United States: Red Notice Newsletter - May 2017

ANTICORRUPTION DEVELOPMENTS

Steven Peikin Reported to Become Co­Director of SEC's Enforcement Division

On May 26, 2017, The Wall Street Journal reported that recently confirmed Commissioner Jay Clayton (see below) will hire Steven Peikin to serve as Co-Director of the Securities and Exchange Commission (SEC) Enforcement Division. Mr. Peikin, a partner at the same prominent law firm as Mr. Clayton, is reported to serve as Co-Director with current Acting Enforcement Director Stephanie Avakian.

For more information, see The Wall Street Journal's coverage here.

DOJ Fraud Section to Detail Prosecutor to UK Financial Conduct Authority

On May 24, 2017, the Department of Justice (DOJ) announced that it would be detailing one of its anti­corruption prosecutors to the United Kingdom's Financial Conduct Authority as part of the DOJ's ongoing efforts to collaborate with international partners in the fight against corruption and financial fraud. Speaking at the American Conference Institute's 7th Brazil Summit on Anti­Corruption, Acting Principal Deputy Assistant Attorney General Trevor McFadden stated that this would be the first time that the Criminal Division or Fraud Section details a prosecutor to work in a foreign regulatory agency on white­collar criminal issues.

Deputy AG McFadden's prepared remarks are available here.

SFO Confirms Investigation Of Petrofac

On Friday, May 12, 2017, the U.K. Serious Fraud Office (SFO) announced that it was investigating London­based Petrofac PLC, an oil and gas services firm, for suspected bribery, corruption and money laundering. The investigation into Petrofac stems from the SFO's ongoing investigation into Unaoil SAM, a Monaco­based oil and gas services firm, subject to criminal inquiry since July 2016.

On May 25, 2017, Petrofac announced that it was suspending its chief operating officer, Marwan Chedid, as a result of the investigation. Chedid has resigned from the Petrofac board of directors. To date, both Chedid and Petrofac's CEO, Ayman Asfari, have been arrested and questioned by the SFO without being charged.

The SFO's Press Release is available here. Petrofac's statement is available here. For more information, see The New York Times' coverage here, The Wall Street Journal's coverage here and the FCPA Blog's coverage here and here.

Nearly a Half­-Million Dollars in Money-­Laundering­-Related Funds Seized from Washington Lobbyist

On May 9, 2017, a civil forfeiture complaint was filed to seize approximately $475,000 in funds from Washington lobbyist Joseph Szlavik according to forfeiture documents filed with the U.S. District Court for the District of Columbia. The complaint alleges that Szlavik operated an unlicensed international money-­transmitting business using a Citizens Bank account through which he disbursed millions in dollars according to his clients' directions. Among Szlavik's clients of interest are Gabonese President Ali Ondimba Bongo, his family members and other Gabonese government officials.

The case is being brought by the Money Laundering and Asset Recovery Section of the DOJ, which noted in its forfeiture complaint that President Bongo has previously been investigated for potential money laundering in the United States.

A copy of the forfeiture complaint is available here. For more information, see The Wall Street Journal's coverage here.

SFO Charges Additional Individuals in F.H. Bertling Bribery Probe

The SFO announced that it had charged Colin Bagwell, a former executive of F.H. Bertling Ltd., with two counts of conspiracy to pay bribes to secure contracts relating to the Jasmine gas field in the North Sea. Bagwell served as the company's chief commercial officer from April 2007 to October 2011, and has been implicated in a scheme to bribe ConocoPhillips agents in order to ensure that F.H. Bertling continued to receive contracts to supply freight­ forwarding services in the Jasmine gas field. Mr. Bagwell's charges bring the total number of individuals charged in this case to seven.

This case follows upon a similar case that the SFO aimed at F.H. Bertling in July 2016. The Red Notice previously reported on these charges, which allege that a number of company executives made improper payments to an Angolan government official connected to a state­owed oil company.

The SFO's Press Release on previous charges is available here. For more information, see The Wall Street Journal's coverage here.

