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 the following: How will leadership changes in key posts at the United States Securities and Exchange Commission (SEC), United States Department of Justice (DOJ), and World Bank affect anti-corruption enforcement? Will Australia begin using deferred prosecution agreements to resolve corporate criminal enforcement actions? And how did the UK expand its use of deferred prosecution agreements? The answers to these questions and more are here in our April 2017 Top Ten list.
1. Leadership Changes in Key Anti-Corruption Positions.
New Acting Head of SEC’s FCPA Unit Named. On April 4, 2017, SEC announced that Charles Cain, a longtime enforcement attorney and current deputy chief of the FCPA Unit, had been named acting chief of the FCPA Unit. During his tenure in the SEC’s FCPA Unit, Cain has handled and supervised numerous major FCPA cases, including the Magyar Telekom case discussed below. Cain has also represented SEC before the OECD’s Working Group on Bribery. With his substantial policy and enforcement experience, as well as his long tenure with SEC, Cain will be an able steward of the FCPA Unit. Cain replaces Kara Brockmeyer, who had been chief of the FCPA Unit since 2011.
Prosecutor with FCPA Experience Confirmed as Deputy Attorney General. On April 26, 2017, Rod Rosenstein was confirmed as Deputy Attorney General, the number two position at DOJ. Rosenstein has significant experience with white collar and public corruption cases, including FCPA cases. As the U.S. Attorney in Maryland since 2005, Rosenstein teamed with DOJ’s FCPA Unit to bring charges against Asem Elgawhary, Vadim Mikerin, and others for FCPA-related conduct. A career prosecutor who has served under presidents of both parties, Rosenstein’s appointment as Deputy Attorney General has been seen as another indication that FCPA enforcement will continue to be a priority for DOJ under the new administration.
World Bank Veteran to Change Positions. On April 27, 2017, the World Bank announced that, effective July 1, 2017, Pascale Helene Dubois would become the new head of the World Bank Group’s Integrity Vice Presidency, known as INT, which is an independent unit within the World Bank Group that investigates and pursues sanctions related to allegations of fraud and corruption in World Bank Group-financed projects. Dubois joined the World Bank in 1997 and currently serves as the World Bank’s Chief Suspensions and Debarment Officer. Dubois is well known in the anti-corruption community and has long been a thought leader in this space. In her current post, she has worked to increase transparency and due process at the World Bank generally and in the Office of Suspension and Debarment specifically. As the World Bank has played an increasingly significant role in combating transnational bribery, Dubois’s work and that of INT has helped foster greater cooperation between the World Bank and law enforcement agencies around the world.
2. United States Attorney General Emphasizes Importance of FCPA Enforcement, Compliance Programs, and Individual Prosecutions.
In remarks delivered during the Compliance Initiative Annual Conference on April 24, 2017, Attorney General Jeff Sessions “ma[d]e clear . . . that under my leadership, the Department of Justice remains committed to enforcing all the laws. That includes laws regarding corporate misconduct, fraud, foreign corruption and other types of white-collar crime.” Sessions noted that, although he had focused on violent crimes and immigration crime in the early days of his tenure, “focusing on these challenges does not mean we will reduce our efforts in other areas.” Sessions specifically focused on FCPA enforcement, which he called “critical” to creating an “even playing-field for law-abiding companies.” Said Sessions: “We will continue to strongly enforce the FCPA and other anti-corruption laws.” Sessions also emphasized the importance of corporate compliance programs and of prosecuting individuals for corporate crimes. Sessions’ comments, which echoed longstanding Department policies, appeared to be designed to counter concern in some corners that DOJ would not pursue white-collar crimes under the Trump Administration.
3. British Grocer Enters into Deferred Prosecution Agreement with UK Serious Fraud Office.
On April 10, 2017, following a two-year investigation, the UK SFO confirmed it had entered into a DPA with Tesco Stores Limited related to false accounting charges. In October 2014, the British supermarket giant revealed it had overstated its profits by a quarter of a billion pounds. In March 2017, Tesco PLC disclosed in a London Stock Exchange Announcement that, if the DPA were approved by the court, Tesco Stores Limited would pay a £128,992,500 penalty and comply with other requirements set forth in the DPA. Sir Brian Leveson, president of the Queen’s Bench Division, approved the DPA. The Financial Conduct Authority (FCA) simultaneously announced that Tesco PLC and Tesco Stores Ltd. had committed market abuses and ordered Tesco PLC to pay an estimated £85 million to investors who were net purchasers of Tesco shares or listed bonds during the period of the misstated accounts. Although they do not involve bribery allegations, the simultaneous resolutions are nevertheless notable for practitioners in the anti-corruption space in several respects. First, this is the SFO’s first DPA involving an offense other than bribery, showing an increasing willingness by the SFO to use this tool to resolve cases. Second, the FCA’s order marks the first time that the agency has used its powers under Section 384 of the Financial Services and Markets Act to require a listed company to pay restitution for committing abuse on the market. Third, the simultaneous SFO and FCA announcements indicate an increased level of cooperation between the two agencies.
