In 2021, the DOJ announced that Frederick Cushmore Jr. (an individual employed by Corsa Coal in various international sales positions) was criminally charged and plead guilty to a conspiracy charge to violate the FCPA’s anti-bribery provisions in connection with a bribery scheme in Egypt. (See here for the prior post).
In 2022, the DOJ announced that Charles Hunter Hobson (an individual employed by Corsa Coal in a variety of roles) was also criminally charged in connection with the same core conduct. (See here for the prior post). The enforcement action against Hobson remains active with the next status conference scheduled for April 3rd.
Recently, the DOJ posted this “declination with disgorgement” letter to Corsa Coal’s counsel on its FCPA website.
The letter states in full:
“Consistent with the Criminal Division Corporate Enforcement and Voluntary Self-Disclosure Policy, the Department of Justice, Criminal Division, Fraud Section and the United States Attorney’s Office for the Western District of Pennsylvania (collectively, the “Government”) have declined prosecution of your client, Corsa Coal Corporation (“Corsa” or the “Company”), for violations of the Foreign Corrupt Practices Act (the “FCPA”), 15 U.S.C. §§ 78dd-1, et seq. We have reached this conclusion despite the bribery committed by employees and agents of the Company.
The Government’s investigation found evidence that from approximately late 2016 until early 2020, certain of Corsa’s employees and agents engaged in a scheme to bribe Egyptian government officials in order to obtain and retain lucrative contracts to supply coal to Al Nasr Company for Coke and Chemicals (“Al Nasr”), an Egyptian state-owned and -controlled coke company. To effectuate the scheme, Corsa paid approximately $4.8 million to an Egypt-based third-party intermediary that Corsa’s employees knew would be used, at least in part, to pay bribes to Egyptian government officials, including the Chairman of Al Nasr. In exchange for the bribe payments, Corsa secured approximately $143 million in coal contracts from Al Nasr and earned approximately $32.7 million in profits.
The Government has decided to decline prosecution of this matter based on an assessment of the factors set forth in the Corporate Enforcement and Voluntary Self-Disclosure Policy, Justice Manual (“JM”) 9-47.120, and the Principles of Federal Prosecution of Business Organizations, JM 9-28.300, including but not limited to: (1) Corsa’s timely and voluntary self-disclosure of the misconduct; (2) Corsa’s full and proactive cooperation in this matter (including its provision of all known relevant facts about the misconduct, including information about the individuals involved in the conduct) and its agreement to continue to cooperate with any ongoing government investigations and any prosecutions that have resulted or might result in the future; (3) the nature and seriousness of the offense; (4) Corsa’s timely and appropriate remediation, including terminating a sales representative who engaged in the bribe scheme and substantially improving its compliance program and internal controls; and (5) the fact that Corsa agrees to and will disgorge the amount of its ill-gotten gains that it is able to pay (as described below).
Pursuant to this letter agreement, Corsa agrees to continue to fully cooperate with the Government’s ongoing investigation, including but not limited to the continued provision of any information and making available for interviews and/or testimony those officers, employees, or agents who possess relevant information, as determined in the sole discretion of the Government.
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. Corsa fully cooperated by providing to the Government relevant information and documents, as well as access to appropriate Company personnel to respond to Government’s inquiries. The Government, with the assistance of a forensic accounting expert, conducted an independent ability to pay analysis, considering a range of factors outlined in the Justice Department’s Inability to Pay Guidance (see October 8, 2019 Memorandum from Assistant Attorney General Brian Benczkowski to All Criminal Division Personnel re: Evaluating a Business Organization’s Inability to Pay a Criminal Fine or Criminal Monetary Penalty). Based on that independent analysis, the Government determined that paying disgorgement in excess of $1,200,000 would substantially threaten the continued viability of the Company. Accordingly, Corsa agrees to disgorge $1,200,000 USD (the “Disgorgement Amount”).”
In this release, Corsa stated:
“The decision by the Department of Justice to decline prosecution was based on a number of factors, including, but not limited to, Corsa’s timely and voluntary self-disclosure, full and proactive cooperation, and timely and appropriate remediation, as well as Corsa’s agreement to pay the disgorgement amount. The disgorgement amount was established based on the Department of Justice’s “inability to pay” guidance and is payable in two equal installments, one immediately and one in three months.
The Royal Canadian Mounted Police has concluded its investigation regarding these matters without recommending that any charges be laid.
Corsa does not intend to make any further public comments regarding these matters, unless required by law or stock exchange rules.”