Commodities Trading Company Resolves FCPA Violations
Commentary by Kevin Harnisch and Sandeep Savla
An international commodities trading company pled guilty and paid monetary penalties to resolve DOJ charges for violating the Foreign Corrupt Practices Act ("FCPA"). The company had been charged with bribing then-public officials of an Ecuadorian state-owned oil company to secure business advantages and contracts.
In a plea agreement filed with the United States District Court for the Eastern District of New York, the Switzerland-based company confessed to being involved in a "multi-year scheme to pay more than $90 million to intermediaries knowing that a portion of the payments would be used to bribe senior government officials in Ecuador in exchange for the [company] obtaining and retaining lucrative business, resulting in profits of more than $384 million to the [company]."
According to the Statement of Facts, the scheme involved elaborate efforts to conceal the bribery including "creat[ing] fake invoices for purported consulting services and us[ing] email accounts with pseudonyms to transfer funds to offshore shell companies involved in the conspiracy. The illegal payments were made through multiple bank accounts in the United States and abroad in an effort to conceal the bribes." In exchange for bribe payments, the high-level Ecuadorian officials helped various state-owned entities, which were acting as front companies, win the rights to a series of oil-backed loan contracts with an oil company. This structure allowed the company and its co-conspirators to avoid a competitive bidding process.
To settle the charges, the company agreed to, among other things (i) plead guilty, (ii) to pay the applicable fine and special assessment, (iii) consent to and to pay the applicable forfeiture amount and (iv) continue to implement a compliance and ethics program.
The Justice Department said it reached this resolution based on a number of factors, including, among others, (i) the nature and seriousness of the offense, (ii) credit the company received for its cooperation with the department’s investigation, (iii) the company's timely and appropriate engagement in remedial measures and (iv) the company's history of misconduct, including a previous scheme to bribe officials to secure oil contracts.
Commentary
It is noteworthy that the DOJ considered the period of the company's misconduct in assessing the fine. Further, the DOJ required the company to enter a plea, rather than seeking a lesser disposition such as a Deferred Prosecution Agreement. (The company’s prior resolution with the Swiss authorities for alleged corruption may have affected the DOJ’s posture in this regard.) That said, the DOJ did give the company some reduction in the fine as a result of its cooperation and remediation. Cooperation such as reporting facts while navigating foreign privacy and other laws remain important considerations in such cross-border investigations.
Commentary
Both the DOJ and the Swiss prosecutor entered into a parallel resolution of this bribery matter, underscoring how prosecutors and regulators frequently collaborate in investigations into cross-border misconduct. Indeed, the DOJ press release referred to the Swiss prosecutor (and Ecuadorian authorities) as “international partners.”