United States: Top 10 International Anti-Corruption Developments For March 2019

In order to provide an overview for busy in-house counsel and compliance professionals, we summarize below some of the most important international anti-corruption developments from the past month, with links to primary resources. This month we ask: How did the U.S. Department of Justice (DOJ) revise its stance on ephemeral messaging systems? Which U.S. enforcement agency announced that it had entered the foreign bribery arena? What steps has the U.S. Federal Bureau of Investigation (FBI) taken to combat foreign bribery in Latin America? Which Asian country appointed its first-ever anti-corruption ombudsman? The answers to these questions and more are here in our March 2019 Top Ten list.

1.  DOJ Revises Foreign Corrupt Practices Act (FCPA) Corporate Enforcement Policy. On March 8, 2019, Assistant Attorney General Brian Benczkowski announced that DOJ had revised the FCPA Corporate Enforcement Policy (the "Policy"). First announced in November 2017, the Policy was designed to encourage companies to self-report FCPA violations and to cooperate with DOJ FCPA investigations. The revised Policy includes a number of changes, but most notably softens DOJ's stance on ephemeral messaging systems. Whereas the original Policy required companies seeking remediation credit under the Policy to prohibit ephemeral messaging systems, the revised Policy requires companies to "implement[] appropriate guidance and controls on the use of personal communications and ephemeral messaging platforms that undermine the company's ability to appropriately retain business records or communications or otherwise comply with the company's document retention policies or legal obligations." The revised Policy also clarifies when a company seeking full credit for cooperation must coordinate (or "de-conflict") its internal investigation with DOJ and makes explicit that companies undergoing mergers and acquisitions can avail themselves of the Policy if they uncover wrongdoing at the target entity. Overall, the revisions are a positive development that seem to reflect that the Department listened to and incorporated feedback from the business community on the challenges posed by the original Policy. For more on the revised Policy and an extended discussion of the implications of the revised ephemeral messaging requirements, please see our client alert and our Socially Aware blog post.

2.  U.S. Commodity Futures Trading Commission (CFTC) Announces Entry into Foreign Bribery Enforcement Arena. On March 6, 2019, the CFTC Division of Enforcement announced that it had issued an Enforcement Advisory on self-reporting and cooperation for violations of the Commodity Exchange Act (CEA) involving foreign corrupt practices. In a speech delivered the same day, James McDonald, the CFTC's enforcement chief, explained that foreign bribery "might constitute fraud, manipulation, false reporting, or a number of other types of violations under the CEA, and thus be subject to enforcement actions brought by the CFTC. Bribes might be employed, for example, to secure business in connection with regulated activities like trading, advising, or dealing in swaps or derivatives . . . [or] to manipulate benchmarks that serve as the basis for related derivatives contracts . . . [and] might alter the prices in commodity markets that drive U.S. derivatives prices. We currently have open investigations involving similar conduct. But regardless of the specific factual scenario, we are committed at the CFTC to enforcing the CEA provisions that encompass foreign corrupt practices." Similar to the DOJ FCPA Corporate Enforcement Policy, the Enforcement Advisory states that, absent aggravating circumstances, there will be a presumption against a civil monetary penalty for companies and individuals that are not registered, or not required to be registered with the CFTC, that self-disclose and cooperate in the investigation of violations of the CEA involving foreign corrupt practices. The presumption will not apply to CFTC registrants, but the CFTC will recommend a "substantial reduction in the civil monetary penalty" for registrants who self-report and cooperate. In his speech, McDonald sought to reassure the public that the CFTC would work closely with other enforcement agencies, including DOJ and SEC, and, echoing DOJ policy, "will not pile onto other existing investigations." How much of an impact the CFTC's entry into the foreign bribery enforcement arena will have is yet to be seen but, for companies that fall within the CFTC's scope, this development adds further complexity to the process of reaching a global settlement of foreign bribery allegations.

