businessman in handcuffs

To all the “nattering nabobs of negativity” concerning FCPA enforcement, the US Justice Department responded with a resounding message – not only is FCPA enforcement here to stay, but individual violators are on DOJ’s radar screen. In an FCPA enforcement week like no other, the Justice Department unveiled a total of seven charging documents (indictments or informations) for FCPA violations, five arising from the Rolls Royce enforcement action and two from an upcoming enforcement action against SBM Offshore.

The Justice Department’s action sent an unmistakable message, whether it reflects the impact of the Yates memorandum or a continuing focus on individual prosecutions in the proper circumstances, FCPA enforcement has taken a new and dramatic turn to include individual criminal enforcement.

Two SBM Offshore Individuals: Mace and Zubiate

In the ongoing investigation involving Unaoil and SBM Offshore, two former executives, Anthony Mace and Robert Zubiate, plead guilty to FCPA conspiracy charges in federal court in Houston Texas.

SBM Offshore was the subject of an enforcement action in 2014 when US prosecutors deferred to Netherlands prosecutors who reached a $240 million settlement with SBM Offshore for foreign bribery violations. The Justice Department re-opened its investigation against SBM Offshore in early 2016 based on information it learned during the Unaoil investigation. Recently, SBM Offshore has disclosed that it has reserved $238 million in anticipation of a future settlement with the Justice Department.

Mace was the former CEO of SBM Offshore and a director of an SBM Offshore subsidiary. Zubiate was a former sales and marketing executive.

Mace admitted that, during the period from 2008 to 2011 while he served as the CEO, he authorized $16 million in payments pursuant to agreements in place prior to his assuming the position of CEO. The payments were made to foreign officials at Petrobas in Brazil, Sonangol in Angola, and GEPetrol in Equatorial Guinea. Interestingly, Mace conceded that he authorized the payments and “deliberately avoided learning” that the payment were bribes paid to foreign officials at these state-owned enterprises.

Mace authorized these illegal bribes to a total of fine individuals who he suspected were Equitorial Guinea officials or persons who received the payments at the direction of the foreign officials. In Brazil, Mace authorized payments to a Brazilian third-party intermediary’s accounts in Brazil and a shell company in Switzerland, ultimately owned by Petrobas officials.

Zubiate’s involvement in bribery stretched from 1996 to 2012, during which he and co-conspirators paid bribes to Petrobas foreign officials through a third-party sales agent in exchange for winning bids. The sales agent also was paid kickbacks for facilitating the bribe payments to Petrobas foreign officials.

It is not clear if Mace and Zubiate are cooperating in the ongoing investigation to investigate and prosecute other individuals and entities. They are scheduled to be sentenced in early 2018.

Five Rolls Royce Individuals: Petros Contoguris, James Finley, Aloysius Johannes Jozel Zuurhout, Andreas Kohler and Keith Barnett

As a follow-on to an enforcement action against Rolls Royce, the Justice Department unsealed FCPA criminal charges against two former Rolls Royce executives, a former Rolls Royce employee, a former third-party intermediary for Rolls Royce in Kazakhstan, and an executive for an international engineering consulting firm. Four of the individual entered guilty pleas during 2016, and one defendant has not been apprehended.

In January 2017, Rolls Royce entered into a global settlement with prosecutors in the UK, US and Brazil under which Rolls Royce paid a total of $800 million in fines and penalties, $169 million of which was paid to the United States.

The Justice Department’s criminal prosecution focused on one aspect of Rolls Royce’s conduct relating to the construction of a gas pipeline from Central Asia to China. The UK’s Serious Fraud Office has ongoing criminal investigations involving individuals involved in foreign bribery schemes in other countries.

Petros Contoguris, a Greek citizen, residing in Turkey was charged by indictment with conspiracy to violate the FCPA , money laundering conspiracy, 7 counts of FCPA violations and 10 counts of money laundering.

James Finley, a UK citizen residing in Taiwan, plead guilty to one count of FCPA conspiracy.

Aloysius Johannes Jozef Zuurhout, a Netherlands citizen, Andreas Kohler, an Austrian citizen and Keith Barnett, a US citizen, each plead guilty to one count of conspiracy to violate the FCPA.

