News
August 2, 2018

Global Anti-Corruption Insights: Summer 2018

Update on Recent Enforcement, Litigation, and Compliance Developments

Enforcement of the US Foreign Corrupt Practices Act (FCPA) was much more active in the first half of this year than in the first half of 2017, the Trump Administration's first year in office. So far this year, the US Department of Justice (DOJ) has resolved five FCPA enforcement actions against companies—including French bank Société Générale S.A., which agreed to pay $585 million in the first coordinated settlement of an international bribery case with French authorities. That settlement, the fifth-largest FCPA settlement of all time, followed the May 9, 2018, announcement by Deputy Attorney General Rod Rosenstein of a new policy promoting coordination within the DOJ and with other US and foreign enforcement agencies when imposing multiple penalties for the same conduct. The DOJ, moreover, recently has secured guilty pleas and jail sentences, as well as unsealed new criminal charges against individuals in a variety of FCPA cases.

On the civil side, the US Securities and Exchange Commission (SEC) has brought six FCPA enforcement actions against companies so far this year. There also have been developments in private securities class action and civil RICO lawsuits stemming from FCPA violations.

Internationally, the UK Serious Fraud Office (SFO) has been pursuing a number of corruption cases, and prosecutors in Japan landed the first-ever corporate plea deal in an overseas bribery case.

We cover these developments and more in the Summer 2018 edition of Global Anti-Corruption Insights.

Table of Contents

I. Corporate FCPA Enforcement »

II. Individual FCPA Enforcement »

III. Related Civil Litigation »

IV. International Developments »

I. CORPORATE FCPA ENFORCEMENT

A. SocGen Settles with DOJ and French Authorities for $585 Million

On June 5, 2018, in the fifth-largest FCPA settlement of all time and the first coordinated settlement with French authorities, France-based financial institution Société Générale S.A. (SocGen) agreed to pay a total of $585 million to resolve charges relating to the bribery of high-level Libyan officials. SocGen admitted that between 2004 and 2009 it paid bribes to Libyan officials through a Libyan broker who received more than $90 million in percentage-based commissions. In exchange for the bribes, SocGen obtained investments worth more than $3 billion and profits of approximately $523 million from Libyan state-owned financial institutions. To resolve criminal charges, SocGen, which did not voluntarily disclose the misconduct, entered into a deferred prosecution agreement (DPA) with the DOJ, and a subsidiary, SGA Société Générale Acceptance N.V., pleaded guilty to conspiracy to violate the anti-bribery provisions of the FCPA. SocGen also reached a related settlement with the Parquet National Financier (PNF) in Paris, agreeing to pay half of the $585 million in sanctions to the PNF and half to the DOJ. In a separate enforcement action announced at the same time, SocGen agreed to pay $475 million in criminal penalties to the DOJ and disgorgement to the US Commodity Futures Trading Commission for manipulating the LIBOR rate.1

B. Legg Mason Settles with DOJ for $64 Million

On June 4, 2018, Maryland-based asset manager Legg Mason Inc. entered into a non-prosecution agreement (NPA) with the DOJ to resolve FCPA charges related to its partnership with SocGen to solicit business from state-owned financial institutions in Libya. Legg Mason admitted that between 2004 and 2010, SocGen paid bribes through a Libyan "broker" in connection with 14 investments, 7 of which were managed by Legg Mason through one of its subsidiaries. The NPA includes a criminal penalty of $32.6 million and disgorgement of $31.6 million. The disgorgement will be credited against disgorgement paid to other law enforcement authorities within the first year of the agreement.2 As noted above, SocGen separately agreed to a $585 million settlement with US and French authorities.

C. Panasonic Avionics Corporation and Panasonic Settles with DOJ and SEC for $280 Million

On April 30, 2018, the DOJ announced that Panasonic Avionics Corporation (PAC), a subsidiary of Panasonic Corporation (Panasonic), agreed to pay a $137.4 million criminal penalty under a DPA to resolve alleged violations of the recordkeeping and accounting provisions of the FCPA.3 The DOJ charged PAC with knowingly and willfully causing Panasonic to falsify its books, records, and accounts in connection with payments PAC made to consultants for improper purposes.4 The alleged misconduct included $875,000 in payments to a Middle Eastern government official who had involvement in or influence over contracts PAC concluded with a state-owned airline which earned the company more than $92 million in profits.5 In addition to the criminal penalty, the DPA requires PAC to retain an independent compliance monitor for two years and to continue to review and strengthen its internal controls and compliance and ethics program.6

Also on April 30, the SEC announced that Panasonic agreed to pay more than $143 million in disgorgement and prejudgment interest to settle related FCPA and accounting fraud charges.7 In addition to many of the same charges detailed in the DOJ's DPA, the SEC's administrative cease-and-desist order also alleged that PAC's practice of backdating certain customer contracts caused Panasonic to fraudulently overstate pre-tax and net income prematurely, including improperly recognizing more than $82 million in its June 2012 financial statements.8 Under the terms of Panasonic's Offer of Settlement, which the SEC accepted and incorporated into the order, the company agreed to disgorge $126.9 million and pay nearly $16.3 million in prejudgment interest.9

D. Credit Suisse Settles "Princeling" Case with DOJ and SEC for $77 Million

On July 5, 2018, Switzerland-based Credit Suisse Group AG (Credit Suisse) agreed to pay the SEC approximately $30 million to resolve FCPA charges that it had obtained investment banking business in the Asia-Pacific region by hiring and promoting individuals connected to government officials.10 This settlement, through an SEC administrative order, follows Credit Suisse's June 6, 2018, announcement that its Hong Kong unit had entered into an NPA with the DOJ to resolve an investigation of hiring practices in China between 2007 and 2013. As part of its NPA, Credit Suisse agreed to pay $47 million in criminal penalties.11 JP Morgan Chase, BNY Mellon, and Qualcomm Inc. previously settled FCPA cases arising out of jobs and internships awarded to relatives and friends of government officials in an effort to win business.

