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 enforcement developments from the past month, with links to primary resources. This month we ask: Which company agreed to the first Foreign Corrupt Practices Act (FCPA) resolution of 2024? Which countries had the best, and the worst, showings in Transparency International’s 2023 Corruption Perceptions Index? Which industries will be the focus of one of China’s most important anti-corruption agencies in 2024? The answers to these questions and more are here in our January 2024 Top 10. For a retrospective of international corruption developments, please see our recently released 2023 FCPA Year in Review for quick, visual representations of key trends in FCPA enforcement over the last year.
1. German Software Company Agrees to First FCPA Resolution of 2024
On January 11, 2024, the U.S. Department of Justice (DOJ) and Securities and Exchange Commission (SEC), in coordination with South African authorities, announced parallel resolutions with German software company SAP SE (SAP) related to allegations that the company bribed officials in Azerbaijan, Ghana, Indonesia, Kenya, Malawi, South Africa, and Tanzania. According to the agencies, the company paid bribes through third-party agents to win contracts with South African cities and state-owned water, energy, and rail companies between approximately 2013 and 2017, paid bribes through third-party agents to win contracts with the Indonesian maritime and telecommunications ministries and state-owned enterprises between 2015 and 2018, used resellers to pay bribes and rig bids in Greater Africa between 2014 and 2018, and provided improper gifts to officials of Azerbaijan’s state-owned oil company. The company entered a three-year Deferred Prosecution Agreement (DPA) in the Eastern District of Virginia, agreeing to pay a $118.8 million criminal penalty for conspiring to violate the anti-bribery and books and records provisions of the Foreign Corrupt Practices Act (FCPA). DOJ said this amount “reflects a discount of 40 percent off the tenth percentile of the otherwise applicable [U.S.] Sentencing Guidelines fine range[.]” The DPA provides that up to $55.1 million of the criminal penalty imposed on the company may be credited against payments to South African authorities. This was the second coordinated resolution between DOJ and South African authorities since December 2022. The company also qualified for DOJ’s Pilot Program Regarding Compensation Incentives and Clawbacks by withholding bonuses during the course of its internal investigation from employees suspected of engaging in wrongdoing, who supervised suspected wrongdoers, or who should have known about the wrongdoing. According to the SEC Order, the company’s conduct constituted violations of the FCPA’s anti-bribery and accounting provisions. The company agreed to pay SEC $98.45 million in disgorgement and prejudgment interest. In February 2016, the company agreed to pay $3.7 million to SEC to resolve allegations that it violated the FCPA’s accounting provisions related to a bribery scheme in Panama. Despite this prior history, the agencies did not impose an independent compliance monitor as part of the resolutions.
2. Transparency International Publishes 2023 Corruption Perceptions Index
On January 30, 2024, Transparency International (TI) published its 2023 Corruption Perceptions Index (CPI). The CPI, which measures perceived levels of public-sector corruption in 180 countries and territories, provides one of the major data points used by compliance professionals, outside counsel, and enforcement authorities in assessing the anti-corruption risk of doing business in particular countries. Countries and territories receive scores ranging between 0 (highly corrupt) and 100 (very clean). The top 10 countries for 2023 were Denmark, leading for its sixth year in a row (90), Finland (87), New Zealand (85), Norway (84), Singapore (83), Sweden (82), Switzerland (82), the Netherlands (79), and Germany and Luxembourg with equivalent scores (78). The bottom 10 were Somalia (11, ranked 180), Venezuela (13, ranked 177), Syria (13, ranked 177), South Sudan (13, ranked 177), Yemen (16, ranked 176), North Korea (17, ranked 172), Nicaragua (17, ranked 172), Haiti (17, ranked 172), Equatorial Guinea (17, ranked 172), and Turkmenistan (18, ranked 170). Notably, 23 countries, including high-ranking democracies like the United Kingdom, Iceland, the Netherlands, and Sweden sank to historic lows. The United States did not show improvement from 2022, retaining its score of 69 (ranked 24), but TI noted that recent Biden administration policies, including the enactment of the Foreign Extortion Prevention Act (FEPA) and the implementation of the Corporate Transparency Act (CTA), show the United States more positively engaging in countering transnational corruption. As discussed in our client alert examining CPI results in the Asia-Pacific region (APAC), Malaysia was one of the significant improvers in the APAC region, improving three points in its 2023 CPI score (50, ranked 57), while Indonesia’s CPI score remained the same from 2022 (34, ranked 115), and China dropped three points from 2022 (42, ranked 76).