3.  FBI Establishes Miami-Based International Corruption Squad. On March 5, 2019, the FBI announced that it had created a dedicated international anti-corruption squad based in its Miami Field Office. The FBI had previously created similar squads in its New York, Los Angeles, and Washington, D.C. Field Offices. These squads focus on foreign bribery, kleptocracy, and antitrust matters that occur outside U.S. borders but have a nexus to the United States. The creation of the Miami squad is a reflection of the significant ongoing investigations into alleged corruption in Latin America (see, for example, our coverage of ongoing investigations involving national oil companies in Brazil, Ecuador, and Venezuela) and, more broadly, the importance of Miami as a hub for activities that violate the FCPA and related laws.

4.  Former Uzbek Official and Former Telecommunications Executive Charged in Alleged Bribery and Money Laundering Scheme, While Third Telecommunications Company Resolves Related Allegations. On March 7, 2019, DOJ announced that money laundering charges had been unsealed against Gulnara Karimova, a former Uzbek government official and daughter of former Uzbek president Islam Karimov. Bekhzod Akhmedov, a former telecommunications executive, was also charged with money laundering and FCPA violations. According to the indictment, filed in the Southern District of New York, Akhmedov helped three telecommunications companies pay more than $865 million in bribes to Karimova between 2011 and 2012 in return for lucrative business opportunities and to operate in the Uzbek market. Two of the three telecommunications companies, Amsterdam-based VimpelCom and Stockholm-based Telia, had previously resolved related allegations in February 2016 and September 2017, respectively. On March 6 and 7, 2019, the U.S. Securities and Exchange Commission (SEC) and DOJ announced that the third company, Russia-based Mobile TeleSystems PJSC (MTS), and its subsidiary Kolorit Dizayn Ink LLC, had agreed to resolve allegations that they paid $420 million to Karimova between 2004 and 2012. MTS agreed to pay a total combined penalty of approximately $850 million pursuant to a deferred prosecution agreement ( DPA) with DOJ and an administrative cease-and-desist order with SEC and a guilty plea for Kolorit. Taken as a whole, these actions have led to the recovery by U.S. and foreign authorities of approximately $2.6 billion, and involved cooperation and coordination between enforcement authorities in the United States, the Netherlands, Sweden, Switzerland, Norway, Latvia, the UK, France, and Ireland.

5.  Germany-Based Provider of Medical Products and Services Resolves FCPA Allegations. On March 29, 2019, DOJ and SEC announced that Fresenius Medical Care AG & Co. KGaA had agreed to pay a total of approximately $231 million to resolve allegations that it made improper payments to health care providers or health officials in several countries, in violation of the FCPA's anti-bribery and accounting provisions. The company entered into a non-prosecution agreement (NPA) with DOJ, while the SEC entered an administrative cease-and-desist order.

6.  Mozambique's Former Finance Minister and Several Others Charged in "Tuna Boat" Case. On March 7, 2019, DOJ announced the unsealing of an indictment, filed in the Eastern District of New York, alleging a $2 billion bribery, fraud, and money laundering scheme perpetrated by government officials from Mozambique, shipbuilding executives, and investment bankers. The indictment alleges that three former Mozambique officials—Manuel Chang, the country's former minister of finance, Antonio do Rosario, an official with Mozambique's State Information and Security Office, and Teofilo Nhangumele, a representative of Mozambique's Office of the President—coordinated with three former London-based investment bankers and two executives at a shipbuilding company to steal approximately $200 million from a total of $2 billion in loans issued to state-controlled companies between 2013 and 2016 for three maritime projects, including one related to tuna fishing. One of the shipbuilding executives was arrested at John F. Kennedy Airport in New York in January 2019 and has pleaded not guilty; a trial date has not yet been set. The United States is seeking extradition of three investment bankers arrested in London in January 2019 and Chang, who was arrested in South Africa in December 2018. Do Rosario, Nhangumele, and the remaining shipbuilding executive are not currently in U.S. custody, although do Rosario and Nhangumele have reportedly been arrested in Mozambique. The tuna boat case is another reminder that DOJ will pursue FCPA and related charges against non-U.S. citizens, including against the officials who allegedly received the bribes.