E. Beam Suntory Settles with SEC for $8 million

On July 2, 2018, Illinois-based liquor company Beam Inc., which is now known as Beam Suntory Inc. (Beam), consented to the entry of an SEC administrative order finding that Beam violated the FCPA's books and records and internal controls provisions. According to the SEC, from at least 2006 through 2012, Beam's Indian subsidiary made improper payments to Indian government officials, including an excise official and employees at government-controlled depots, retail stores, and offices, in order to increase sales orders, secure license and label registrations, and facilitate distribution across states. The improper payments were made through sales promoters, distributors, bottlers, and other third parties who provided fabricated or inflated invoices to the Indian subsidiary. The subsidiary's books were consolidated into the books and records of Beam, which had a class of publicly traded securities listed on the New York Stock Exchange during the relevant time. To resolve the enforcement action, Beam agreed to disgorge $5.26 million, and to pay prejudgment interest of about $917,000 and a civil penalty of $2 million. Beam did not admit or deny the SEC's findings.12

F. Dun & Bradstreet Settles with SEC for $9.2 Million

On April 23, 2018, the SEC charged The Dun & Bradstreet Corporation (D&B), a global commercial data and analytics provider headquartered in New Jersey, with violating the accounting provisions of the FCPA. The SEC alleged that two of D&B's subsidiaries in China made unlawful payments to Chinese government officials through third-party agents in order to acquire non-public financial data on Chinese entities, acquire non-public personal data used in a subsidiary's products, and obtain specific business. According to the SEC, D&B falsely recorded the improper payments as legitimate business expenses and failed to stop the payments or correct the subsidiary's books and records for years after learning of concerns. D&B self-disclosed the misconduct to the SEC and the DOJ shortly after local police in China raided one of its subsidiaries. Without admitting or denying the allegations, D&B consented to the entry of a cease-and-desist order and agreed to pay disgorgement of $6,077,820, prejudgment interest of $1,143,664, and a civil penalty of $2 million.13 On the same day, the DOJ issued a declination letter advising that it had declined prosecution consistent with the FCPA Corporate Enforcement Policy. The DOJ based its decision on a number of factors, including D&B's self-disclosure, full cooperation and remediation, and the fact that D&B would pay to the SEC the full amount of disgorgement as determined by the SEC.14

G. Nuclear Transport Company Pays $2 Million Criminal Fine

On March 12, 2018, Transport Logistics International, Inc. (TLI), a Maryland-based uranium transport company, entered into a three-year DPA to resolve an FCPA conspiracy charge in connection with a scheme to bribe an official at a subsidiary of Russia's State Atomic Energy Corporation. TLI admitted that between 2004 and 2014 it conspired with others to pay approximately $1.7 million in bribes to the Russian official through the use of offshore shell companies and fake invoices that concealed the nature of the payments. As part of the DPA, TLI agreed to pay a penalty of $2 million, which the DOJ determined was appropriate in light of TLI's full cooperation with the Department's investigation and TLI's inability to pay a larger penalty in accordance with the US Sentencing Guidelines. Two co-presidents of TLI, as well as the Russian official, have been charged with crimes for their roles in the bribery scheme.15

H. Kinross Settles with SEC for $950,000

On March 26, 2018, the SEC charged Kinross Gold Corporation (Kinross), a Canadian gold mining company, with violations of the FCPA's accounting provisions. The SEC alleged that, for three years after acquiring subsidiaries based in Mauritania and Ghana, Kinross failed to devise and maintain anti-corruption compliance programs and internal accounting controls, despite multiple internal audits flagging deficiencies. According to the SEC, a Kinross subsidiary awarded a lucrative logistics contract to a company preferred by Mauritanian government officials in contravention of its own bidding and tendering procedures. The subsidiary also allegedly retained a well-connected individual with high-level government contacts as an independent contractor without performing required due diligence, and paid vendors and consults without ensuring the payments were consistent with relevant policies. Without admitting or denying the allegations, Kinross consented to the entry of a cease-and-desist order and agreed to pay a civil penalty of $950,000 and report on its status of remediation and implementation of compliance measures for a year.16 On November 7, 2017, the DOJ also notified Kinross that it closed its investigation and declined to pursue further the matter against the company.17

I. Elbit Settles with SEC for $500,000

On March 9, 2018, the SEC announced that Elbit Imaging Ltd. (Elbit), an Israel-based real-estate and medical-technology company, agreed to pay $500,000 to resolve charges that it had violated the FCPA's accounting provision. The SEC alleged that Elbit and its subsidiary, Plaza Center NV (Plaza), paid millions of dollars to offshore consultants and a sales agent purportedly for legitimate services related to a real estate development project in Romania and the sale of a large portfolio of real estate assets in the United States. However, according to the SEC, there was no evidence that the consultants and the sales agent actually provided the contracted-for services. The SEC claimed that Elbit and Plaza failed to accurately record these payments and to devise and maintain sufficient internal controls to prevent the funds from being embezzled or used to make corrupt payments. Without admitting or denying the SEC allegations, Elbit consented to the entry of a cease-and-desist order and agreed to pay a civil penalty of $500,000.18

J. Fresenius Medical Care Prepares for Settlement with SEC and DOJ

In a February 27, 2018, filing with the SEC, Germany-based Fresenius Medical Care AG & Co. KGaA (Fresenius) announced that it had established a €200 million provision to take into account ongoing settlement negotiations with the SEC and DOJ related to potential FCPA violations. Fresenius voluntarily informed the SEC and DOJ in 2012 of its investigations into the conduct that might have violated the FCPA.