3. Qatar-Related Bribery Allegations Added to Indictment Against U.S. Senator
On January 2, 2024, a federal grand jury in the Southern District of New York (SDNY) returned a superseding indictment against U.S. Senator Robert Menendez that includes additional bribery allegations involving Qatar. According to the new allegations, Senator Menendez accepted bribes from New Jersey businessman Fred Daibes in exchange for introducing Daibes to Qatari officials and helping him secure a large investment for a real estate project from a Qatari investment company, including by making favorable statements about Qatar while Chairman of the Senate Foreign Relations Committee. Menendez allegedly received cash, gold bars, and luxury watches from Daibes and accepted Formula One race tickets from a Qatari official. In September 2023, Senator Menendez was charged alongside his wife, Daibes, and two other New Jersey businessmen, Wael Hana and Jose Uribe, with bribery offenses arising from an alleged scheme in which Senator Menendez agreed to use his official position to benefit the government of Egypt. An October 2023 superseding indictment added a charge that Senator Menendez conspired to violate the Foreign Agent Registration Act (FARA) related to the Egypt allegations. On January 10, 2024, Senator Menendez's lawyers filed a lengthy memorandum of law in support of a motion to dismiss the charges against him.
4. Trial Begins for Former Oil Trader Accused of Bribing Latin American Officials
On January 5, 2024, the trial of Javier Aguilar, a former employee of one of the world’s largest oil traders, Vitol Inc. (Vitol), began in the Eastern District of New York related to allegations that he bribed officials in Ecuador and Mexico to win contracts worth around $500 million. Aguilar is charged with conspiracy to violate the FCPA and violating the FCPA in connection with the Ecuador allegations and money laundering charges related to the Ecuador and Mexico allegations. Aguilar is facing additional FCPA charges related to the Mexico allegations in the Southern District of Texas. In his opening statement, Aguilar’s defense counsel conceded that the consultants whom Aguilar hired to help win business in Ecuador bribed Ecuadorian officials but said that Aguilar thought the consultants were legitimate and “didn’t know about [their] secret sauce.” In December 2020, Vitol agreed to pay more than $135 million to resolve criminal FCPA charges relating to bribes paid to officials in Brazil, Ecuador, and Mexico. Aguilar is the first Vitol defendant to stand trial in the United States for his role in the scheme as part of a DOJ probe into commodity trading firms paying bribes to win business from state-run companies across Latin America. (For more on the Vitol and Aguilar prosecutions, see our September 2020, December 2020, December 2022, May 2023, and August 2023 Top 10s.)
5. Fifth Circuit Affirms Dismissal of Venezuela-Related Bribery Charges with Revised Opinion
On January 5, 2024, a Fifth Circuit panel again affirmed the dismissal of Paulo Jorge Da Costa Casqueiro Murta’s federal indictment for alleged involvement in bribing officials of Venezuela’s state oil company on Speedy Trial Act grounds but remanded the case to the Southern District of Texas to determine whether the dismissal should have been with prejudice. The Fifth Circuit originally affirmed the May 2023 dismissal and remanded on the prejudice issue in November 2023, but Murta petitioned for rehearing. The Fifth Circuit denied Murta’s petition, but slightly modified its November 2023 opinion. In the new opinion, the court addressed the district court’s finding that prosecutors had acted in bad faith in moving to continue the trial in order to litigate the discoverability of classified material under the Classified Information Procedures Act (CIPA). We took issue with this aspect of the district court’s opinion in our June 2023 Top 10, arguing that prosecutors should not be disincentivized from erring on the side of caution when it comes to disclosing potentially exculpatory, albeit classified, information. In the new opinion, the Fifth Circuit stated that neither the district court nor Murta pointed to any deliberate conduct that would support an inference of bad faith on the part of the prosecutors. “[A]t most, the Government was negligent in its raising of the CIPA issue,” and delays resulting from negligence “weigh only slightly in favor of dismissal,” meaning that the “district court’s evaluation of this factor was therefore flawed[.]” The charges against Murta related to an alleged scheme by U.S. businesses to bribe officials of Venezuela’s national oil company, Petróleos de Venezuela, S.A. (PDVSA), in exchange for assistance in obtaining PDVSA contracts and receiving payment priority.