Jay Clayton Sworn in as Chairman of the SEC

On May 4, 2017, Jay Clayton was sworn in as Chairman of the SEC. His swearing­in follows the Senate's vote on Tuesday, May 2, 2017. Clayton, a partner in a prominent law firm with a history of representing Wall Street clients, said in a statement that "The work of the SEC is fundamental to growing the economy, creating jobs, and providing investors and entrepreneurs with a share of the American Dream."

The SEC's Press Release is available here. For more information, see The New York Times' coverage here and The Wall Street Journal's coverage here.

Former MoneyGram Executive Thomas Haider Agrees to Pay $250,000 Penalty for AML Failures

On May 4, 2017, the Financial Crimes Enforcement Network ("FinCEN") and the U.S. Attorney's Office for the Southern District of New York announced the settlement of claims under the Bank Secrecy Act against Thomas E. Haider, the former chief compliance officer of MoneyGram International, Inc. Haider, who served in this role from 2003 to 2008, admitted to failing to implement policies at MoneyGram to effectively detect and terminate services to MoneyGram locations with redflags indicating that they were engaged in fraudulent activity and evasion of anti­money laundering laws. Haider agreed to pay a $250,000 penalty and agreed to a three­year injunction barring him from performing any compliance function for any money transmitter.

FinCEN's Press Release is available here, and the Southern District of New York's Press Release is available here. For more information see The New York Times' coverage here.

Former Guinean Mining Minister Convicted of Money Laundering

On May 3, 2017, Mahmoud Thiam, former Minister of Mines and Geology of the Republic of Guinea, was convicted of one count of dealing in criminally derived property and one count of money laundering. Mr. Thiam is a U.S. citizen alleged to have taken nearly $9 million in bribes from executives of China Sonangol International Ltd. and China International Fund, SA to facilitate the award of nearly exclusive investment rights in Guinea's valuable mining sector, as well as other sectors of the Guinean economy. To hide the basis for the money paid to him by the Chinese conglomerate, Thiam allegedly misrepresented his occupation and source of the funds to U.S. banks and the Internal Revenue Service.

The DOJ's Press Release is available here, and its Complaint is available here. For more information, see Bloomberg's coverage here and the FCPA Blog's coverage here.

World Bank Appoints New Integrity Chief

On April 27, 2017, the World Bank announced the appointment of Pascale Helene Dubois as World Bank Group Vice President for Integrity (INT), effective July 1, 2017. In a press release, World Bank President Jim Yong Kim stated that "Pascale has a proven track record of fighting fraud and corruption, and I'm very pleased to have her at the helm of our integrity unit." Ms. Dubois is a Belgian national, an experienced international lawyer and a Certified Fraud Examiner who worked in the private sector in the United States and Belgium before joining the World Bank in 1997 as Counsel for the Africa region. She has also served as manager of the Voluntary Disclosure Program and as Chief Suspension and Debarment Officer within INT.

The World Bank's Press Release is available here. For more information, see the FCPA Blog's coverage here.

SEC Issues Declination for Newmont Mining

On April 24, 2017, Colorado­based gold mining company Newmont Mining Corporation disclosed in an SEC filing that the SEC had issued a declination letter "in late February 2017" concerning its investigation of Newmont's business activities in countries outside the United States. Newmont operates in the United States, New Zealand, Peru, Indonesia and Ghana. In 2016, Newmont disclosed both the SEC's investigation and an investigation by the DOJ. The company's most recent disclosure makes no mention of the status of the DOJ's investigation, although it notes that its tolling agreement with DOJ ended in April 2017.

For more information, see the FCPA Blog's coverage here.

Anticorruption Spotlight: World Bank Debars Three Corporations

On May 5, 2017, the World Bank announced the debarment of Zhengtai Group Co. Ltd. through the execution of a Negotiated Resolution Agreement following a World Bank investigation that concluded that a falsified contract agreement with a falsified construction period and inflated contract value were submitted in order to meet the requirements of the bidding process. Zhengtai has been debarred for a period of 15 months.