K. Glencore Faces Scrutiny by US and UK Authorities over Operations in the Democratic Republic of Congo, Nigeria, and Venezuela

On July 3, 2018, the Swiss mining and commodity trading company Glencore plc (Glencore) announced that a subsidiary, Glencore Ltd, had received a subpoena from the DOJ to produce documents and other records in connection with the company's compliance with the FCPA and US money laundering statutes. According to Glencore's statement, the documents requested by the DOJ "related to the Glencore Group's business in Nigeria, the Democratic Republic of the Congo (DRC), and Venezuela from 2007 to present."19 On July 11, Glencore announced that it had established a committee of the board of directors to oversee the company's response to the subpoena.20 The announcement of the DOJ's subpoena came two months after Bloomberg News first reported that the UK's SFO is considering opening an investigation into Glencore's work in the DRC.21

L. Declinations

On January 29, 2018, the SEC concluded its FCPA investigation into the Angolan operations of Cobalt International Energy, Inc. (Cobalt), a Houston-based oil exploration and production company.22 In March 2017, the SEC had initiated an informal inquiry related to Cobalt and contributions to the Sonangol Research and Technology Center.23

On February 5, 2018, the SEC notified Core Laboratories, N.V. (Core), an Amsterdam-based provider of oil and gas products and services, that it would not recommend an enforcement action in relation to the company's interactions with Unaoil, a Monaco-based oil and gas company. The DOJ previously had notified Core that it had closed its related investigation on October 4, 2017.24

On February 7, 2018, Juniper Networks, Inc., a California-based networking products developer, announced that the DOJ had closed its investigation into potential FCPA violations.25

On February 23, 2018, Teradata Corporation (Teradata), an analytic data solutions and services company, announced that both the SEC and DOJ had advised the company that they had closed their investigations into potential FCPA violations and would not take any enforcement actions.26 In February 2017, Teradata had voluntarily self-disclosed to the SEC and DOJ its discovery, through internal processes, of certain questionable expenditures for travel, gifts, and other expenses at one of the company's subsidiaries doing business in Turkey.27

On February 28, 2018, Exterran Corporation, a Houston-based corporation operating in the oil, gas, water, and power markets, announced that the SEC and DOJ had concluded their investigations into the company's compliance with the FCPA and had indicated that they did not intend to proceed with enforcement actions.28

On March 7, 2018, Sanofi S.A., a French pharmaceutical company, announced that, in February, the DOJ had decided to close its inquiry into allegations that certain subsidiaries outside the United States made improper payments in connection with the company's pharmaceutical sales.29

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II. INDIVIDUAL FCPA ENFORCEMENT

A. Several Sentenced in Connection to Aruban Telecommunications Scheme

On June 27, 2018, Egbert Yvan Ferdinand Koolman, a Dutch national residing in Florida, was sentenced to 36 months in prison and ordered to pay $1.3 million for laundering money in connection with the award of contracts at Servicio di Telecommunicacion di Aruba N.V. (Setar), a state-owned Aruban telecommunications company. Koolman admitted that he used his position as the product manager at Setar to receive payments in exchange for awarding lucrative mobile phone and accessory contracts as part of a corrupt scheme that violated the FCPA. Koolman also admitted to conspiring with others, including Florida businessman Lawrence W. Parker, to transfer bribe money via wire transfer from banks in the United States, through in-person cash payments in both Aruba and Miami, and by using a bank card to withdraw funds from US accounts. On April 30, 2018, Parker was sentenced to 35 months in prison in connection with the same scheme and ordered to pay $701,750 in restitution. Parker pleaded guilty on December 28, 2017, to one count of conspiracy to violate the FCPA and one count of conspiracy to commit wire fraud.30

B. Additional Individuals Charged in Rolls Royce Bribery Probe

On May 24, 2018, additional criminal charges were filed in the US District Court for the Southern District of Ohio against three individuals for their alleged participation in a bribery and corruption scheme to assist an Ohio-based subsidiary of Rolls-Royce plc (Rolls Royce) secure a contract to provide equipment and services to Asia Gas Pipeline (AGP), an oil pipeline running from Kazakhstan to China. Azat Martirossian, an Armenian national and that country's former ambassador to China, and Vitaly Leshkov, a Russian national, both were charged with one count of conspiracy to launder money and ten counts of money laundering. Also named in the superseding indictment was Petros Contoguris, a Greek national residing in Turkey, who initially was charged on November 17, 2017, and faces one count of conspiracy to violate the FCPA, seven counts of violating the FCPA, one count of conspiracy to launder money, and ten counts of money laundering. Contoguris, along with an international engineering consulting firm that employed Martirossian and Leshkov, allegedly devised and carried out a scheme whereby Rolls Royce would pay commissions to Contoguris' company, which then would pass on money to employees of the consulting firm, including Martirossian and Leshkov, knowing that a portion of the funds would be used to pay kickbacks to a foreign official in Kazakhstan in exchange for the award of a $145 million AGP contract to a Rolls Royce subsidiary. The charges follow a January 2017 settlement in which Rolls Royce agreed to pay more than $800 million to authorities in the US, UK, and Brazil in relation to the scheme.31

