marubeniIn this era of aggressive FCPA enforcement, there are critics who have suggested that the Department of Justice should concentrate its prosecutions on individuals rather than imposing ever-increasing criminal fines on corporations. These critics claim that individual criminal prosecutions are the most effective means to deter criminal conduct.

The Justice Department’s prosecution of Marubeni Corporation, a Japanese company, for two separate FCPA bribery schemes provides an interesting case study on DOJ’s FCPA prosecution program. To date, no Marubeni individuals have been prosecuted in either case; however, several individuals from other companies have been prosecuted.

In the first case, filed on January 17, 2012, Marubeni agreed to a deferred prosecution agreement (DPA) under which Marubeni agreed to pay a criminal fine of $54.6 million for its role in the Bonny Island Project in Nigeria. For those of you new to the FCPA scene, the Bonny Island Project is one of the most notorious bribery schemes that has been prosecuted, resulting in the prosecution of member companies of the Bonny Island  joint venture and several individuals, including the infamous Jeffrey Tesler and Albert (“Jack”) Stanley.

The Bonny Island bribery scheme involved nearly $200 million in bribes paid to Nigerian National Petroleum Company officials during 1995 to 2004 to secure a series of six lucrative contracts involving Liquified Natural Gas facilities totaling nearly $6 billion.

Marubeni played a central role in the scheme funneling nearly $51 million in bribes to “lower level” Nigerian government officials, while Jeffrey Tesler’s company was responsible for paying bribes to higher level NNPC officials. Under the plea agreement, Marubeni faced a criminal fine range of $54.6 to $109.2 million. The government agreed to a fine of $54.6 million, the bottom of the guideline range, citing Marubeni’s agreement to undertake remedial measures and its agreement to cooperate (in the future).  As part of its remedial measures, Marubeni represented that it had implemented and will implement a compliance program meeting the elements set forth in the plea agreement.marubeni3

A little more than two years later, on March 19, 2014, the Justice Department announced a second FCPA settlement with Marubeni. This agreement, which is connected to the ongoing investigation of Alstom, related to Marubeni’s participation in bribery in securing a power project in Indonesia.  Interestingly, the Alstom investigation involves the ongoing prosecution of several individuals from Alstom, and the Indonesia power project is one of numerous incidents under investigation involving Alstom.

The facts of this case involve a consortium of major power companies, including Marubeni and Alstom, and two consultants who were hired to pay bribes to Indonesia government officials. Consultant A was retained to funnel bribes but was unsuccessful in securing guarantees for a $118 million project from the Indonesia state-owned electric company. Consultant B was retained to increase the bribes paid.  Several million dollars were paid in bribes and the power contract was secured.

This time Marubeni faced a different Department of Justice. The guideline fine range was $63.7 million to $127.4 million. Marubeni was forced to plead guilty to eight separate counts of FCPA criminal violations, one conspiracy count and seven separate substantive FCPA violations.

The guideline fine range was $63.7 to $127.4 million. The government and Marubeni agreed to an amount in the middle of the range — $88 million. DOJ specific ally cited the following reasons for the fine amount: (1) the nature and seriousness of the offense; (2) [Marubeni’s] failure to voluntarily disclose the conduct; (3) [Marubeni’s] refusal to cooperate with the Department’s investigation when given the opportunity to do so; (4) the lack of an effective compliance and ethics program at the time of the offense; (5) [Marubeni’s] failure to properly remediate; and (6) [Marubeni’s] history of prior criminal misconduct.

marubeni5Marubeni participated actively in two notorious bribery schemes. So far, no individuals from Marubeni have plead guilty or been charged with any violations arising from these two notorious bribery schemes. I suspect there is a lot more to the story but, at this time, Marubeni’s treatment can be cited by those who suggest that increased focus on individual prosecutions are needed, while I am sure there are others who would argue that forcing Marubeni to plead guilty to eight separate criminal counts was sufficient punishment to deter future violations.

We shall see who has the better argument in the days or years to come.

Topics:  Alstom, Bonny Island, Deferred Prosecution Agreements, DOJ, Enforcement, Enforcement Actions, FCPA, Joint Venture, Liquid Natural Gas, Marubeni, Power Purchase Agreements

Published In: General Business Updates, Criminal Law Updates, International Trade Updates

DISCLAIMER: 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.

© Michael Volkov, The Volkov Law Group | Attorney Advertising

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