The DOJ recently announced that a “federal grand jury in the Southern District of Florida returned an indictment … charging three executives of an election voting machine and service provider company and a former Chairman of the Commission on Elections (COMELEC) of the Republic of the Philippines for their roles in an alleged bribery and money laundering scheme to retain and obtain business related to the 2016 Philippine elections. […] These bribes were allegedly paid to obtain and retain business related to providing voting machines and election services for the 2016 Philippine elections and to secure payments on the contracts, including the release of value added tax payments.”
Although not mentioned in the indictment, the company at issue is Smartmatic (and related entities).
The individuals charged with Foreign Corrupt Practices Act offenses are:
- Roger Alejandro Pinate Martinez (a citizen of Venezuela and resident of Florida described as a cofounder, Chief Operating Officer and President of Company 1 who was also and employee of Company 2); and
- Jorge Miguel Vasquez (a citizen of the U.S. and executive for Company 2 in Florida who managed hardware development and manufacturing worldwide for Company 1 who reported to Pinate).
In addition, Pinate, Vasquez and Juan Andres Donate Bautista and Elie Moreno are charged with a variety of money laundering offenses.
- Bautista is described as the Chairman of COMELEC (an independent agency mandated to enforce and administer election laws in the Philippines) from on or about April 28, 2015, to in or around October 2017.
- Moreno is described as follows: “a dual citizen of Venezuela and Israel, was a Company 1 executive involved in managing Companies 1 and 3’s contracts with COMELEC in the Philippines. He served as project director for Company 3 and a Company 1 subsidiary in the Philippines, and he signed and implemented the 2016 Philippine elections contracts with COMELEC.”
According to the indictment:
“In or around October 2014, COMELEC opened the bidding process for the lease of, with an option to buy, 23,000 election machines and related services for the 2016 Philippine elections (“Contract 1 “) .
On or about August 1, 2015, COMELEC awarded Contract 1 to Company 3. ELIE MORENO, as Project Director, and on behalf of Company 3 , and another COMELEC commissioner, on behalf of COMELEC, signed Contract 1 because JUAN ANDRES DONATO BAUTISTA was unavailable. For Contract 1 , COMELEC agreed to pay Company 3 1,724,712,698.24 Philippine pesos (approximately $37,038,502.80 in U.S. dollars), in installments, and upon Company 3 meeting certain milestones during the contract. The contract provided that COMELEC would issue a payment to Company 3 only when BAUTISTA or his designee certified that Company 3 had reached a milestone.
In or around May 2015, COMELEC opened the bidding process for the lease of, with the option to buy, 70,977 election machines and related services for the 2016 Philippine elections (“Contract 2”).
On or about August 27, 2015, COMELEC awarded Contract 2 to Company 3. JUAN ANDRES DONATO BAUTISTA, as COMELEC Chairman, and ELIE MORENO, as Project Director, and on behalf of Company 3 , signed Contract 2. For Contract 2, COMELEC agreed to pay Company 36,286,382,682.72 Philippine pesos (approximately $ 134,670,877.27 in U.S. dollars), in installments, and upon Company 3 meeting milestones during the contract. Contract 2 provided that COMELEC would pay Company 3 only when BAUTISTA or his designee certified that Company 3 reached a milestone.
In or around March 2015, COMELEC opened the bidding process for services related to transmission of results for the 2016 elections (“Contract 3″) . On or about December 8, 2015, COMELEC awarded Contract 3 to a subsidiary of Company 1 for the 2016 Philippine elections. JUAN ANDRES DONATO BAUTISTA, as COMELEC Chairman, and ELIE MORENO, as Project Director, and on behalf of the Company 1 subsidiary, signed Contract 3. For Contract 3, COMELEC agreed to pay the Company 1 subsidiary 507,718,000 Philippine pesos (approximately $ 10,642,488.37 in U.S. dollars), in installments, and upon the Company 1 subsidiary meeting milestones during the contract. Contract 3 provided that COMELEC would pay the Company 1 subsidiary only when BAUTISTA or his designee certified that the Company 1 subsidiary had met a milestone.
In total, in or around and between 2015 and 2016, Company 3 and the Company 1 subsidiary won bids for Contracts 1 , 2, and 3 worth a total approximate value of 8,518,813,380.96 Philippine pesos (approximately $ 182,351,868.44 U.S. dollars) to supply COMELEC with voting machines and related services for the May 2016 elections in the Philippines for President, Vice President, and other official positions.”
