Global Anti-Corruption Insights: Winter 2022 – Criminal Law

2021 ended up as a relatively quiet year for enforcement of the
Foreign Corrupt Practices Act (FCPA) in comparison to the past
couple of years, which delivered some of the largest settlements of
all time. In 2021, the US Department of Justice (DOJ) entered into
deferred prosecution agreements with two companies to resolve FCPA
charges (versus eight in 2020 and seven in 2019), while the US
Securities and Exchange Commission (SEC) resolved FCPA charges
through administrative cease-and-desist orders with four companies
(versus eight resolutions in 2020 and 13 in 2019). The DOJ has
reported that in 2021, similar to recent years, it charged a couple
dozen individuals with violations of the FCPA and other federal
crimes, such as money laundering, for their roles in international
corruption schemes. The SEC, however, did not bring any
bribery-related FCPA charges against individuals in 2021 (in
contrast to charges against two individual in 2020 and eight the
year before).

Many have speculated about what’s behind the lower FCPA
enforcement numbers. New leadership at DOJ and SEC? Covid? Maturing
corporate compliance programs?

For what it’s worth, leading enforcement officials have
cautioned against reading into year-over-year statistical
comparisons. They claim that the “pipeline is strong” and international
cooperation is reaching new heights. The White House, moreover, has
unveiled a series of anti-corruption initiatives that may herald an
increased use of the FCPA, anti-money laundering laws, sanctions,
and other tools to combat international corruption-which the
administration has characterized as a “core national security
interest.”

Below we discuss enforcement actions, judicial decisions, and
other notable developments from the second half of 2021, with an
eye toward what lies ahead in 2022. For more on what happened in
the first half of 2021, see Arnold & Porter’s Global Anti-Corruption
Insights: Summer 2021.

FCPA Enforcement Updates

Enforcement Against Companies

DOJ did not bring any new corporate FCPA charges in the second
half of 2021. For its part, the SEC entered into three new
corporate settlements of FCPA cases in the latter part of the year.
See Credit Suisse to Pay Nearly $475 Million to U.S.
and U.K. Authorities to Resolve Charges in Connection with
Mozambican Bond Offerings (10/19/21); SEC Charges World’s Largest Advertising Group
with FCPA Violations (9/24/21) (announcing agreement by WPP plc
to pay more than $19 million in connection with FCPA violations at
its subsidiaries in India, Brazil, China, and Peru); SEC Charges The Kraft Heinz Company and Two Former
Executives for Engaging in Years-Long Accounting Scheme
(9/3/21). Notably, the Kraft Heinz case, which the company settled
for $62 million, did not concern any allegations of corruption, and
thus serves as a reminder of the breadth of the FCPA’s
accounting provisions (namely, the internal controls and
books-and-records provisions) that apply to public companies and
their employees.

Criminal Enforcement Against Individuals

Consistent with statements from high-ranking DOJ officials about
a focus on individual accountability for corporate crime, in the
second half of 2021 DOJ charged numerous individuals under the FCPA
and money laundering statutes for their alleged participation in
international corruption schemes.

Many of the prosecutions concerned corruption in Latin America.
In particular, DOJ continued to prosecute individuals for
corruption at state-owned companies in Venezuela. See,
e.g., Executive Arrested and Charged for Bribery and
Money-Laundering Scheme (8/4/21); Colombian Businessman Charged with Money
Laundering Extradited to the United States from Cabo Verde
(10/18/21); Five Individuals Charged with Money Laundering in
Connection with Alleged Venezuela Bribery Scheme (10/21/21).
DOJ also brought money laundering charges against two brothers in
connection with an FCPA case that the Brazil-based construction
company Odebrecht settled back in 2016. See Panamanian Intermediary Pleads Guilty in
Connection with International Bribery and Money Laundering
Scheme (12/2/21); Panamanian Intermediary Extradited to the United
States Pleads Guilty to International Bribery and Money Laundering
Scheme (12/14/21).

Furthermore, in the second half of 2021, DOJ prosecuted
numerous individuals under the FCPA in connection with alleged
corruption in African countries. See Texas Woman Pleads Guilty to Schemes to Procure
Adoptions from Uganda and Poland through Bribery and Fraud
(11/17/21); Former Ericsson Employee Charged for Role in
Foreign Bribery Scheme (9/8/21); Information, U.S. v. Frederick Cushmore,
Jr. (11/3/21); Information, U.S. v. Anthony Stimler
(7/26/21).

Judicial Decisions in FCPA Cases

Over the past few months, federal judges have added to the
relatively sparse body of FCPA case law in connection with
prosecutions of individual defendants. Most notably, in November, a
judge in the Southern District of Texas granted a motion to dismiss
FCPA and money laundering charges against a Swiss wealth manager
accused of helping US companies launder bribes to employees of
Venezuela’s state-owned oil company. United States v.
Blueler, No. 4:17-cr-0514-7 (S.D. Tex. Nov. 10, 2021). The
judge rejected the government’s argument that the wealth
manager was acting as an agent of a “domestic concern”
and therefore subject to the FCPA. According to this District Court
judge, “[w]hen there is no allegation that an agent of a
domestic concern acted unlawfully while in the United States,
establishing that agency exists as the jurisdictional basis for a
criminal charge requires direct evidence of an agency relationship,
apart from other types of professional relationship.” The
government has filed a notice of appeal and will likely challenge
the court’s narrow construction of agency. For prior
discussions of the fact-specific nature of agency in the FCPA
context, see our coverage of United States v. Hoskins here and here.