6. Venezuelan National Sentenced for PDVSA Bribery
On January 17, 2024, Tulio Anibal Farias-Perez, a Venezuelan national, was sentenced in the Southern District of Texas to three years’ probation following his February 2020 guilty plea to one count of conspiracy to violate the FCPA.[1] Farias and Jose Manuel Gonzalez Testino allegedly paid bribes—including cash and Super Bowl tickets—to PDVSA officials to win supply contracts, obtain bidding information, and receive priority over other vendors in getting paid. On January 4, 2024, the charges against Gonzalez were dismissed after he fatally shot his three-year-old son and himself only weeks before he was scheduled to be sentenced in connection with his May 2019 guilty plea to one count of conspiracy to violate the FCPA.[2]
7. U.S. Navy Servicemember Sentenced for Receiving Bribes from China
On January 8, 2024, Petty Officer Wenheng (Thomas) Zhao was sentenced to 27 months in prison following his October 2023 guilty plea for receiving bribes in exchange for transmitting sensitive U.S. military information to a Chinese intelligence officer posing as a maritime economic researcher. Zhao, who worked at Naval Base Ventura County in Port Hueneme, California, allegedly received approximately $14,866 in exchange for, among other things, sending the Chinese intelligence officer non-public and controlled operational plans for a large-scale U.S. military exercise in the Indo-Pacific Region and photographs and electrical diagrams and blueprints for a radar system stationed on a U.S. military base in Okinawa, Japan. DOJ announced Zhao’s arrest in August 2023.
8. New SDNY Whistleblower Policy Does Not Apply to FCPA Tips
On January 10, 2024, the U.S. Attorney’s Office for the Southern District of New York announced a new Whistleblower Pilot Program to encourage early and voluntary self-disclosure of criminal conduct. Under the program, non-violent offenders who divulge misconduct not already known to the U.S. Attorney’s Office and who cooperate with the government’s subsequent investigation are eligible to receive non‑prosecution agreements. The program explicitly does not apply to certain offenses, including FCPA violations or bribery of federal officials. The carve out for FCPA offenses is consistent with DOJ’s longstanding policy requiring all FCPA cases to be authorized by the Fraud Section of DOJ’s Criminal Division in Washington, D.C.
9. Two Former European Lawmakers Charged with Accepting Bribes from Azerbaijan
On January 29, 2024, prosecutors in Munich announced charges against two former members of Germany’s parliament and the Parliamentary Assembly of the Council of Europe (PACE), Eduard Lintner and Alex Fischer, for accepting bribes in exchange for pushing policies within PACE favorable to Azerbaijan. PACE is the parliamentary arm of the Council of Europe, made up of representatives from 46 countries. PACE representatives serve concurrently in their home countries’ parliaments. According to prosecutors, Lintner, who spent 33 years in Germany’s parliament and was a member of PACE until 2010, received several million euros via 19 foreign letterbox companies from two firms until 2016. He allegedly passed some of these payments on to other politicians to influence decisions in favor of Azerbaijan. Fischer, who was active in PACE as a group leader for the European People’s Party (EPP) faction from 2010 to 2018, allegedly made speeches favorable to the interests of Azerbaijan and forwarded confidential documents, in exchange for a bribe totaling roughly $23,570 in 2016.
10. Chinese Anti-Corruption Body Identifies New Areas of Focus and Issues Report on 2023’s Enforcement Efforts
On January 10, 2024, following a three-day plenary session, China’s Central Commission for Discipline Inspection (CCDI) issued a communique setting out its anti-corruption priorities. In the communique, CCDI pledged to focus on themes discussed by President Xi Jinping in his speech at the plenary session on January 9, 2024. The communique specifically identified sectors such as finance, energy, sports, tobacco, and medicine as focus areas for the CCDI. On January 25, 2024, the CCDI and the National Supervisory Commission (NSC) published a report summarizing nationwide anti-graft investigations in 2023. According to the report, disciplinary inspection and supervision agencies across China received 3.45 million complaints and tips in 2023, handled 1.73 million clues, and filed 626,000 cases. 610,000 individuals were disciplined, including 49 at the provincial and ministerial levels, 3,144 at the prefecture and department levels, 24,000 at the county level, and 82,000 at the township and village levels. Authorities also investigated and punished bribe payers, investigating 17,000 individuals for paying bribes and prosecuting 3,389.
[1] Re-Arraignment Transcript, United States v. Tulio Anibal Farias-Perez, No. 4:20-CR-89, ECF No. 20 (S.D. Tex. Jan. 17, 2024).
[2] Order of Dismissal, ECF No. 205, United States v. Gonzalez-Testino, No. 4:20-CR-89 (S.D. Tex. Jan. 4, 2024).
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