4. Brazilian Construction Company Sentenced.
On April 17, 2017, Eastern District of New York Judge Raymond J. Dearie sentenced Brazilian construction and engineering company Odebrecht S.A. to pay a fine of $93 million in connection with its December 2016 guilty plea to conspiring to violate the FCPA’s anti-bribery provisions in connection with approximately $788 million in bribes allegedly paid to officials in twelve, mostly Latin American, countries to secure contracts. The ultimate fine was considerably less than the company was originally slated to pay: At the time of the guilty plea, DOJ stated that the company agreed to pay up to $2.6 billion, ten percent of which ($260 million) would be paid to the United States. However, DOJ stated in an April 11, 2017, sentencing memorandum that, after conducting an “inability to pay” analysis in conjunction with Brazilian authorities, it had determined that the company did not have the ability to pay the full $2.6 billion penalty and should be required to pay only $93 million to the United States. Judge Dearie agreed and found that the reduced fine was appropriate under the circumstances.
5. Colorado-Based Mining Company Reports SEC Declination.
On April 17, 2017, Newmont Mining Corporation announced in a securities filing that it had received a letter from SEC in which the agency stated that it had decided not to recommend an enforcement action. The company first disclosed that it was under investigation for possible FCPA violations in April 2016. Although no details regarding the locus of the investigation were made public, the company had active mining operations in Australia, Ghana, Indonesia, Peru, Suriname, and the United States at the time of the announcement. To date, DOJ has not publicly stated its intentions with regard to the matter.
6. Engineering Firm and Its Executive Debarred by World Bank for Bribery in Southeast Asia.
On April 6, 2017, the World Bank Group announced the debarment of Denmark-based Consia Consultants ApS and its managing director. According to the World Bank, INT’s investigation revealed evidence that the company made payments to officials to influence contract awards in connection with the World Bank-financed Strategic Road Infrastructure Project in Indonesia. The World Bank stated that the company further failed to disclose its agreement and commissions paid to its agent in connection with the project and misrepresented the availability of key staff it has claimed would be assisting with the execution of its technical assistance contract under the project. The World Bank also said it found evidence that the company made corrupt payments in Vietnam in connection with the Hanoi Urban Transport Development Project, in addition to fraudulent misconduct relating to the Second Northern Mountain Poverty Reduction Project. The World Bank debarred the company for 14 years and its managing director for 3.5 years. The company could also face cross-debarment by other Multilateral Development Banks under the Agreement of Mutual Recognition of Debarments, signed in 2010.
7. Former Diplomat Pleads Guilty to FCPA Charges in United Nations Bribery Case, While Judge Denies Motion to Dismiss FCPA Charges against Another Defendant.
On April 28, 2017, Francis Lorenzo, a former deputy ambassador from the Dominican Republic, pleaded guilty in the Southern District of New York to conspiring to violate the FCPA and to pay and receive bribes and gratuities in a bribery scheme allegedly involving Ng Lap Seng, a Chinese national and real estate developer accused of bribing former U.N. General Assembly President John Ashe. Lorenzo pleaded guilty to related charges in 2016 and is expected to testify against Seng at trial, currently set to begin May 30, 2017. Two days before Lorenzo’s guilty plea, on April 26, 2017, Southern District of New York Judge Vernon S. Broderick denied Seng’s motion to dismiss FCPA and related charges against him, finding that the superseding indictment sufficiently presented the essential facts underlying the charges and that the prosecution had made sufficient disclosures concerning the nature of the charged offenses by other means, including through the various complaints filed in the case, extensive discovery, agent affidavits, and a written response to Seng’s letter request for a bill of particulars.
8. Telecom Executives Agree to SEC Penalties.
On April 24, 2017, SEC announced that former Magyar Telekom executives Elek Straub and Andras Balogh had agreed to pay $250,000 and $150,000 in civil penalties, respectively, in connection with their March 2017 agreement to resolve civil FCPA charges brought against them by SEC in 2011. In addition, the former CEO and former chief strategy officer, both Hungarian citizens, agreed to five-year bans on serving as an officer or director of any SEC-registered public company. In February 2017, a third former Magyar executive, Tamas Morvai, agreed to pay $60,000 to resolve related charges. SEC alleged that the three former executives violated or aided and abetted violations of the FCPA’s anti-bribery, books and records, and internal controls provisions by using “sham consultancy contracts with entities owned and controlled by a Greek intermediary” to make payments of approximately $5.3 million that they knew or should have known would be passed on to Macedonian officials.
9. Australian Government Publishes DPA Consultation.
In April 2017, the Australian Government took comments on a public consultation paper that outlined a proposed model for a Deferred Prosecution Agreement (DPA) scheme, described as “a key focus of the Australian Government’s consideration of options to facilitate a more effective and efficient response to corporate crime by encouraging greater self-reporting by companies.” The Australian Minister of Justice first announced Australia’s intentions to consider instituting a DPA scheme in March 2016. On March 31, 2017, the Minister of Justice released the public consultation paper on Australia’s DPA scheme. The public consultation period closed on May 1, 2017, with 18 responses having been received from a broad range of stakeholders, including academics, law firms, civil society, and some of Australia’s largest companies.
10. Former South Korean President Charged With Bribery.
In March 2017, South Korean President Park Geun-Hye was arrested in connection with a corruption scandal that had led to her impeachment in December 2016. On April 17, 2017, Park was formally charged with bribery, coercion, abuse of power, and leaking state secrets. Ms. Park’s trial, as well as the election that will determine her successor, are both expected to take place in May 2017.
 United States v. Odebrecht S.A., Crim. No. 16-643 (RJD), ECF No. 15 (Apr. 11, 2017).