The indictment charges Pinate and Vasquez with conspiracy to violate the FCPA’s anti-bribery provisions and alleges:
“It was a purpose of the conspiracy for ROGER ALEJANDRO PINATE MARTINEZ, JORGE MIGUEL VASQUEZ, and their co-conspirators to offer, promise to pay, and pay bribes to JUAN ANDRES DONATO BAUTISTA, a Philippine government official, in order to obtain and retain contracts with, and receive payment- including releases of value added tax (“VAT”) payments from COMELEC, for and with, and direct business to Company 1 , Company 1 subsidiary, Company 2, Company 3 , Vendor A, and others. It was further a purpose of the conspiracy to conceal the bribe payments, proceeds, and funds related to the corrupt scheme.
[…]
ROGER ALEJANDRO PINATE MARTINEZ, JORGE MIGUEL VASQUEZ, and ELIE MORENO, together with others, regularly communicated about corrupt payments to and for the benefit of JUAN ANDRES DONATO BAUTISTA using personal or non-business email accounts, as well as encrypted messaging on WhatsApp, to conceal the nature of the communications.
ROGER ALEJANDRO PINATE MARTINEZ, JORGE MIGUEL VASQUEZ, and ELIE MORENO, together with others, created and used slush funds to, among other things, pay bribes to JUAN ANDRES DONATO BAUTISTA, including by over-invoicing or inflating the cost per voting machine for the May 2016 Philippine elections with additional fees of$50 and $ 10 per unit. PINATE, VASQUEZ, and others further caused transfers of monies from slush funds to, through, and from bank accounts and companies controlled by PINATE, VASQUEZ, and others — including bank accounts and companies located in Hong Kong; Singapore; the Philippines; Switzerland; New York; and Weston, Florida; and elsewhere.
To conceal and disguise the nature and purpose of the slush funds, JORGE MIGUEL VASQUEZ and others described in coded language the slush funds generated by the additional $50 fee as the “boss’s funds,” “RUSH fee” or “Extra Fee[s],” and the funds generated by the additional $ 10 per unit as the “RUE.”
ROGER ALEJANDRO PINATE MARTINEZ, JORGE MIGUEL VASQUEZ, and ELIE MORENO, together with others, caused fraudulent contracts and sham loan agreements to be created from various offshore entities that described services and loans that were not provided to generate funds for corrupt payments from the slush funds for the benefit of JUAN ANDRES DONATO BAUTISTA.
ROGER ALEJANDRO PINATE MARTINEZ, JORGE MIGUEL VASQUEZ, and ELIE MORENO, together with others, caused corrupt payments to be made for the benefit of JUAN ANDRES DONATO BAUTISTA through a series of transactions, initiating in the Southern District of Florida and elsewhere, involving a network of offshore and domestic bank accounts, intermediaries, and shell and front companies -including by Shell Company X and Shell Company Y, which were owned and controlled by Vendor A-Executive, and Philippine Metals Company and Philippine MSB Company.
ROGER ALEJANDRO PINATE MARTINEZ, JORGE MIGUEL VASQUEZ, and ELIE MORENO, together with others, directed and caused Vendor A-Executive to use domestic and overseas bank accounts to transfer and to attempt to transfer approximately $1,000,000 in bribe payments to and for the benefit of JUAN ANDRES DONATO BAUTISTA.
The indictment also charges Pinate and Vasquez with violating the FCPA’s anti-bribery provisions based on the same core allegations highlighted above and states that “or about August 15, 2016, in Broward and Palm Beach Counties, in the Southern District of Florida, and elsewhere:
“PINATE sent VASQUEZ a WhatsApp message relating to payments received from COMELEC and the instruction to immediately execute a loan that would be used to facilitate a payment for the benefit of JUAN ANDRES DONATO BAUTISTAin furtherance of the illegal bribery scheme.”
The indictment also charges Pinate, Vasquez, Moreno, and Bautista with a variety of money laundering offenses.
In a post on X, Smartmatic stated:
“Smartmatic has learned that two of our employees have been indicted for alleged violations of the FCPA in the Philippines almost 10 years ago. Regardless of the veracity of the allegations and while our accused employees remain innocent until proven guilty, we have placed both employees on leaves of absence, effective immediately. No voter fraud has been alleged and Smartmatic is not indicted. Voters worldwide must be assured that the elections they participate in are conducted with the utmost integrity and transparency. These are the values that Smartmatic lives by.”
