Global Anti-Corruption Insights: Winter 2023 – White Collar Crime, Anti-Corruption & Fraud

The US Department of Justice (DOJ) and Securities and Exchange
Commission (SEC) closed out 2022 by announcing two major corporate
settlements under the Foreign Corrupt Practices Act (FCPA): one for
a total of $160 million (coordinated with Brazil) and another for a
total of $460 million (coordinated with South Africa). The December
announcements capped off a year in which DOJ and SEC disclosed a
total of eight FCPA corporate enforcement actions. These include a
$1.1 billion global agreement that the commodity trading and mining
firm Glencore reached with authorities in the United States, United
Kingdom, and Brazil-an agreement that required guilty pleas in New
York and a compliance monitor for three years. Both the number and
total dollar amount of corporate FCPA settlements were higher in
2022 than in 2021, though remained lower than in 2019 or 2020.

Individual defendants also were in DOJ’s cross-hairs in
2022. DOJ announced new FCPA charges against nine different
individuals and also relied on federal money laundering and fraud
statutes to pursue other individuals for alleged bribery schemes
involving government officials around the world. DOJ won jury
trials in Florida and New York, but also received a few significant
setbacks, including in the Southern District of Texas and the
Second Circuit Court of Appeals.

On January 17, 2023, DOJ’s Criminal Division released an
updated Corporate Enforcement and Voluntary Self-Disclosure Policy
that comes on the heels of other revisions in late 2022 to the
department’s corporate criminal enforcement policies. At the
annual American Conference Institute’s 39th International
Conference on the FCPA in Washington, DC, and elsewhere, DOJ
officials also spoke publicly about the approach to FCPA
enforcement. They sought to emphasize not just the supply side but
also the demand side of bribery, the asserted willingness to take
challenging cases to trial, the expanding influence of
international cooperation, the interplay between corruption
enforcement and sanctions and export control enforcement, and how
regulators evaluate corporate compliance programs.

Below we cover these developments and more from the second half
of 2022. For developments from the first half of last year,
see Arnold & Porter’s Global Anti-Corruption Insights: Summer
2022.

FCPA Enforcement Updates From the Second Half of 2022

Enforcement Against Corporations

The second half of 2022 saw DOJ enter into deferred prosecution
agreements with three companies to resolve FCPA charges. DOJ
reported that:

The SEC announced parallel FCPA settlements with Gol, ABB, and Honeywell, as well as a settlement with Oracle in September. All of these SEC actions
were resolved through administrative orders, outside of court.

In addition, on December 21, 2022, the French aerospace company
Safran S.A. received a formal declination, pursuant to the DOJ’s FCPA
Corporate Enforcement Policy, based on the company’s voluntary
self-disclosure, cooperation with the government’s
investigation, remediation, and disgorgement of $17.9 million in
profits related to bribes paid to win lucrative train lavatory
contracts with the Chinese government. This was DOJ’s second
official declination of the year.

Also in December, Swedish telecom company Ericsson agreed to a one-year extension of a
three-year compliance monitorship in connection with a 2019
deferred prosecution agreement to resolve FCPA charges related to
bribery of officials in Djibouti, China, Vietnam, Indonesia, and
Kuwait.

Enforcement Against Individuals

While the SEC did not charge any individuals under the FCPA in
the second half of 2022, DOJ continued to pursue cases against
individuals under the FCPA and also relied on the money laundering
and fraud statutes to prosecute a range of alleged international
bribery schemes.

