No Result
View All Result
SUBSCRIBE | NO FEES, NO PAYWALLS
MANAGE MY SUBSCRIPTION
NEWSLETTER
Corporate Compliance Insights
  • Home
  • About
    • About CCI
    • Writing for CCI
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Explore Topics
    • See All Articles
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Well-Being at Work
    • Leadership and Career
    • Opinion
  • Vendor News
  • Career Connection
  • Events
    • Calendar
    • Submit an Event
  • Library
    • Whitepapers & Reports
    • eBooks
    • CCI Press & Compliance Bookshelf
  • Podcasts
  • Videos
  • Subscribe
  • Home
  • About
    • About CCI
    • Writing for CCI
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Explore Topics
    • See All Articles
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Well-Being at Work
    • Leadership and Career
    • Opinion
  • Vendor News
  • Career Connection
  • Events
    • Calendar
    • Submit an Event
  • Library
    • Whitepapers & Reports
    • eBooks
    • CCI Press & Compliance Bookshelf
  • Podcasts
  • Videos
  • Subscribe
No Result
View All Result
Corporate Compliance Insights
Home FCPA

The Asia-Pacific Top 10 FCPA Enforcement Actions of 2017

by Wendy Wysong
January 24, 2018
in FCPA, Featured
Hong Kong

The Year In Review

Asia Pacific continues to give rise to a large number of Foreign Corrupt Practices Act (FCPA) enforcement actions. Four of the nine companies that the US Department of Justice (DOJ) Fraud Section includes on its list of 2017 FCPA Enforcement Actions are based or were operating in the region, as were seven of the 15 individuals prosecuted in 2017.

Co-authored by Tess Forge

  1. Keppel Group

In late December 2017, enforcement authorities in the United States, Singapore, and Brazil announced a coordinated multi-jurisdiction settlement of bribery charges with a Singaporean-based company, Keppel Offshore & Marine Ltd (KOM) and its wholly-owned subsidiaries, KOM US, and Keppel Corporation Limited FELS in Brazil. This bribery scheme allegedly netted over $500 million USD in profits over 13 years, through inflated commissions to intermediaries, who then made payments to Brazilian officials and a political party, to obtain contracts with Petrobras and another Brazilian company.

The total fine of $422 million USD was the result of penalty offsets among the countries that collaborated in the investigation: approximately 50 percent will be paid in Brazil, 25 percent in Singapore, and the remaining 25 percent in the United States.

KOM USA pleaded guilty to conspiracy to violate the FCPA, as did Jeffery Chow, a US lawyer working in KOM’s legal department in Singapore for 25 years, who admitted to preparing the contracts used to make bribe payments in Brazil. KOM entered into a three-year Deferred Prosecution Agreement (DPA) with DOJ, receiving the maximum discount available for cooperation and remediation, but not voluntary disclosure (25 percent off the bottom penalty). Similarly, Brazil‘s Ministério Público Federal offered a Leniency Agreement and Singapore’s Corrupt Practices Investigation Bureau served a conditional warning in lieu of prosecution against KOM. Part of the penalty mitigation was due to KOM’s remediation, which included causing seven employees to resign, imposing financial penalties of approximately $8.9 million USD on 12 individuals and issuing warnings to or demoting seven employees.

KEY: The Keppel prosecution demonstrates how international agencies work together to address cross-border corruption. It also highlights that early cooperation in government investigations and extreme remediation can lessen the severity of the penalty imposed.

  1. Rolls-Royce

In January 2017, the US DOJ and UK Serious Fraud Office (SFO) announced DPAs with Rolls-Royce and an indirect subsidiary, based on bribes allegedly paid in connection with business in China, India, Indonesia, Malaysia, Thailand and others.  The combined penalty of over $800 USD million was a global resolution involving the UK, United States, and Brazil, following an investigation that also included Austria, Germany, the Netherlands, Singapore and Turkey. There are reported on-going investigations in Thailand, Malaysia, Indonesia, India and China. According to media reports, the investigation arose from an employee whistleblower report.

In November 2017, DOJ announced that five individuals (two former Rolls-Royce executives and an employee, plus a former intermediary and an executive of an international engineering consultancy) were charged with FCPA conspiracy to pay kickbacks to an engineering consulting company, which bribed foreign officials, enabling the Rolls-Royce subsidiary to win contracts connected with the Central Asia-China gas pipeline. One of the executives is a US citizen, the non-US co-conspirators traveled to the United States in furtherance of the scheme, and US bank accounts were used to make corrupt commission payments. Four of the individuals have pled guilty, while one remains outside US jurisdiction.