The World Bank also announced the debarment of Hunan Shaping Construction Co., Ltd., also referred to as Sunpeak Construction, through the execution of a Negotiated Resolution Agreement alleging that the company submitted a falsified bid guarantee letter in its bid for a bidding process under the Integrated Economic Development of Small Towns Project in the People's Republic of China. The company has been debarred for 15 months.

Tthe World Bank announced the debarment of Tehnoplus Medical S.R.L. through the execution of a Negotiated Resolution Agreement following a World Bank investigation that concluded that Tehnoplus paid Euros 168,860 [approx. USD 189,000] in exchange for award of an equipment supply contract associated with the Romania Health Sector Reform 2 Project. The company has been debarred for two years.

All three debarments qualify for cross­debarment by other Multilateral Development Banks under the Agreement of Mutual Recognition of Debarments that was signed on April 9, 2010 (available here). The list of all World Bank debarred entities and individuals is available here.

The World Bank's Press Release regarding the Zhengtai and Hunan debarments is available here, and its Press Release regarding the Tehnoplus debarment is available here. For more information, see the FCPA Blog's coverage here.

Anticorruption Spotlight: SEC Issues Two Whistle­Blower Determinations

In April and May, the SEC issued two whistle­blower determinations, bringing the total number of whistle­blower awards to 44 since it first began the practice in 2012. Awards totaling approximately $154 million have been paid for whistle­blower information.

Specifically, on April 25, 2017, the SEC awarded approximately $4 million to an anonymous whistle­blower who provided information that led to a successful enforcement action. According to the SEC's Order, the whistle­ blower voluntarily offered extensive "industry­specific knowledge and expertise" in the underlying investigation. The SEC's Press Release and Order are available here.

In addition, on May 2, 2017, the SEC awarded more than $500,000 to a "company insider" who provided a tip to the SEC informing the agency of "well­hidden and hard­to­detect violations of the securities laws." The SEC's Press Release and Order are available here.

Whistle­blower awards—provided for under the Dodd­Frank Act—can range from 10 percent to 30 percent of the money collected when monetary sanctions from a successful enforcement exceed $1 million. Notices of Covered Actions—enforcement actions with sanctions greater than $1 million—are posted on the SEC's website, and claims must be submitted within 90 days of such posting.

For more information, see the FCPA Blog's coverage here.

EXPORT CONTROL AND SANCTIONS ENFORCEMENT

Singapore Man Sentenced to 40 Months in Prison for Plot Involving Exports to Iran of U.S. Components

On April 27, 2017, the Department of Justice (DOJ) announced that Steven Lim, a citizen of Singapore, was sentenced to 40 months in prison for his role in a conspiracy involving illegal exports of U.S.­origin radio frequency modules with sophisticated wireless data transmission capabilities from the United States to Iran. Such devices are commonly found in commercial applications, such as office­based local area networks for printers, but the modules are export­controlled due to potential use in remote detonation systems in improvised explosive devices (IEDs). Between June 2007 and February 2008, Lim and his co­conspirators caused more than 6,000 modules to be exported from the United States to Iran through Singapore; at least 14 of those modules were later found in unexploded IEDs in Iraq. According to the DOJ, Lim misrepresented to the Minnesota manufacturer of the devices that Singapore was the final destination of the items, causing the manufacturer to file false documents with the U.S. government.

This sentencing follows Lim's pleading guilty late last year to defrauding the U.S. government by dishonest means. Lim will be deported upon completion of his sentence.

For additional information, please see the DOJ press release and coverage in the December 2016 issue of Red Notice.

Czech Republic and Slovak Republic Nationals Charged with Violating U.S. Export Laws

On May 16, 2017, the DOJ announced that Josef Zirnsak, a national of the Czech Republic, was indicted on two charges stemming from alleged violations of the Arms Export Control Act (AECA). According to the press release, Zirnsak shipped an aiming laser and a rifle scope from the United States to Germany in 2011.

Earlier this month, the DOJ also announced the indictment of Martin Gula, a national of the Slovak Republic, on charges relating to the export and smuggling of night­vision goggles and aviation systems from the United States to the United Kingdom in 2012. Gula was also indicted for smuggling charges and using a false U.S. passport during that time.