Many recent FCPA-related prosecutions have focused on alleged
corruption in Latin America. For example, several cases unfolded
against individuals for alleged bribery of officials at PDVSA,
Venezuela’s state-owned oil company. See, e.g., Two Financial Asset Managers Charged in Alleged
$1.2 Billion Venezuelan Money Laundering Scheme (7/12/22); Venezuelan Businessman Charged in Bribery and
Money Laundering Scheme (8/24/22); Venezuelan Sentenced to One Year in Prison for
Bribery Scheme (10/3/22). Two individual defendants-non-US
employees of a Swiss wealth management firm-continued to fight FCPA
and money laundering charges alleging that they facilitated and
concealed bribes to PDVSA officials. The defendants persuaded a
federal District Court Judge in Texas to dismiss the charges based
on a narrow interpretation of the FCPA and money laundering
statute’s extraterritorial reach, among other arguments. Stay
tuned: in October, the US Court of Appeals for the Fifth Circuit
heard oral argument on the government’s appeals.² The Fifth Circuit’s decision may have
important implications for FCPA enforcement going forward.

In another case involving Venezuela, a federal jury in December
convicted the former National Treasurer of
Venezuela and her husband of money laundering offenses related to
their acceptance of over $100 million in bribes for providing a
private media company with access to government bond purchases at
favorable exchange rates.

In other news related to Latin America, a federal grand jury in
the Southern District of Florida indicted three men for FCPA violations
stemming from an alleged scheme to pay bribes to obtain business
from state-owned insurance companies in Ecuador. The Eastern
District of New York unveiled new charges against a former Vitol
oil trader implicated in schemes to bribe officials at state-owned
oil companies in Ecuador and Mexico using a web of bank accounts
and shell companies around the world.³ A
former Bolivian government minister pleaded guilty to conspiracy to launder the
proceeds of a bribery scheme involving a US company doing business
with the Bolivian government. And the former president of the El
Salvadorean soccer federation, who had pleaded guilty to a
racketeering conspiracy, was sentenced to 16 months in prison for accepting
bribes from an American media company in exchange for the broadcast
rights to the El Salvador soccer team’s 2018 World Cup
qualifier matches.

Criminal prosecutions also swept up individuals accused of
bribery in other parts of the world. In November, a former Goldman
Sachs banker reportedly was arrested in the United Kingdom on FCPA charges
related to a power plant project in Ghana-nearly two years after he
consented to a judgment in the SEC’s civil
case related to the same alleged conduct. And in December, two
former heads of a New York-based NGO pleaded guilty to FCPA violations involving
bribes paid to elected officials in the Marshall Islands to pass
certain legislation.

DOJ also scored a win in a case against a former US government
official involved in overseas bribery. In November, a former US
Navy employee was sentenced to five years in prison after a
federal jury in DC convicted him of bribery, conspiracy to commit
bribery, and lying to investigators in connection with bribes paid
by a South Korea-based company to win contracts to provide services
to US military ships.

In a setback for DOJ, this past August the US Court of Appeals
for the Second Circuit affirmed the acquittal of Lawrence Hoskins,
a former Alstom executive in Europe, on FCPA charges. United
States v. Hoskins, 44 F.4th 140 (2d Cir. 2022). After closely
parsing of the facts established at trial, the Second Circuit
agreed with the trial judge that, as a matter of law, the
government had failed to prove that Hoskins was an agent of
Alstom’s US subsidiary and therefore not subject to the FCPA
for his overseas conduct. This marks the second time that the
Circuit has sided against the government on an FCPA issue in the
Hoskins case, in what has become a nearly decade-long
prosecution over conduct that dates back to 2002.⁴

Policy Announcements

On January 17,
2023, Assistant Attorney General Kenneth Polite announced that DOJ’s FCPA Corporate
Enforcement Policy would become known as the Corporate Enforcement and Voluntary Self-Disclosure
Policy, applicable to all criminal matters handled by the DOJ
Criminal Division. This revised policy provides criteria for a
declination or a reduced fine of up to 75% when a company
voluntarily self-discloses misconduct, fully cooperates with DOJ,
and takes timely and appropriate remedial action.

