Designed for busy in-house counsel, compliance professionals, and anti-corruption lawyers, this newsletter summarizes some of the most important international anti-corruption law and case developments from the past month, with links to primary resources. This month we ask: Who is the new head of the Criminal Division of the U.S. Department of Justice (DOJ) and how will his confirmation affect foreign bribery enforcement? Why was July 2021 a busy month for the UK Serious Fraud Office (UK SFO)? Which African leader has been the subject of successful kleptocracy forfeiture actions in the United States, Switzerland, and France? The answers to these questions and more are here in our July 2021 Top 10.
1. New Assistant Attorney General for DOJ’s Criminal Division Confirmed. On July 20, 2021, the Senate confirmed Kenneth Polite, Jr. as the Assistant Attorney General (AAG) for DOJ’s Criminal Division. Because criminal enforcement of the Foreign Corrupt Practices Act (FCPA) resides exclusively with the Criminal Division’s Fraud Section, this confirmation is particularly significant for foreign bribery enforcement. Polite previously served as an Assistant United States Attorney in the Southern District of New York from 2007 to 2010 and as the United States Attorney for the Eastern District of Louisiana from 2013 to 2017. In addition to working in private practice at several prominent law firms, Polite served as chief compliance officer of Entergy Corporation, an electric power company operating along the U.S. Gulf Coast, including in Polite’s home state of Louisiana. President Biden nominated Polite for the AAG position in April 2021. Polite obtained bipartisan support and was ultimately confirmed by a relatively narrow vote of 56-44. Especially given the Biden administration’s focus on corruption as a core national security interest (see our June 2021 Top 10 for more) and Polite’s own experience prosecuting public corruption cases, we see no reason to believe that FCPA enforcement will cease to be a priority under AAG Polite. We also expect that Polite, a former chief compliance officer, will continue the Criminal Division’s focus on communicating DOJ’s compliance expectations to the market. In his written responses to questions for the record (QFRs) posed by Senator Chuck Grassley as part of the confirmation process, Polite spoke favorably about the FCPA Corporate Enforcement Policy and said, “If confirmed, I look forward to continuing the Criminal Division’s commitment to provide transparency and guidance … to the business and compliance community, and to incentivize good corporate behavior.”
2. UK Serious Fraud Office Enters into Deferred Prosecution Agreement with UK-Based Engineering Company. On July 2, 2021, the UK SFO announced that it had secured court approval for a three-year deferred prosecution agreement (DPA) with Amec Foster Wheeler Energy Limited (AFWEL) relating to the company’s alleged use of corrupt agents in the oil and gas sector from 1996 to 2014 in Brazil, India, Malaysia, Nigeria, and Saudi Arabia, contrary to the Prevention of Corruption Act 1906 and section 7 of the UK Bribery Act 2010 (UKBA). AFWEL’s parent company, John Wood Group PLC (“Wood”), was not involved in the underlying conduct but fully cooperated with the SFO’s investigation, agreed to pay AFWEL’s financial penalty and costs amounting to £103 million in the UK (including a payment of compensation to the people of Nigeria of £210,610), and agreed to report annually to the SFO on its group-wide ethics and compliance program. The DPA was part of a coordinated resolution with U.S. and Brazilian authorities, which the company disclosed in June 2021. Another Wood subsidiary resolved foreign bribery allegations involving Kazakhstan with Scotland’s Crown Office & Procurator Fiscal Service in March 2021.
3. UK Serious Fraud Office Secures Deferred Prosecution Agreements with Two Unnamed Companies. On July 20, 2021, the UK SFO announced that it had secured court approval for DPAs with two unnamed UK-based companies for UKBA offenses based on “a common Statement of Facts.” The SFO provided few details regarding the alleged conduct, saying only that it involved “bribes paid in relation to multi-million pound UK contracts” contrary to sections 1 and 7 of the UKBA. The SFO said that “legal reasons” prevented the agency from disclosing the names of the companies, potentially because the SFO intends to prosecute individuals who arguably could be prejudiced if information about the offenses was made public. Combined the two companies will pay a total of £2,510,065, consisting of disgorgement of profits and a financial penalty. Both DPAs will last for two years and require reporting to the SFO on each company’s compliance program improvements.
4. Maryland-Based Nuclear Transportation Company Concludes Deferred Prosecution Agreement. On July 13, 2021, a judge in the District of Maryland granted DOJ’s unopposed motion to dismiss FCPA charges filed against Transport Logistics International, Inc.[1] In March 2018, the company entered into a DPA with DOJ to resolve allegations that it bribed an official of JSC Techsnabexport (TENEX), a subsidiary of Russia’s State Atomic Energy Corporation, in order to receive contracts for transporting uranium. The official, Vadim Mikerin, and the company’s former co-presidents, Daren Condrey and Mark Lambert, were convicted of related crimes. (See our April 2021 Top 10 for the latest on the individual prosecutions.) In moving for dismissal, DOJ informed the court that the company had met its obligations under the DPA, including providing full cooperation, implementing an enhanced compliance program, and paying its $2 million penalty.