If convicted, both Zirnsak and Gula face up to 20 years' imprisonment on each export­related count. Gula may receive up to an additional 10 years for each charge for the use of a false passport and smuggling. Both Zirnsak and Gula are being sought by law enforcement. DOJ did not identify any connection between the two individuals, though it did include both indictments in the same press release.

For additional information, please see the DOJ press release.

Defense Contractor Employee Pleads Guilty to Selling Satellite Secrets to Undercover Agent Posing as Russian Spy

On May 22, 2017, the DOJ announced that Gregory Allen Justice, a U.S. citizen and engineer, pleaded guilty to charges of economic espionage and violating the AECA. The guilty plea follows Justice's arrest in July of last year. According to the press release, Justice stole from his employer International Traffic in Arms Regulations (ITAR)­controlled technical data related to military satellites. In exchange for thousands of dollars in cash, Justice subsequently provided this information to an individual whom he believed to be a Russian agent. The "Russian agent" was, in fact, an undercover FBI agent to whom Justice had also offered a private tour of military spacecraft production facilities. Apparently, Justice and the undercover agent discussed developing a relationship like the one depicted on the television show "The Americans" during their meetings. If convicted, Justice could receive up to 35 years' imprisonment.

For additional information, please see the DOJ press release.

EXPORT CONTROL AND SANCTIONS DEVELOPMENTS

OFAC Announces New Iran and Venezuela Designations

On May 17, 2017, the Department of the Treasury's Office of Foreign Assets Control (OFAC) added two senior Iranian defense officials and one Iranian company to the Specially Designated National (SDN) list, citing the United States' concern with Iran's continued development and testing of ballistic missiles, as well as growing concern over abuses in Syria. OFAC also designated a China­based network involved in supplying missile­ applicable items to support Iran's ballistic missile program. Iran responded to the designations by asserting that they demonstrated "ill will" from the United States and warned that they could threaten the 2015 nuclear deal.

On May 18, 2017, OFAC added eight Venezuelan judges to the SDN list in an effort to demonstrate the United States' concern with human rights abuses and democratic backsliding in Venezuela. The eight officials are all members of the Tribunal Supremo de Justicia (TSJ), Venezuela's Supreme Court of Justice. According to the notice, TSJ has issued a number of rulings over the past year that have wrested power away from the National Assembly, usurping many of the functions of Venezuela's democratically elected legislature in violation of the Constitution. Most recently, in March 2017, the TSJ drew condemnation from the international community when it allowed itself to assume the legislative role in government and stripped parliamentary immunity from National Assembly members.

For further information on the Iranian designations, please see this OFAC web notice. For further information on the Venezuelan designations, please see this OFAC web notice.

President Trump Announces New Assistant Secretary of Commerce for Export Administration

On May 19, 2017, President Trump announced his intent to nominate Richard Ashooh to serve as the Assistant Secretary of Commerce for Export Administration. Ashooh is currently the Director of Economic Partnerships at the University System of New Hampshire, and he was previously at the University of New Hampshire Law School. Prior to his work in higher education, Ashooh served for more than two decades as a senior executive in the aerospace industry, at Lockheed Martin and later at BAE Systems, with notable experience in the electronic warfare space. Earlier in his career, he focused on federal procurement policies as a Professional Staff Member for the U.S. Senate Committee on Governmental Affairs.

For further information, please see the White House press release.

WRITING AND SPEAKING ENGAGEMENTS

On June 8, 2017 Maka Hutson will be presenting on an Akin Gump hosted webinar, "Impact of the Trump Administration's Immigration Policies on the Life Sciences Sector," in connection with CLSA's Corporate Counsel Committee.

Red Notice Newsletter - Chinese
Red Notice Newsletter - Russian

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

    Disclaimer

    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

    Registration

    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

    Cookies

    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

    Links

    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

    Mail-A-Friend

    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

    Emails

    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

    Security

    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions