCPA enforcement actions in the first quarter. As highlighted here, the SEC has not brought an individual FCPA enforcement action in approximately 2.5 years.
Other Developments or Items of Interest
In April 2022, Roger Ng (a former Goldman Sachs managing director) was found guilty at trial of Foreign Corrupt Practices Act and related charges for paying bribes to various Malaysian and Abu Dhabi officials in connection with Malaysia’s state-owned and state-controlled investment development company. See here. During the first quarter, Ng was sentenced to ten years in prison (see here) and also ordered to forfeit $35.1 million (see here).
In another FCPA sentence during the first quarter, former Unaoil executive Saman Ahsani was sentenced to 366 days in prison. (See here). In 2019, the DOJ announced that Cyrus Ahsani and Saman Ahsani (the former CEO and Chief Operations Officer of Monaco-based Unaoil) pleaded guilty in March 2019 to one count of conspiracy to violate the FCPA for their roles in a scheme to corruptly facilitate millions of dollars in bribe payments to officials in multiple countries.
As highlighted here, the Fifth Circuit reinstated FCPA and related charges against Daisy Rafoi-Bleuler and Paulo Caqueiro Murta holding that, at this stage of the proceedings, the indictment was good enough and also holding that the term “agent” in the FCPA is not unconstitutionally vague. In 2019 Rafoi-Bleuler (a citizen of Switzerland and partner in a Swiss Wealth Management firm) and Murta (a citizen of Portugal and Switzerland and employee in a Swiss Management firm) were criminally charged with FCPA and related offenses for allegedly directing bribes to various individuals at PDVSA (Venezuela’s state-owned and state-controlled energy company). See this guest post for additional analysis.
As discussed here, the DOJ announced changes to its Corporate Enforcement Policy (CEP). According to the DOJ, “these changes offer companies new, significant, and concrete incentives to self-disclose misconduct. And even in situations where companies do not self-disclose, the revisions to the policy provide incentives for companies to go far above and beyond the bare minimum when they cooperate with our investigations.” See here for additional analysis. A few weeks later, as highlighted here, the DOJ announced yet additional changes to DOJ policy. According to the DOJ, the changes concern how the DOJ “consider[s] a corporation’s approach to the use of personal devices as well as various communications platforms and messaging applications, including those offering ephemeral messaging.” In addition, the DOJ “updated its policies concerning corporate compensation systems” and issued a “revised memorandum on the selection of monitors in Criminal Division matters” including that “any submission of a monitor candidate by the company and selection of a monitor candidate by the Criminal Division should be made in keeping with the department’s commitment to diversity, equity, and inclusion.”