C. Former PDVSA Officials Charged, Extradited, and Convicted

On February 12, 2018, the DOJ unsealed an indictment against five former employees of Venezuela's state oil company, Petroleos de Venezuela S.A. (PDVSA), in connection with a bribery and kickback scheme involving PDVSA vendors. All five defendants were charged with money laundering, and two also were charged with conspiracy to violate the FCPA. According to the DOJ, four of the defendants were arrested in Spain at the request of US authorities, while one remains at large.32 On April 19, 2018, after being extradited from Spain, one of the defendants, Cesar Rincon, pleaded guilty in federal court in Houston to one count of money laundering.33 He admitted to taking bribes, including from US residents, and laundering money through wire transfers to accounts in the United States and Switzerland. The other defendant who has been extradited, Luis Carlos De Leon-Perez, has pleaded guilty to one count of conspiracy to violate the FCPA and one count of conspiracy to commit money laundering on July 16, 2018.34 As part of a larger, ongoing investigation by the US government into bribery at PDVSA, ten other individuals have pleaded guilty to crimes.35

D. Former President of Nuclear Transport Company Charged for Bribing Russian Official

On January 12, 2018, the DOJ unsealed an eleven-count indictment against Mark Lambert, the former co-president of Transport Logistics International, Inc. (TLI), a Maryland-based company that transports uranium. The indictment includes one count of conspiracy to violate the FCPA and commit wire fraud, seven counts of FCPA violations, two counts of wire fraud, and one count of money laundering. Lambert, who has pleaded not guilty, is alleged to have played a role in making bribery and kickback payments through offshore bank accounts associated with shell companies for the benefit of Vadim Mikerin, an official at a subsidiary of the Russian State Atomic Energy Corporation. The payments allegedly were intended to help TLI win highly sensitive nuclear fuel transportation contracts. On June 17, 2015, Daren Condrey, Lambert's former co-president at TLI, pleaded guilty to related charges and is awaiting sentencing. Mikerin, who was separately charged and also pleaded guilty to related charges, is serving a 48-month prison sentence.36

E. Former Hedge Fund Employees Win Dismissal of Civil FCPA Case; One Still Faces Criminal Charges

On July 12, 2018, a federal judge in the Eastern District of New York granted a motion to dismiss the SEC's claims under the FCPA and Investment Advisers Act against Michael L. Cohen, a former hedge fund executive, and Vanja Baros, a former hedge fund analyst. Citing the US Supreme Court's recent decision in Kokesh v. SEC, the judge ruled that the SEC's claims—"all of which accrued more than five years before the SEC filed suit, and seek relief that is at least partly penal"—are time-barred. The SEC had alleged that between 2007 and 2012, Cohen and Baros orchestrated a scheme to bribe various African public officials in exchange for business for their employer.37 On June 26, 2018, in connection with a criminal case related to the hedge fund's activities in Africa, Cohen surrendered to US authorities and was released on a $10 million bond secured with property and $500,000 cash.38 Cohen had been charged late last year with conspiracy, fraud, obstruction of justice, and making material false statements.39

F. Individual Pleads in United Nations Bribery Case

On April 4, 2018, Julia Vivi Wang, a Chinese-born naturalized United States citizen, pleaded guilty to three criminal counts in the Southern District of New York.40 Wang admitted to conspiring to violate and violating the FCPA by causing $500,000 to be paid as a bribe to John Ashe, who at the time was the Antiguan Ambassador to the United Nations.41 The payment was made with the intent to ensure Wang's position as a special envoy for Antigua. Wang also admitted to under-reporting her taxable income in the amount of $2 million for the tax years 2010, 2011, 2012, and 2016.42 Ashe was accused of soliciting and accepting bribes from businesspeople in China seeking to influence the actions of the United Nations and Antiguan officials43 but died while awaiting trial.44

G. Jail Sentences Handed Down for Mexican Bribery Scheme

Two individuals have been sentenced in federal court in Texas for their roles in conspiring to bribe Mexican officials to obtain aircraft maintenance and repair contracts.45 On February 23, 2017, Victor Hugo Valdez Pinon (Valdez), a Mexican citizen, was sentenced to a year and one day in prison and ordered to pay more than $90,000 in restitution.46 On March 30, 2017, Douglas Ray, a US citizen, was sentenced to 18 months in prison and ordered to pay more than $580,000 in restitution.47 Both men pleaded guilty in October 2016 to conspiracy to violate the FCPA and conspiracy to commit wire fraud. In total, Ray, Valdez, and their co-conspirators paid more than $2 million in bribes to Mexican officials.48

