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 Organization for Economic Cooperation and Development’s (OECD) Working Group on Bribery respond to the COVID-19 pandemic? What are the most recent developments in the long-running global investigation into alleged corruption in international soccer? Why did a London court dismiss an Unexplained Wealth Order targeting allegedly tainted funds used to purchase tony London real estate? The answers to these questions and more are here in our April 2020 Top 10.
1. OECD Warns of Risks Bribery Poses to Global Pandemic Response. Last month, we discussed the impact that COVID-19 was already having on anti-corruption enforcement, as well as concerns expressed by some watchdog groups that endemic corruption in policing, healthcare, and other services could compromise governmental responses to COVID-19. On April 22, 2020, the OECD Working Group on Bribery expressed similar concerns, urging that “[t]he Global response to the coronavirus pandemic must not be undermined by bribery.” The Working Group warned that the pandemic “can create environments that are ripe for corruption,” which has “the potential to undermine the global response to tackle the crisis.” Noting that “[m]any of the detected cases of foreign bribery have occurred in the health industry,” the Working Group warned that bribery can divert vital equipment and medicines away from their intended purposes and endanger public services. The Working Group urged that “all actors respect the rule of law and transparency to ensure the most efficient and effective distribution of [health and pharmaceutical] products” and committed to “examine the possible impact and consequences of the coronavirus pandemic on foreign bribery, as well as solutions to help countries strengthen their anti-bribery systems.”
2. Italian Oil Company Resolves Algeria FCPA Allegations. On April 17, 2020, the U.S. Securities and Exchange Commission (SEC) announced that Eni S.p.A. had agreed to resolve allegations that it violated the Foreign Corrupt Practices Act’s (FCPA) books and records and internal accounting controls provisions. According to the SEC order, between 2007 and 2010, the company’s minority-owned and controlled subsidiary paid approximately €198 million to an intermediary that assisted with obtaining multiple contracts from Algeria’s state-owned oil company. SEC alleged that the intermediary directed a portion of the payment it received to Algerian government officials. The company neither admitted nor denied SEC’s findings. In October 2019, the company announced that the U.S. Department of Justice (DOJ) had closed its parallel investigation.
3. SEC Charges Former Financial Services Company Executive with Ghana FCPA Violations. On April 13, 2020, the SEC announced charges against Asante Berko, a former executive of a UK-based financial services company, for allegedly violating the FCPA’s anti-bribery provision and federal securities laws. The complaint, filed in the Eastern District of New York, alleges that in 2015 and 2016, the executive developed and carried out a scheme to bribe Ghanaian government officials to help a Turkish energy company win a power plant contract. According to the SEC announcement, compliance personnel for the UK company’s publicly traded parent “took appropriate steps to prevent the firm from participating in the [allegedly improper] transaction and it is not being charged.”
4. Former Power Company Sales Manager and Government Cooperator Sentenced for Indonesia FCPA Conviction. On April 13, 2020, District of Connecticut Judge Janet Bond Arterton sentenced Larry Puckett, a former regional sales manager of Alstom’s subsidiary in Connecticut, to time served, 100 hours of community service, and a $5,000 fine. In 2013, Puckett agreed to plead guilty to conspiring with former Alstom executive Lawrence Hoskins and others to bribe Indonesian officials to secure a state power plant project. Puckett testified against Hoskins at trial, leading to Hoskin’s conviction in November 2019 and 15-month term of imprisonment, imposed in March 2020. (See our client alert for an in-depth look at the Hoskins case.) Due to the COVID-19 pandemic, the sentencing was conducted through videoconference.
5. More Charges in FIFA Bribery Investigation. We covered various aspects of the long‑running investigation into allegations of corruption in international soccer in our May 2015, December 2016, November 2017, February 2018, and February 2020 Top 10s. There were several notable developments in the global investigation in April 2020.