The five defendants conspired to pay bribes to foreign officials in exchange for securing business for Rolls Royce’s energy systems subsidiary, in relation to the construction of a gas pipeline. Contoguris and Kohler were engineering consultans and devised a scheme with the Rolls Royce executives and employee would pay bribes to at least one foreign official and disguise the payments through commission payments to Contoguris’s company.

Asia Gas Pipeline was a joint venture consisting of state-owned entities from China and Kazakhstan, which was created to build a gas pipeline between Kazakhstan and China. In November 2009, Rolls Royce was awarded a contract worth $145 million to supply gas turbines to the project, and Rollys Royce made commission payments to Contoguris’s company, who in turn passed the payments to a Technical Advisor company, knowing that the Advisor would in turn pay various foreign officials with bribes.

The three Rolls Royce former employees, Finley, Barnett and Zuurhout, admitted their participation in a conspiracy to violate the FCPA stretching back to 1999 and continuing to 2013, in which they would retain Technical Advisors who would transmit bribery payments to foreign officials in a number of countries to win contracts for the pipeline project. In a perverted twist, the Rolls Royce former employees conducted due diligence of potential technical advisors to ensure that they had close relationships with key foreign officials in order to facilitate bribery payments.

This article was republished with permission from Michael Volkov’s blog, Corruption, Crime & Compliance.

Michael Volkov

Michael Volkov

Michael-Volkov-leclairryanMichael Volkov is the CEO of The Volkov Law Group LLC, where he provides compliance, internal investigation and white collar defense services.  He can be reached at [email protected].  His practice focuses on white collar defense, corporate compliance, internal investigations, and regulatory enforcement matters. He is a former federal prosecutor with almost 30 years of experience in a variety of government positions and private practice.

Michael maintains a well-known blog: Corruption Crime & Compliance which is frequently cited by anti-corruption professionals and professionals in the compliance industry.Michael has extensive experience representing clients on matters involving the Foreign Corrupt Practices Act, the UK Bribery Act, money laundering, Office of Foreign Asset Control (OFAC), export controls, sanctions and International Traffic in Arms, False Claims Act, Congressional investigations, online gambling and regulatory enforcement issues.

Michael has assisted clients with design and implementation of compliance programs to reduce risk and respond to global and US enforcement programs.

Michael has built a strong reputation for his practical and comprehensive compliance strategies.Michael served for more than 17 years as a federal prosecutor in the U.S. Attorney’s Office in the District of Columbia; for 5 years as the Chief Crime and Terrorism Counsel for the Senate Judiciary Committee, and Chief Crime, Terrorism and Homeland Security Counsel for the Senate and House Judiciary Committees; and as a Trial Attorney in the Antitrust Division of the U.S. Department of Justice.

Michael also has extensive trial experience and has been lead attorney in more than 75 jury trials, including some lasting more than six months. His clients have included corporations, officers, directors and professionals in, internal investigations and criminal and civil trials. He has handled a number of high-profile criminal cases involving a wide‐range of issues, including the FCPA and compliance matters, environmental crimes, and antitrust cartel investigations in countries all around the world.

Representative Engagements

  • Successfully represented three officers of a multinational company in two separate criminal antitrust investigations involving a criminal antitrust investigation in the District of Columbia and the Southern District of New York.
  • Defended pharmaceutical company before the Food and Drug Administration and Senate Finance Committee relating to application for approval of generic drug.
  • Conducted internal investigation which exonerated company against allegations of false statements in submissions to the FDA and against improper conduct alleged by Senate Finance Committee.
  • Represented company before the US State Department on alleged violations of ITAR which lead to voluntary disclosure and imposition of no civil or criminal penalties.
  • Advised several multinational companies on compliance with anti‐corruption laws, and design and implementation of anti‐corruption and anti‐money laundering compliance programs.
  • Advised hospitals, pharmaceutical companies and medical device companies on compliance issues relating to Stark law and Anti‐Kickback law and regulations.
  • Conducted due diligence investigations for large multinational companies for anti‐corruption compliance of: potential third party agents, joint venture partners and acquisition targets in Europe, Africa, Asia and Latin America.
  • Represented individual in white collar fraud case in Alexandria, Virginia and secured dismissal of criminal charges and expungement of criminal record.
  • Represented company before Congress and Executive Branch in effort to modify Justice Department regulations concerning use of federal funds.
  • Advised and assisted World Bank in review of global corruption policies, enforcement programs and corruption investigations and prosecutions.

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