H. Former UN Head's Nephew Pleads Guilty to FCPA Charges

On January 5, 2018, Joo Hyun Bahn, also known as Dennis Bahn, a New Jersey-based real estate broker and nephew of former Secretary General of the United Nations Ban Ki-moon, pleaded guilty to one count of violating the FCPA and one count of conspiracy to violate the FCPA. The charges stemmed from a failed scheme to bribe a Qatari official to entice Qatar's sovereign wealth fund to purchase a skyscraper in Vietnam from a South Korean entity at which Bahn's father served as a senior executive. Bahn, who is a Korean national and US permanent resident, admitted to paying $500,000 to a person he thought was a Qatari official in an attempt to secure the Qatari's sovereign wealth fund's purchase of a structure called Landmark 72 for almost $800 million dollars. A successful sale would have netted Bahn millions of dollars in commission and provided much needed liquidity to his father's company. The father, Ban Ki Sang, was also charged and is awaiting trial. The father and son sought to use Malcom Harris, a fashion blogger and arts consultant who represented himself as an agent of the foreign official, to make the payment to the Qatari official. Harris, however, kept the $500,000 for himself. Harris pleaded guilty to fraud charges on June 21, 2017, and currently is serving a 42-month sentence in federal prison.49

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III. RELATED CIVIL LITIGATION

A. Judge Approves $3 Billion Settlement of Petrobras Securities Class Action

On June 25, 2018, US District Court Judge Jed Rakoff in Manhattan granted final approval of a $3 billion settlement of securities class action litigation against Brazilian state-owned company, Petrobras. The securities litigation, which lasted more than three years, stemmed from Petrobras' massive international corruption scandal. In approving the settlement, Judge Rakoff awarded class counsel for the plaintiffs a total of $186.5 million.50

B. Securities Class Action Against Embraer Dismissed

On March 30, 2018, a federal judge in the Southern District of New York dismissed a securities class action against Brazilian aircraft manufacturer Embraer S.A. (Embraer), the company's former CEO and president, and its former CFO. The plaintiffs had alleged that Embraer failed to disclose the existence of FCPA violations for years after announcing it was under investigation by US authorities. In granting the defendants' motion to dismiss, the court found that, before the investigation was complete, Embraer did not have a duty to disclose anything beyond that it was under investigation and might have to pay significant penalties. The court noted that "companies do not have a duty to disclose uncharged, unadjudicated wrongdoing." Moreover, the court found no duty to disclose that a portion of Embraer's income was derived from FCPA violations where there was no allegation that the company's financial statements were incorrect; that Embraer's statements about its code of ethics, which was "inherently aspirational," were not actionable; that Embraer's statement that there was "no basis for estimating reserves or quantifying any possible contingency," which was based on the opinion of outside counsel, was not actionable; and that the claim about the deficiency of Embraer's internal controls was not adequately particularized to survive the motion to dismiss.51

C. PDVSA US Litigation Trust Files Suit Against Energy Companies and Banks

On March 3, 2018, the PDVSA US Litigation Trust (Trust) filed a complaint in federal court in Florida against various energy companies and banks, alleging that they conspired to bribe agents and officials of PDVSA, Venezuela's state oil company, as part of a decade-long, multi-billion dollar price fixing and bid rigging scheme. The Trust has asserted federal antitrust, RICO, common law, and other claims.52 Defendants have challenged the validity and standing of the Trust.53

D. EIG Files RICO Suit Against Keppel over Role in Brazil Corruption Scandal

On February 6, 2018, EIG Global Energy Partners (EIG) filed suit in federal court in Manhattan against Singapore-based Keppel Offshore & Marine (Keppel) seeking $660 million in treble damages under the Racketeer Influenced and Corrupt Organizations Act (RICO). EIG alleges that Keppel's role in a Brazilian bribery scheme led to the collapse of an offshore drilling venture in which EIG had invested more than $220 million. The suit comes on the heels of Keppel's global settlement of corruption charges, in December 2017, with authorities in the United States, Singapore, and Brazil. Under the settlement, Keppel admitted to paying more than $50 million in bribes to Brazilian officials at the then-ruling Workers' Party and the state-owned oil company, Petrobras, in exchange for contracts to construct several oil rigs and drill ships. EIG's civil RICO complaint closely tracks the language of the settlement in outlining the corruption scheme.54

E. US Supreme Court Requires Whistleblowers to Report to SEC in Order to Be Protected Under Dodd-Frank Anti-Retaliation Provisions

On February 21, 2018, the US Supreme Court unanimously held in Digital Realty Trust, Inc. v. Somers that whistleblowers must report their concerns to the SEC in order to be protected by the anti-retaliation provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank). The Court focused on the plain language of Dodd-Frank, which defines a "whistleblower" as "any individual who provides . . . information relating to a violation of the securities laws to the [SEC]." Because the individual in question reported his concerns to the company he worked for but not to the SEC, the Court found that he was not eligible for protection under the anti-retaliation language of Dodd-Frank. The Court's decision resolved a circuit split over the scope of Dodd-Frank's anti-retaliation protections for whistleblowers.55

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IV. INTERNATIONAL DEVELOPMENTS

A. United Kingdom

1. Former US Federal Prosecutor Named Director of the UK SFO

On June 4, 2018, the UK Attorney General's Office announced that Lisa Osofsky, a dual UK-US citizen who prosecuted more than 100 cases for the US government during a 30-year career, had been appointed as the new Director of the SFO. Osofsky, a UK barrister and US lawyer who has spent the past decade working in the private sector, previously served as the Deputy General Counsel and Ethics Officer for the FBI, a Special Attorney in the Fraud Section of the Criminal Division of DOJ, and an Assistant US Attorney, as well as in DOJ's Office of International Affairs. Osofsky will begin her renewable five-year term on September 3, taking over from Interim Director Mark Thompson who has held the position temporarily since former Director David Green's term ended in April.56

2. SFO Initiates Criminal Proceedings Against Two Unaoil Group Companies for Alleged Conspiracy to Commit Bribery in Iraq

On June 26, 2018, the SFO commenced criminal proceedings against Unaoil Monaco SAM and Unaoil Ltd. in connection with the SFO's ongoing investigation into suspected bribery, corruption, and money laundering offenses involving Unaoil and its officers, employees, and agents.57 The SFO charged Unaoil Monaco SAM with two offenses of conspiracy to give corrupt payments allegedly to secure contracts for Unaoil's client SBM Offshore in Iraq.58 In November 2017, the SFO brought criminal charges against four individuals as part of the same purported Iraq bribery scheme involving SBM Offshore.59

The SFO also brought two charges of conspiracy to give corrupt payments against Unaoil Ltd. in connection with alleged corrupt payments to secure the award of a Iraqi pipeline construction contract worth $733 million for Leighton Contractors Singapore PTE Ltd (Leighton Singapore).60 In May 2018, the SFO brought additional charges against two of the individuals charged in the SBM Offshore scheme in November, alleging that they had also engaged in conspiracy to give corrupt payments to benefit Leighton Singapore.61

3. UK SFO Recovers $6 Million in the Griffiths Energy Corruption Case

On March 22, 2018, the UK SFO obtained an order from the High Court of Justice, under the UK Proceeds of Crime Act, to recover £4.4 million ($6 million) from Ikram Saleh, the wife of Chadian diplomat Mahamoud Adam Bechir. The SFO alleged that Saleh received a bribe in the form of shares from Griffiths Energy International Inc. (Griffiths), a Canadian oil and petroleum company, in connection with Griffiths' efforts to secure oil properties in Chad. Griffiths paid a $10 million fine to the Royal Canadian Mounted Police in 2013, and in 2015 the DOJ filed a related civil forfeiture complaint in the United States.

4. SFO Opens Investigation into Chemring and Subsidiary

On January 18, 2018, the SFO announced an investigation into UK-based defense company Chemring Group PLC (Chemring) and its subsidiary, Chemring Technology Solutions Limited (CTSL). The investigation concerns potential money laundering, corruption, and bribery, and was initiated following a self-report by CTSL related to two historic contracts.62

B. Other Countries

1. Japanese Prosecutors Secure First-Ever Corporate Plea Bargain

Under a new law adopted in June 2018 to allow for plea bargaining, Japanese prosecutors reportedly entered into a plea agreement with Mitsubishi Hitachi Power Systems Ltd., a Japan-based power plant maker, in connection with the bribery of a civil servant in Thailand by one of the company's employees. The bribe relates to a contract awarded in 2013, according to The Japan Times.63

2. Teva Settles with Israeli Authority for $22 Million

On January 15, 2018, Teva Pharmaceutical Industries, Ltd. (Teva), a global pharmaceutical company headquartered in Israel, entered into a conditional agreement with the Israeli State Attorney's Office to resolve charges of bribery. In exchange for the closure of all criminal charges against the company, Teva admitted to paying bribes to government officials and employees in Russia, Ukraine, and Mexico, and agreed to pay a fine of NIS 75 million (approximately $22 million). According to Israeli authorities, the settlement was based on the fact that Teva has already paid a fine in the United States, cooperated with the investigation, implemented an extensive compliance program, terminated the employment of the workers involved, and set up an organizational structure designed to reduce the recurrence of such cases.64

3. Singapore Arrests Six Former Keppel Executives over Brazilian Corruption Scandal

On February 2, 2018, the Corrupt Practices and Investment Bureau (CPIB) in Singapore arrested six former executives of Keppel Offshore & Marine and its subsidiaries in connection with an investigation of Keppel's role in a corruption scandal in Brazil. Tay Kim Hock, former president and CEO of Keppel Fels Brasil from 2000 to 2007, was among those arrested. All six former Keppel executives have been released on bail as the Attorney General's Chambers (AGC) decides whether charges will be filed.65 Keppel previously agreed to pay a total of $422 million in fines to resolve corruption-related charges in Brazil, the United States, and Singapore.

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* * * * *

For further information on anything discussed in Global Anti-Corruption Insights, please contact one of the authors or your Arnold & Porter attorney.

*The following law school students also contributed to the preparation of this newsletter: Ryan Holmes, Julia Kindlon, Yiqing Shi, and Lori Taubman.

© Arnold & Porter Kaye Scholer LLP 2018 All Rights Reserved. This newsletter is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.

  1. Press Release, DOJ, Société Générale S.A. Agrees to Pay $860 Million in Criminal Penalties for Bribing Gaddafi-Era Libyan Officials and Manipulating LIBOR Rate (June 4, 2018).

  2. Press Release, DOJ, Legg Mason Inc. Agrees to Pay $64 Million in Criminal Penalties and Disgorgement to Resolve FCPA Charges Related to Bribery of Gaddafi-Era Libyan Officials (June 4, 2018).

  3. Press Release, DOJ, Panasonic Avionics Corporation Agrees to Pay $137 Million to Resolve Foreign Corrupt Practices Act Charges (Apr. 30, 2018).

  4. Id.; see also Deferred Prosecution Agreement at 1, United States v. Panasonic Avionics Corp., Case No. 1:18-cr-00118-RBW (D.D.C. Apr. 30. 2018), Dkt.No. 2-1 {hereinafter PAC DPA}; PAC DPA Attachment A, at A-5-6.