- Media Executives and Sports Marketing Company Charged with Fraud and Money Laundering in Connection with FIFA Bribery Case. On April 6, 2020, the US Attorney’s Office for the Eastern District of New York announced the unsealing of a 53‑count third superseding indictment, charging two former sports marketing executives at 21st Century Fox Inc., a former co-CEO of a Spanish media company, and a Uruguayan sports marketing company with wire fraud, money laundering, and related counts, including Racketeer Influenced and Corrupt Organizations (RICO) conspiracy, in connection with DOJ’s investigation and prosecution of corruption in international organized soccer. According to the indictment, the defendants, Hernan Lopez, Carlos Martinez, Gerard Romy, and Full Play Group S.A., allegedly participated in a scheme to pay millions of dollars in bribes to officials at The Fédération Internationale de Football Association’s (FIFA) continental confederations in Central and South America in exchange for broadcasting rights and other media and marketing rights to various soccer events. The superseding indictment also contained additional charges against certain defendants who had previously been indicted but not yet extradited to the United States.
- Israeli Bank Enters NPA to Resolve Money Laundering Charges in FIFA-Related Conspiracy. On April 30, 2020, DOJ announced a three-year non-prosecution agreement (NPA) with Bank Hapoalim B.M., Israel’s largest bank with international operations, and its wholly owned Swiss subsidiary to allegations of their involvement in conspiring with sports marketing executives to launder more than $20 million in bribes and kickbacks for officials at FIFA and other soccer federations. Under the NPA, the bank agreed to forfeit $20,733,322 and pay a fine of $9,329,995. On the same day, DOJ’s Tax Division announced separate resolutions with the bank and the same subsidiary to resolve charges related to allegations that they conspired with U.S. taxpayers and others to hide more than $7.6 billion in more than 5,500 secret Swiss and Israeli bank accounts.
- Swiss FIFA Prosecution Faces Set Back. On April 27, 2020, the first trial in Switzerland’s investigation into corruption in international soccer ended without a judgment. Former German Football Association (DFB) executives Theo Zwanzinger, Wolfgang Niersbach, and Horst Schmidt and former Swiss FIFA official Urs Linsi were accused of fraud and misleading the DFB about a $10 million payment, which was allegedly used to buy votes supporting Germany’s 2006 FIFA World Cup bid. Trial on the fraud charges began on March 9, 2020, but was adjourned due to COVID-19 concerns. Before the trial could resume, the 15-year statute of limitations for fraud charges based on that payment expired. The expiration of the statute of limitations also effectively ended the case against German soccer legend Franz Beckenbauer, who was the head of the World Cup organizing committee when Germany was named host for the 2006 World Cup.
6. Update on UK Criminal Procedure.
- SFO Confirms End of DPA with British Multinational Grocer. On April 10, 2020, the UK Serious Fraud Office (SFO) announced that it had confirmed to the courts that Tesco Stores Limited had fulfilled the terms of its deferred prosecution agreement (DPA) with the SFO. In April 2017, SFO entered into the three-year DPA with the company in connection with false accounting charges. Fulfilling the terms under the DPA, the company paid the SFO a financial penalty of £128,992,500 and costs of £3,069,951. According to the Notice of Discontinuance, the SFO also confirmed that the company had fully cooperated with the SFO and implemented accounting controls. The SFO has entered into seven DPAs to date, and the Tesco DPA was the third that had concluded with terms fulfilled. Although not a foreign bribery case, the Tesco DPA—and its successful completion—offer important guidance as to how DPA practices are evolving in the United Kingdom.
- London High Court Discharges Third Ever Unexplained Wealth Order. The Criminal Finances Act 2017, which entered into force in January 2018, introduced unexplained wealth orders (UWOs) to the United Kingdom. UWOs, which require those suspected of corruption to explain the sources of their wealth, may be issued on the request of UK regulators against property valued in excess of £50,000 if the respondent is a politically exposed person (PEP). UWOs have been used on a handful occasions since their introduction. (See our October 2018 Top 10 for a discussion of the first use of a UWO by the UK’s National Crime Agency (NCA).) On April 8, 2020, London’s High Court discharged UWOs brought by the NCA against companies that owned three London properties linked to relatives of Nursultan Nazarbayev, the former president of Khazakhstan. The NCA had alleged that the properties, worth approximately £80 million, were bought with money illegally earned by Rakhat Aliyev, Nazarbayev’s son and a former Kazah official himself, but the court disagreed that the NCA had satisfied its burden to prove that the homes were bought with illicit funds. The NCA reportedly intends to appeal the decision. Given that this was the third ever UWO brought in the United Kingdom, this case will provide important early guidance on how and when UK enforcement agencies can use UWOs—and how the targets of such orders may defend against them.
