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Wakil Enforcement Action – Obtain Or Retain Business?

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This previous post summarized the DOJ’s criminal charges against Naman Wakil regarding an alleged bribery scheme in Venezuela.

Should the case be litigated, there will be some interesting legal issues to consider including “obtain or retain” business.

The FCPA’s anti-bribery provisions are not an all-purpose corporate ethics statute, but rather a limited statute with specific elements that must be met for there to be a violation.

Among the required elements is “obtain or retain business.” The FCPA’s anti-bribery provisions capture the authorizing or payment of money or anything of value, to a foreign official, for purposes of:

(A)       (i) influencing any act or decision of such foreign official in his official capacity, (ii) inducing such foreign official to do or omit to do any act in violation of the lawful duty of such official, or (iii) securing any improper advantage; or

(B)       Inducing such foreign official to use his influence with a foreign government or instrumentality thereof to affect or influence any act or decision of such government or instrumentality

in order to assist … in obtaining or retaining business for or with, or directing business to, any person.

However, portions of the Wakil indictment are vague at best as to the business Wakil and his companies “obtained or retained” through the alleged bribery scheme. Rather, the indictment appears to allege in part that the purpose of the “bribe payments” was to obtain “disbursements of contractual payments” presumably owed to Wakil and his companies by the alleged Venezuelan SOEs his companies were doing business with.

This is not the first time the FCPA enforcement agencies have used this expansive “obtain or retain” theory in connection with conduct in Venezuela.

As highlighted in this 2010 post, a portion of the SEC’s FCPA enforcement action against Joe Summers (an individual employed by Pride International) concerned the following:

“Following widespread strikes and civil unrest in Venezuela in late 2002, Pride […] and other companies performing work for PDVSA (PDVSA is the Venezuela state-owned oil company) had difficulty collecting outstanding receivables from PDVSA. By early 2003, Pride […] had significant unpaid receivables for services that it had provided to PDVSA. In or around March or April 2003, Pride […] received information that a mid-level PDVSA accounts payable employee was holding up the payment of funds owed to Pride […] and wanted a payment of approximately $30,000 in order to release the funds due. In or around March or April 2003, Summers authorized a payment of approximately $30,000 to a third party, believing that all or a portion of the funds would be offered or given by the third party to an employee of PDVSA for purposes of securing an improper advantage in receiving payment from PDVSA. Shortly thereafter, in or around April 2003, Pride […] received overdue payments from PDVSA for work that Pride […] had performed.”

Likewise, as highlighted in this 2018 post, a portion of the DOJ’s FCPA enforcement action against individuals in the sprawling PDVSA related enforcement actions concerned the following:

“Beginning in at least 2010, Venezuela began to experience a liquidity crisis as the profits earned through PDVSA, which historically had been a significant source of revenue to the Venezuelan government as a result of its oil reserves, were insufficient to meet the government’s expenses. Numerous analysts began to speculate that PDVSA could default on its debt, and the government made public commitments for PDVSA to increase oil production.

Given these liquidity problems, PDVSA was unable to pay all of its vendors in a timely manner, but remained under pressure to continue to escalate oil production.

In or about 2011, Rincon and Shiera were approached by a group of individuals who consisted of then-current PDVSA officials and individuals outside PDVSA with influence at PDVSA, including De Leon, Villalobos, and Istruriz, referred to as the ‘management team.’ The management team offered to give Rincon’s and Shiera’s companies payment priority over other PDVSA vendors, ensuring that Rincon’s and Shiera’s companies would get a least partial payment on outstanding PDVSA invoices, and to provide Rincon’s and Shiera’s companies with assistance in winning future PDVSA business, in exchange for providing a bribe to the management team in the amount of 10% of all payments Rincon and Shiera received from PDVSA. The management team made offers to other vendors known and unknown to the Grand Jury.”



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