  5. Id. at A-12-13.

  6. PAC DPA, supra note 4, at 10-14; see also id. Attachment D.

  7. Press Release, SEC, Panasonic Charged With FCPA and Accounting Fraud Violations (Apr. 30, 2018).

  8. See Order Instituting Cease-and-Desist Proceedings Pursuant to Section 21c of the Securities Exchange Act Of 1934, Making Findings, and Imposing a Cease-and-Desist Order, In the Matter of Panasonic Corp., Securities Exchange Act of 1934, Release No. 83128 at 10 (Apr. 30, 2018).

  9. Id. at 1, 12.

  10. Press Release, SEC, SEC Charges Credit Suisse With FCPA Violations (July 5, 2018).

  11. See Don Weinland, Credit Suisse to pay US DoJ $47m Over Asia Hiring Practices (June 6, 2018), Jan-Henrik Foerster, Credit Suisse to Pay $47 Million to Resolve DoJ Asia Probe (June 6, 2018).

  12. See Order Instituting Case-and-Desist Proceedings Pursuant to Section 21c of the Securities Exchange Act of 1934, Making Findings and Imposing a Case-and-Desist Order, In the Matter of Beam Inc., n/k/a Beam Suntory Inc., Securities Exchange Act of 1934, Release No. 83575 (July 2, 2018).

  13. See Order Instituting Cease-and-Desist Proceedings Pursuant to Section 21c of the Securities Exchange Act of 1934, Making Findings, and Imposing a Cease-and-Desist Order, In the Matter of the Dun & Bradstreet Corporation, Securities Exchange Act of 1934, Release No. 83088 (Apr. 23, 2018).

  14. Letter from FCPA Unit, Fraud Section, DOJ to counsel for the Dun & Bradstreet Corporation (Apr. 23, 2018).

  15. Press Release, DOJ, Transport Logistics International Inc. Agrees to Pay $2 Million Penalty to Resolve Foreign Bribery Case (Mar. 13, 2018); see also Deferred Prosecution Agreement, United States v. Transport Logistics International, Inc., No. 18-cr-00011 (D. Md. Mar. 12, 2018), Dkt. Entry No. 6.

  16. See Order Instituting Cease-and-Desist Proceedings, Pursuant to Section 21c of the Securities Exchange Act of 1934, Making Findings, and Imposing a Cease-and-Desist Order, In the Matter of Kinross Gold Corporation, Securities Exchange Act of 1934, Release No. 82946 (Mar. 26, 2018).

  17. Press Release, Kinross, Kinross Announces End of Regulatory Investigation of West Africa Operations (Mar. 26, 2018).

  18. See Order Instituting Cease-And-Desist Proceedings Pursuant to Section 21c of the Securities Exchange Act of 1934, Making Findings, Imposing a Cease-And-Desist Order, and Imposing a Civil Money Penalty, In the Matter of Elbit Imaging Ltd., Securities Exchange Act of 1934, Release No. 82849 (Mar. 9, 2018).

  19. Press Release, Glencore plc, Subpoena from United States Department of Justice (July 3, 2018).

  20. Press Release, Glencore plc, Update on subpoena from United States Department of Justice (July 11, 2018).

  21. Franz Wild & Suzi Ring, Glencore May Face U.K. Bribery Probe Over Congo Dealings, Bloomberg, (May 18, 2018, 11:53AM MDT).

  22. Cobalt International Energy, Inc., Current Report (Form 8-K) (Jan. 30, 2018).

  23. Cobalt International Energy, Inc., Annual Report (Form 10-K) (Mar. 14, 2017) at 47.

  24. Core Laboratories N.V., Annual Report (Form 10-K) (Feb. 9, 2018) at 28.

  25. Juniper Networks, Inc., Current Report (Form 8-K) (Feb. 9, 2018).

  26. Teradata Corporation, Annual Report (Form 10-K) (Feb. 23, 2018) at 69.

  27. Teradata Corporation, Quarterly Report (Form 10-Q) (Aug. 4, 2017) at 11.

  28. Exterran Corporation, Annual Report (Form 10-K) (Feb. 27, 2018) at 12.

  29. Sanofi, Annual Report (Form 20-F) (Mar. 6, 2018) at 198.

  30. See Press Release, DOJ, Aruban Telecommunications Purchasing Official Sentenced to Prison in Money Laundering Conspiracy Involving Violations of the Foreign Corrupt Practices Act, (June 27, 2018).

  31. See Press Release, DOJ, Former Armenian Ambassador and a Russian National Charged in Foreign Bribery and Money Laundering Scheme, (May 24, 2018); Superseding Indictment, United States v. Contoguris, No. 2:17-cr-233 (S.D. Ohio, May 24, 2018), Dkt. Entry 13.

  32. Press Release, DOJ, Five Former Venezuelan Government Officials Charged in Money Laundering Scheme Involving Foreign Bribery (Feb. 12, 2018).

  33. Minute Entry, United States v. Luis Carlos De Leon-Perez et al., No. 4:17-CR-514(S.D. Tex. Apr. 19, 2018), Dkt. Entry No. 65; Brendan Pierson, Ex-Venezuelan official pleads guilty in U.S. corruption case, Reuters (Apr. 19, 2018).

  34. Minute Entry, United States v. Luis Carlos De Leon-Perez et al., No. 4:17-CR-514 (S.D. Tex. July 16, 2018), Dkt. Entry No. 102.