In September, a federal judge in Brooklyn refused to set aside
FCPA charges against a former banker who had been extradited to the
United States for his alleged role in the massive bribery scheme
involving Malaysia’s sovereign wealth fund, known as 1MDB.
United States v. Ng Chong Hwa, 18-CR-538 (E.D.N.Y. Sept.
3, 2021). The judge found that the government’s indictment
sufficiently alleged jurisdiction on the basis of Ng being an
agent, employee, and/or stockholder of an “issuer”
(Goldman Sachs) at the relevant time. The judge also held that the
indictment adequately alleged that he had conspired to circumvent
the issuer’s set of internal controls in violation of the FCPA.
Ng is expected to stand trial this year.

In August, the US Court of Appeals for the First Circuit
affirmed a Massachusetts federal judge’s grant of a new trial
to Joseph Baptiste based on ineffective assistance of counsel in an
FCPA prosecution. United States v. Baptiste, No. 20-1400
(1st Cir. Aug. 9, 2021).

Whistleblower Awards

The SEC awarded more than $3.5 million to a whistleblower whose
2012 tips regarding a bribery scheme involving Juniper Networks
Inc. in Russia resulted in the company entering into a $11.7
million settlement with the SEC in 2019. See Whistleblower Is Awarded Over $3.5 Million in
Juniper Bribery Case (8/10/21).

Restitution

DOJ announced that it began the process of remitting a total of
$201 million in funds to various international soccer organizations
that were the victims of a widespread corruption scheme. The
initial distribution was for $32.3 million. See Justice Department Approves Remission of Over $32
Million in Forfeited Funds to Victims in the FIFA Corruption
Case (8/24/21)

Policy Announcements

Following the White House’s June 3, 2021 Memorandum on Establishing the Fight Against
Corruption as a Core United States National Security Interest,
the Biden Administration continued to articulate its focus on
anti-corruption, with a particular emphasis on Latin America.

In December, Arnold & Porter attorneys attended ACI’s
39th International Conference on the FCPA in Washington, DC, and
recapped noteworthy panel discussions on our Enforcement Edge
blog:

• “We Follow the Money,” “The
  Pipeline Is Strong,” “If We Find You, It Is Going to Be a
  Worse Result”: FCPA Enforcers Talk About the Past Year and
  What’s to Come (12/1/21)




• Assistant Attorney General Talks About DOJ
  Criminal Division Priorities, Where Resources Are Going
  (12/1/21)




• “We Are an Agency That Is Willing and Able to
  Work With the Corporate World”: UK SFO Director Lays Out
  Agency’s Mindset and Priorities (12/1/21)




• “A Provision We Rely on Pretty Heavily in the
  Anti-Bribery Area”: SEC Enforcement Official Discusses the
  FCPA’s Internal Controls Provision (12/2/21)




• Defending Your FCPA Compliance Program to the
  Agencies (12/2/21)




• “We’re Not the Only Game in Town, and
  That’s a Good Thing”: US Enforcement Officials Discuss
  Intensified Anti-Corruption Drive in Latin America
  (12/3/21)




• A General Counsel’s Perspective on the
  Pandemic, Compliance, Investigations, and Tone at the Top
  (12/3/21)




• Capping Off the ACI FCPA Conference: A Town Hall
  with SEC, DOJ, and FBI Officials (12/3/21)

Selected International Updates

United Kingdom: In October, Petrofac Limited, a
British oilfield services provider, pleaded guilty to charges
brought by the UK’s Serious Fraud Office (SFO) that the company
failed to prevent former executives from paying bribes between 2011
and 2017. Petrofac agreed to pay £77 million ($104.6 million)
in penalties for Bribery Act offenses in Iraq, Saudi Arabia, and
the United Arab Emirates. See Serious Fraud Office secures third set of Petrofac
bribery convictions. In December, however, the SFO suffered a
setback in another case stemming from an investigation into the
energy company Unaoil, when an appeals court overturned the bribery conviction of a former
Unaoil executive.

Brazil: Although the “Operation Car
Wash” scandal involving Petrobras has been winding down, in
October Brazil’s Office of the Comptroller General and Attorney
General’s Office announced a $27.8 million settlement with UK
engineering company Rolls-Royce to resolve charges concerning the
bribery of officials at Petrobras, Brazil’s state-owned oil
company. This resolution comes on top of, and includes a credit
for, a prior settlement that Rolls-Royce had entered years earlier
with Brazilian federal prosecutors and enforcement authorities in
the United Kingdom and United States.

China: The past year saw several policy
developments related to the enforcement anti-corruption laws in
China. For example, in September 2021, the Central Commission of
Discipline Inspection (CCDI) and the National Supervisory
Commission (“NSC”), together with other Chinese
government organs, issued Opinions on Further Promoting the Investigation of
the Acceptance and Payment of Bribes. The Opinions reflect
increasing attention on the investigation of those paying bribes,
not just those accepting bribes. Earlier in 2021, the Supreme
People’s Procuratorate announced the expansion of a pilot program for
corporate compliance reform. This pilot program, which launched
in 2020, provides local procuratorates with the authority to
negotiate with corporate defendants, defer prosecution, bring
lighter charges, seek lighter penalties, or otherwise give credit
for a company’s compliance commitments. Also this past year,
the SPP, in collaboration with other Chinese government agencies,
announced preliminary guidance on establishing
a third-party evaluation mechanism for the pilot corporate
compliance reform program.

OECD: In November 2021, the Organisation for
Economic Co-operation and Development adopted a Recommendation of the Council for Further
Combating Bribery of Foreign Public Officials in International
Business Transactions. This Recommendation, which updates prior
guidance from 2009, includes new sections “on key topics that
have emerged or significantly evolved in the anti corruption area
since 2009,” in particular:

• Addressing the Demand Side of Foreign Bribery Cases;




• Sanctions and Confiscation?




• Non-Trial Resolutions;




• International Co-operation;




• Protection of Reporting Persons;




• Incentives for Compliance; and




• Data Protection.

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