Gone are the days when everyone wondered whether FCPA enforcement was slowing down. The Justice Department and the SEC have answered that question with a resounding statement – “We are here to stay.”
DOJ is leveraging its resources in a remarkable way – US Attorney’s Offices around the country are assisting DOJ’s FCPA Unit in the Fraud Section, and the results are becoming very clear. US Attorney’s Offices can play an important role in FCPA enforcement. They help to navigate local district courts, they have access to significant resources in the federal district and they are very familiar with proactive investigation techniques.
The year has begun with an enforcement bang – three senior executives from Petro Tiger were charged in a bribery scheme involving Ecopetrol, the state-owned oil company in Colombia. Petro Tiger is an oil and gas company with significant drilling operations in Latin America. The two former co-CEOs were charged by criminal complaint; while the former general counsel was charged by information. All three were allegedly involved in payments of over $1.3 million to an Ecopetrol official for approval needed to secure a lucrative drilling contract.
The case was built through the cooperation of the company, Petro Tiger, and the former general counsel, Weisman, who plead guilty to the criminal information. The two former co-CEOs were arrested soon after the beginning of the year.
The Petro Tiger case was brought with the assistance of the US Attorney’s Office in New Jersey. More FCPA cases are being brought with US Attorneys’ offices – this signals an important increase in FCPA enforcement resources.
The bribes were paid through a sham consulting contract with the Ecopetrol official’s wife for alleged services which were never provided. The important reminder from this bribery scheme is the importance of reviewing and conducting due diligence of third parties to identify relationships with government officials and to confirm that the consultant is providing actual services to the company.
Interestingly, the Petro Tiger prosecution did not involve a settlement with Petro Tiger. That is still to be negotiated and Petro Tiger will continue to cooperate to earn as much credit as they can to reduce any fine or other penalty.
Days after this case was announced, DOJ and the SEC announced the settlement of the Alcoa Aluminum case for a total of $384 million in fines and penalties. The Aloca investigation focused on a long-running relationship between Alcoa and royal family members in Bahrain and the mining of aluminum. The Alcoa settlement falls 5th on the Top-10 list of FCPA settlement, just under Total’s settlement last year.
DOJ and the SEC have been resolving some of the long-running investigations, including Weatherford, Bilfinger and now Alcoa. It is apparent that there is an effort to close the books on several long-running investigations and I expect more settlements will follow.
At the same time, DOJ and the SEC are conducting significant prosecutions of individuals. While last year was the year of prosecuting individuals, DOJ and the SEC have sent an important message that their focus on individuals is continuing.