5. Ex-Oil Trader Pleads Guilty to Nigerian Oil Bribery Scheme. On July 26, 2021, Anthony Stimler, a former U.K.-based trader for Glencore Plc, pleaded guilty in the Southern District of New York to conspiracy to violate the FCPA and to commit money laundering in relation to his role in an alleged scheme to bribe officials of the Nigerian National Petroleum Corporation, Nigeria’s state-owned oil company, to obtain favorable crude oil contracts.[2] Stimler worked for the company’s West Africa desk from 2002 to 2009 and again from 2011 through 2019. As part of the alleged scheme, and over at least ten years, Stimler and others used inflated invoices, coded language, intermediary companies, and other means to pay millions of dollars in bribes to foreign government officials in Nigeria and elsewhere. Stimler is scheduled to be sentenced in January 2022.
6. Financial Manager Pleads Guilty to Ecuadorian Police Pension Bribery Scheme. On July 7, 2021, a plea agreement and factual proffer for Luis Alvarez Villamar, the former operations manager for an unnamed Ecuadorian company that operated a centralized depository for the clearing and settlement of securities, were filed in the Southern District of Florida. Alvarez agreed to plead guilty to one count of conspiracy to launder the proceeds of a scheme to bribe officials at Ecuador’s public police pension fund (ISSPOL) to direct the fund’s investment business to companies controlled by Jorge Cherrez Miño. According to the proffer, between 2014 and 2019, Alvarez received a total of more than $3.1 million and a Miami apartment from Cherrez to help Cherrez acquire the ability to invest and use the ISSPOL securities without proper oversight from Alvarez’s employer. DOJ announced Cherrez’s guilty plea to related charges in March 2021.
7. Former Legal Counsel to Venezuelan Ministry Pleads Guilty to PDVSA Bribery and Embezzlement Scheme. On July 14, 2021, Carmelo Urdaneta Aqui, the former legal counsel to the Venezuelan Ministry of Oil and Mining, pleaded guilty in the Southern District of Florida to conspiracy to commit money laundering in connection with an alleged bribery and embezzlement scheme involving Venezuela’s state-owned oil company, Petróleos de Venezuela S.A. (PDVSA). As part of the plea agreement, Urdaneta agreed to forfeit over $49 million, including his interests in three South Florida properties, several properties in Panama, and the contents of a Swiss bank account. Urdaneta faces up to 10 years in prison. He is the fourth defendant to plead guilty in this case: banker Matthias Krull pleaded guilty in August 2018 and was sentenced to 120 months’ imprisonment in October 2018; former PDVSA executive director of financial planning Abraham Edgardo Ortega pleaded guilty in October 2018 and was sentenced to 26 months’ imprisonment in May 2021; and former Miami-based investment broker Gustavo Adolfo Hernandez Frieri pleaded guilty in November 2019 and was sentenced to 46 months’ imprisonment in April 2021. Five additional defendants remain at large.
8. Former U.S. Oil Contractor Sentenced in PDVSA Investigation. On July 8, 2021, Charles Quintard Beech III, a former oil contractor from Texas was sentenced in the Southern District of Texas to 12 months in prison and ordered to pay a $10,000 fine and to forfeit $833,452 following his January 2017 guilty plea to one count of conspiring to violate the FCPA.[3] Beech admitted to making payments to multiple PDVSA officials in 2011 and 2012, in exchange for putting his company on PDVSA bidding panels and receiving payments for previously awarded contracts.
9. French Court Affirms Embezzlement Verdict against Equatorial Guinea’s Vice President. On July 28, 2021, France’s highest appeal court, the Cour de Cassation, upheld the 2017 embezzlement conviction of Teodorin Nguema Obiang Mangue, Equatorial Guinea’s vice president and the son of that country’s sitting president. Obiang, who was tried and convicted in absentia in 2020, was given a three-year suspended sentence, fined €30 million, and had his assets in France—estimated to be worth approximately €150 million—confiscated. This is not the first time that Obiang has had his assets confiscated. In 2014, Obiang resolved a U.S. civil forfeiture case in which DOJ accused him of “raking in millions in bribes and kickbacks” and then “embark[ing] on a corruption-fueled spending spree in the United States.” The DOJ resolution required Obiang to forfeit $30 million in assets, including, most famously, Michael Jackson’s glove. Switzerland and France later seized additional assets from Obiang and, on July 22, 2021, the UK sanctioned Obiang under its Global Anti-Corruption sanctions regime.
10. Guatemalan Corruption Prosecutor Fired, Flees Country. On July 23, 2021, Guatemala’s attorney general removed Juan Francisco Sandoval from his position as the head of the Guatemalan Special Prosecutor’s Office Against Impunity (FECI). The attorney general said that Sandoval had been removed due to “constant abuses” of the FECI, but Sandoval said he was fired because he was investigating top officials in the administration of President Alejandro Giammattei, and many outside observers, including several members of the Biden administration, expressed concern that Sandoval’s firing was part of a systematic effort to weaken the fight against corruption in Guatemala. (In August 2019, the International Commission Against Impunity in Guatemala (CICIG) announced that it would cease operations after it lost the support of successive Guatemalan presidents.) Shortly after his termination, Sandoval fled to El Salvador. In response to Sandoval’s firing, the U.S. State Department announced that it had suspended cooperation with the Guatemalan attorney general’s office, saying it had lost confidence in the country’s willingness to fight corruption.
[1] United States v. Transport Logistics International, Inc., 8:18-cr-00011-TDC, ECF No. 13 (D. Md. July 13, 2021).
[2] United States v. Stimler, 1:21-cr-00471-PKC, ECF No. 4 (S.D.N.Y. July 26, 2021).
[3] United States v. Beech, 4:17-cr-00006, ECF No. 51 (S.D. Tex. July 9, 2021).
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