7. DOJ Announces Repatriation of $300 Million to Malaysia in Connection With 1MDB. On April 14, 2020, DOJ announced that it had repatriated to Malaysia approximately $300 million in funds allegedly misappropriated from 1Malaysia Development Berhad (1MDB), Malaysia’s sovereign wealth fund. DOJ’s ongoing effort to recover 1MDB-related funds is already the largest to date under DOJ’s Kleptocracy Asset Recovery Initiative and the largest civil forfeiture ever concluded by the Department. According to the announcement, DOJ has recovered or assisted in the recovery of over $1 billion in assets associated with 1MDB and has returned or assisted Malaysia in recovering over $600 million. (For more on the 1MDB case, see our July 2016, August 2016, June 2017, December 2017, May 2018, June 2018, August 2018, October 2018, February 2019, and May 2019 Top 10s.)
8. Inter-American Development Bank Debars Brazilian Construction Company. On April 24, 2020, the Inter-American Development Bank (IDB) announced a 37-month debarment of Andrade Gutierrez Engenharia S.A. (AG Engenharia) related to allegations of corrupt practices in connection with four contracts financed by the IDB under the Estrada Nova Watershed Sanitation Program and the Igarapes de Manaus Environmental and Social Programs in Brazil. According to admissions in a Negotiated Resolution Agreement, the company agreed to make illicit kickback payments to Brazilian government officials in exchange for obtaining IDB-financed contracts. Based on the values of the underlying contracts, the corrupt payments were potentially as high as $60 million. Separately, Brazilian authorities investigated AG Engenharia as part of Operation Car Wash (also known as Lava Jato). In December 2018, the company settled bribery allegations, including those related to IDB-financed contracts, by paying about $381.5 million to the Brazilian government.
9. Asian Development Bank Releases 2019 Annual Report on Anticorruption and Integrity. On April 6, 2020, the Office of Anticorruption and Integrity (OAI) at the Asian Development Bank (ADB) released its 2019 Annual Report. According to the report, in 2019, ADB debarred 69 firms and 62 individuals, in addition to imposing temporary suspensions and taking other remedial actions, for violating ADB’s Anticorruption Policy. ADB cross-debarred 153 firms and 20 individuals in response to other Multilateral Development Banks’ notices of debarment. The report also touted the OAI’s improved efficiency in complaints assessment and investigative processes and its adoption of a new case management system. According to the report, OAI achieved a 16% increase in complaints assessed and closed (219 complaints) and a 93% increase in completed investigations of integrity violations (110 investigations).
10. Colombia Officially Enters the OECD. In January 2012, Colombia joined the OECD Anti‑Bribery Convention and became part of the Working Group on Bribery. At the time, however, the country was not a full member of the OECD. On April 28, 2020, OECD announced that Colombia formally became its 37th member country. Columbia is the seventh country that has joined the OECD since 2010. OECD accession is an increasingly rigorous review process, including technical reviews by OECD committees in various policy areas to evaluate a country’s willingness and ability to implement relevant OECD legal instruments, including the Anti-Bribery Convention. This review process often results in a series of recommendations to align the candidate country further to OECD standards and best practices. Following the completion of the technical process, the OECD Council makes the decision on inviting the candidate country to become a member. Colombia began this process in 2013, which included in-depth review of Colombia’s legislation, politics, and practices, and subsequent alignment with OECD standards. In the foreign bribery area, Colombia completed its Phase 3 evaluation in December 2019. Colombia is the third Latin American OECD member country, after Mexico and Chile. A fourth Latin American country, Costa Rica, began the accession process in April 2015.
 United States v. Larry E. Puckett, Case No. 19-cr-150, ECF No. 49 (D. Conn Apr. 13, 2020).