  35. Press Release, DOJ, Five Former Venezuelan Government Officials Charged in Money Laundering Scheme Involving Foreign Bribery (Feb. 12, 2018).

  36. Press Release, DOJ, Former President of Maryland-Based Transportation Company Indicted on 11 Counts Related to Foreign Bribery, Fraud and Money Laundering Scheme (Jan. 12, 2018); see also Arraignment as to Mark T. Lambert, United States v. Lambert, No. 18-cr-00012 (D. Md. Jan. 25, 2018), Dkt. Entry No. 125; In-Court Status Conference as to Mark T. Lambert, United States v. Lambert, No. 18-cr -00012 (D. Md. May 30, 2018) Dkt. Entry No. 27.

  37. Memorandum & Order, SEC v. Cohen, 17-cv-430 (E.D.N.Y. July 12, 2018), Dkt Entry No. 68.

  38. See Arrest Warrant, United States v. Michael Leslie Cohen, No. 1:17-cr-00544-NGG (E.D.N.Y. June 26, 2018) Dkt. Entry No. 14; Order Setting Conditions of Release and Appearance Bond, United States v. Michael Leslie Cohen, 1:17-cr-00544-NGG (E.D.N.Y June 26, 2018) Dkt Entry No. 16.

  39. See Indictment, United States v. Michael Leslie Cohen, No. 1:17-cr-00544-NGG, at *13-18 (E.D.N.Y. Oct. 5, 2017).

  40. Text Order, United States v. Wang, No. 16-cr-00495 (S.D.N.Y. Apr. 4, 2018) {hereinafter Wang Order}. Dkt. Entry No. 44.

  41. Superseding Information, United States v. Wang, No. 16-cr -00495 (S.D.N.Y. Apr. 4, 2018), Dkt. Entry No. 55, at ¶¶3, 4.

  42. Id. at ¶5.

  43. Press Release, DOJ, Former UN General Assembly President and Five Others Charged In $1.3 Million Bribery Scheme (Oct. 6, 2015).

  44. Jonathan Stempel, Chinese-born executive pleads guilty in U.N. bribery case, Reuters, Apr. 4, 2018.

  45. Press Release, DOJ, Four Businessmen and Two Foreign Officials Plead Guilty in Connection with Bribes Paid to Mexican Aviation Officials (Dec. 27, 2016) {hereinafter Mexican Bribes Press Release}.

  46. Text Order, United States v. Pinon, No. 16-cr-00409 (S.D. Tex. Feb. 23, 2017).

  47. Text Order, United States v. Ray, No. 16-cr-00409 (S.D. Tex.. Mar. 30, 2017).

  48. Mexican Bribes Press Release.

  49. See Press Release, DOJ, New Jersey Real Estate Broker Pleads Guilty to Role in Foreign Bribery Scheme Involving $800 Million International Real Estate Deal, (Jan. 5, 2018).

  50. See Opinion and Order, In re Petrobras Secs. Litig., No. 14-cv-9662 (S.D.N.Y. June 22, 2015).

  51. Emps. Ret. Sys. Of City of Providence v. Embraer S.A., No. 16-cv-6277 (RMB), 2018 WL 1725574 (S.D.N.Y. Mar. 30, 2018).

  52. Complaint, PDVSA US Litigation Trust v. Lukoil Pan Americas LLC et al., 1:18-cv-20818 (S.D. Fl. Mar. 3, 2018), Dkt. Entry No. 1.

  53. See, e.g., Order, PDVSA US Litigation Trust v. Lukoil Pan Americas LLC et al., 1:18-cv-20818 (S.D. Fl. Apr. 2, 2018), Dkt. Entry No. 219.

  54. See Complaint, EIG Energy Fund XIV LP et al. v. Keppel Offshore & Marine Ltd., No. 1:18-cv-01047, (S.D.N.Y. Feb. 6, 2018), Dkt. Entry 1.

  55. Digital Realty Trust, Inc. v. Somers, No. 16–1276 (Feb 21, 2018).

  56. Press Release, Attorney General's Office & The Rt. Hon. Jeremy Wright MP, New Head of the Serious Fraud Office Announced (June 4, 2018); see also Simon Goodley, SFO Names Ex-FBI Lawyer Lisa Osofsky as New Director, The Guardian (June 5, 2018).

  57. SFO, News Release, Unaoil Group Companies Summonsed as Part of SFO's Ongoing Corruption Investigation (June 26, 2018) {hereinafter Unaoil News Release}. See also SFO, Case Information, Unaoil last modified July 18, 2018) {hereinafter Unaoil Case Information}.

  58. Unaoil News Release, supra note 57.

  59. See Arnold & Porter, Global Anti-Corruption Insights: Winter 2018, (Jan. 24, 2018).

  60. Unaoil News Release, supra note 57.

  61. Unaoil Case Information, supra note 57.

  62. See News Releases, SFO, Chemring Group PLC and Chemring Technology Solutions Ltd. (Jan. 18, 2018).

  63. Thai bribery case leads to Japan's first plea bargain, The Japan Times (July 14, 2018).

  64. Shoshanna Solomon, Teva to pay NIS 75 million to Israel authorities to settle foreign bribe claims, Times of Israel (Jan. 15, 2018).

  65. See Grace Leong, Former Key Keppel Execs Arrested in Corruption Probe, STRAITS TIMES (Feb. 2, 2018).

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