In a widely discussed memo issued by Deputy Attorney General Lisa
Monaco in September, DOJ publicized several revisions to its
Corporate Enforcement Policy. The memo sheds light on the DOJ’s
current approach to corporate recidivism, cooperation, independent
corporate compliance monitors, and other topics.⁵

In December, at the annual ACI FCPA conference in Washington,
Acting Principal Deputy Assistant Attorney General Nicole
Argentieri discussed what has become known as the
“Monaco Memo,” while other DOJ and SEC officials spoke
about various enforcement and compliance trends. For more of Arnold
& Porter’s coverage of the ACI FCPA Conference, see:

Collateral Litigation

As we previously have reported, collateral civil litigation
often accompanies corporate FCPA enforcement actions. Recent
developments from some of the cases winding their way through US
courts include:

• Goldman Sachs and certain individual defendants agreed to
  settle a shareholder derivative suit related to the company’s
  deferred prosecution agreement for violations of the FCPA in
  connection with obtaining and retaining business from a Malaysian
  sovereign wealth fund known as 1MDB. Fulton Cnty.
  Employees’ Ret. Sys. on Behalf of Goldman Sachs Grp. Inc. v.
  Blankfein, No. 19-CV-1562 (VSB), 2022 WL 4292894 (S.D.N.Y.
  Sept. 16, 2022).




• The US District Court for the District of New Jersey dismissed
  a Caremark claim brought by shareholders of Cognizant Technology
  Solutions alleging that the board failed to exercise oversight
  consistent with its fiduciary duties in the years leading up to an
  FCPA enforcement action by the SEC. In re Cognizant Tech. Sols.
  Corp. Derivative Litig., No. CV1701248KMCLW, 2022 WL 4483595
  (D.N.J. Sept. 27, 2022).




• The Second Circuit, in a summary order, upheld the SEC’s
  decision to deny a whistleblower award in connection with an FCPA
  enforcement action. Doe v. Sec. & Exch. Comm’n,
  No. 21-2537, 2022 WL 16936098 (2d Cir. Nov. 15, 2022).

Selected International Enforcement Updates

Anti-corruption enforcement also was active outside of the
United States during the latter half of 2022. For example, in
September, Canada’s Royal Canadian Mountain Police announced charges against Ultra Electronics
Forensic Technology Inc. and four of its former executives under
the Canadian Corruption of Foreign Public Officials Act. The
defendants allegedly directed a bribery scheme in the Philippines
to influence a government contract there.

Brazilian authorities entered into leniency agreements with
three companies also subject to FCPA enforcement actions, including
Gol, Honeywell, and Keppel Offshore, a company that had settled
with US, Singaporean, and certain other Brazilian
authorities back in 2017 for corruption offenses related to
business with Petrobras, the Brazilian state oil company.

The Peruvian government provided extensive cooperation to the
United States in forfeiture actions resulting in the return to Peru of approximately $686,000
linked to the corruption and bribery of Peru’s former president
by Brazil-based Odebrecht S.A.

In November, a London court ordered the British unit of Swiss trading and
mining company Glencore to pay over $310 million in penalties for
bribery offenses related to its oil operations in Africa. Shortly
thereafter, Glencore agreed to pay $180 million to the Democratic
Republic of Congo to resolve claims of corruption there. These
developments follow Glencore’s settlement of related FCPA charges
with the US DOJ in May 2022.

Footnotes

1 For more commentary on the ABB settlement, the
first-ever coordinated FCPA resolution with South Africa, see New FCPA Enforcement Actions Announced on the
Heels of the Annual ACI Conference.

2 See United States v. Rafoi-Bleuler, No.
22-20658 (5th Cir.); see also United States v.
Rafoi-Bleuler, 4:17-cr-00514 (S.D. Tex. Nov. 10,
2021).

3 Superseding Indictment, United States v.
Aguilar, 1:20-cr-00390 (E.D.N.Y. Dec. 2, 2022).

4 For more analysis of the Hoskins case, see Agent Zero: Second Circuit (Again) Limits Criminal
Liability in Long-Running Hoskins Case.

5 For more analysis, see DOJ Announces New Policies on Corporate Criminal
Enforcement; DOJ’s Monaco Memo Reverberates in SEC Approach
to Recidivism.

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