7.  Ex-Hong Kong Minister Sentenced for African Bribery Schemes. On March 25, 2019, DOJ announced that former Hong Kong home affairs minister Patrick Ho had been sentenced in the Southern District of New York to 36 months' imprisonment and a fine of $400,000. Ho was convicted in December 2018, following a week-long trial, of FCPA and money laundering charges stemming from allegations that, while acting as the head of a Virginia-based non-governmental organization, he offered to pay $2.9 million in bribes to prominent African politicians, including the president of Chad and Uganda's foreign minister, in order to secure contracts for a Chinese energy conglomerate. Ho's sentence was two years shorter than DOJ had sought, in part because the court took into account what it deemed to be Ho's "extraordinary" history of charity.

8.  Canadian Court Sentences UK and U.S. Nationals to 30-Month Prison Terms Over Failed India Bribery Scheme. On March 7, 2019, an Ontario Superior Court judge sentenced Robert Barra, a U.S. citizen, and Shailesh Govindia, a UK national, to 30 months' imprisonment in connection with a failed plot to bribe officials at India's national airline, Air India, to secure a biometrics contract for U.S.-based Cryptometrics and its Canadian subsidiary. Barra's and Govindia's January 2019 convictions were the result of the second-ever trial under Canada's foreign bribery law, the Corruption of Foreign Public Officials Act (CFPOA). In July 2017, the Court of Appeal of Ontario affirmed the first-ever conviction under the CFPOA in connection with related charges against Nazir Karigar, a former agent of the Canadian subsidiary. The Barra and Govindia case was also noteworthy because the court held that prosecutors were required to prove that the defendants had knowledge that the intended bribe recipient was a "foreign public official" under the CFPOA. The court found the evidence sufficient to prove that the defendants knew that India's Minister of Civil Aviation was a foreign public official but insufficient to prove the same regarding the Air India employees.

9.  OECD Working Group on Bribery Reports on the UK's Foreign Bribery Enforcement Record. In March 2017, the Organization for Economic Cooperation and Development's Working Group on Bribery released its first "Phase 4" evaluations, of the United Kingdom and Finland. The Phase 4 monitoring process, launched in March 2016, focuses on the evaluated country's enforcement of the OECD Anti-Bribery Convention and considers the country's particular challenges and positive achievements. On March 21, 2019, the Working Group published its " Phase 4 Two-Year Follow-Up Report" for the UK. The report concluded that the UK had fully or partially implemented roughly three-quarters of the 2017 report's recommendations. The report commended the passage of the Criminal Finances Act of 2017 and the increased level of, and capacity for, enforcement of the UK's foreign bribery laws. But the report expressed concern that the "total number of finalised and ongoing cases relative to the UK economy remains relatively low," including just three concluded foreign bribery cases since the Phase 4 evaluation in 2017. Other areas for improvement noted in the report include increasing collaboration between government agencies to promote information sharing and bribery detection; increasing transparency surrounding court decisions on foreign bribery cases, including routine publication of sentencing remarks; and ensuring the independence of foreign bribery investigations and prosecutions. The Working Group requested that the UK file an update on its implementation progress in another two years.

10.  India Appoints First Anti-Corruption Ombudsman. On March 19, 2019, Indian President Nath Kovind cleared the way for former Indian Supreme Court Justice Pinaki Chandra Ghose to become the first anti-corruption ombudsman, or Lokpal, of India. Ghose was appointed under the Lokpal Act, which authorizes the Lokpal to investigate corruption allegations against any public official, other than officials in the armed forces. The Act also provides for analogous positions at the state level. Although passed in 2013, no ombudsman had been appointed until the Indian Supreme Court ordered the Indian government to appoint a Lokpal in January 2019. India, which ranked 78th out of 180 countries on the 2018 Transparency International Corruption Perception Index, is predicted to be the fastest growing major economy in the world over the next two years. As such, it will be interesting to see the impact that this appointment will have on anti-corruption enforcement.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP. All rights reserved

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
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

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