Colombian Financial Holding Company Settles Charges for Bribery Scheme

A Colombia-based financial holding company and its merchant bank subsidiary resolved separate SEC and DOJ charges (see here and here ) for bribery in connection with a highway construction project.

In parallel enforcement actions, the SEC and the DOJ found that an executive of the construction company paid intermediaries a success fee to obtain approval for, and accelerate, the construction of a highway. The SEC and the DOJ alleged that the executive was aware that a portion of the success fee would be going to Colombian government officials. The SEC and the DOJ stated that the holding company concealed the bribes as "legitimate business expenses." The SEC and the DOJ found that the scheme was used to bypass a public tendering process for the construction project. The SEC and the DOJ said that the bribery scheme allowed for the bank holding company to receive an "improper financial benefit" of $32 million in fees, interest income and investment distributions.

As a result of its actions, the bank holding company violated provisions under the Foreign Corrupt Practices Act, Exchange Act Section 30A ("Prohibited foreign trade practices by issuers") and Section 13 ("Periodical and other reports").

To settle the charges with the SEC, the bank holding company and its subsidiary agreed to (i) cease and desist from further regulatory violations and (ii) pay disgorgement of $32,139,731 along with $8,129,558 in prejudgment interest. The SEC noted that it is not imposing a civil monetary penalty given the civil monetary penalty Order imposed by the DOJ.

As part of a deferred prosecution agreement with the DOJ, the bank holding company agreed to pay a criminal penalty of $40,600,000. The DOJ stated that it would credit the bank holding company up to half of the penalty amount under the condition that the bank holding company drop its appeal of a resolution imposed by Columbia's Superintendencia de Industria for violations of Columbian laws related to the same conduct.

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