KEY: This case again emphasizes the cooperation between international anti-corruption enforcement authorities, but it also highlights the consequences for individuals involved in bribery. The newly revised FCPA Corporate Enforcement Policy requires internal discipline of executives and employees, as well as full cooperation to identify the culpable individuals to DOJ to secure cooperation credit and consequent corporate penalty discounts.

  1. Las Vegas Sands

In January 2017, Las Vegas Sands paid a fine of almost $7 million USD to DOJ, after paying nearly $9 million USD to the SEC in April 2016, to resolve alleged FCPA violations in China and Macao. The fines relate to the approximately $6 million USD Las Vegas Sands is alleged to have paid to a consultant and others to promote its efforts to establish gaming operations in China and Macao, where such activity is heavily regulated. Neither the DOJ Non-Prosecution Agreement (NPA) nor the SEC Cease and Desist Letter charged actual bribery, but because of the inadequacy of Las Vegas Sands’ internal books and records, the money could not be properly accounted for, thereby breaching the FCPA books and records provisions and creating the risk that the money was used for improper purposes.

KEY: DOJ and the SEC need only prove a company has inadequate books and recordkeeping and lacks internal controls to prevent bribery in order to generate significant fines. This investigation may have arisen from allegations made by a former chief executive in a civil breach of contract claim alleging that he was fired for reporting the improper business practices in Macao. He was paid $75-100 million USD to settle his claims, which serves as a warning regarding whistleblower protections, as explained further below.

  1. Ban Ki Sang

In January 2017, Ban Ki Sang (brother of the former UN Secretary-General, senior executive of South Korean construction company Keangnam), his son, Joo Hyun Bahn (a New York real estate broker), and Malcolm Harris (a US national and the supposed front man for a Middle Eastern sovereign wealth fund), were charged with conspiracy to violate the FCPA, three substantive FCPA violations and other criminal offenses. A fourth individual, also a New York real estate broker, was separately charged with conspiracy.

Ban and Bahn allegedly paid $500,000 USD to Harris and promised a further $2 million USD to facilitate the sale of a skyscraper (owned by Keangnam) in Vietnam to the sovereign wealth fund. Unfortunately, it appears that Harris had no actual connection to the fund, allegedly pocketing the funds and taking no action to progress the sale of the skyscraper, thereby demonstrating “there is truly is no honour among thieves” (US Assistant Attorney General, Leslie Caldwell).  Harris pled guilty, admitting to the scheme, and was sentenced to 42 months in October 2017.  Bahn pled guilty to conspiracy and violating the FCPA in January 2018, admitting to the facts above, and his father remains at large.

KEY: This case demonstrates that even if a bribery scheme does not, and even cannot succeed, it can form the basis of an FCPA prosecution.

  1. Alere Inc.

In September 2017, Alere agreed to pay the SEC more than $13 million USD to settle FCPA books and records charges, among other SEC violations, pursuant to a Cease and Desist Order.  Alere’s Indian subsidiary paid a 4 percent commission to an agent in exchange for a fivefold increase in the number of malaria testing kits ordered by a local government. When new management discovered the unreported commission, it recovered the payment, but the failure to accurately record the commission was sufficient to trigger liability.

KEY: During rapid expansion (such as that undergone by Alere), a parent company should monitor the practices and compliance procedures of its new subsidiaries. The timing of this investigation and settlement, in the context of an M&A transaction, delayed Abbott’s acquisition of Alere by almost 18 months and resulted in a lower purchase price.

  1. Ng Lap Seng

In July 2017, Ng Lap Seng (a Macao national) was found guilty of bribing two United Nations (UN) officials to ensure the UN would choose his construction company to build a conference center in Macao. Seng paid more than $1 million USD in bribes to a former deputy ambassador of the Dominican Republic and the former UN General Assembly president. Seng was found to have corrupted high-ranking UN officials and “turned leaders of the league of nations into his private band of profiteers.” (Acting US Attorney SDNY Joon Kim).  Five co-conspirators previously pled guilty.

KEY: UN officials are considered foreign officials under the FCPA, as the UN is a “public international organization.” The court rejected Seng’s affirmative defense based on Macao’s lack of foreign bribery laws, stating that this defense only applies where the written foreign law makes bribery lawful—a very tough standard to meet.

  1. Laundering Bribes (Mahmoud Thiam and Heon-Cheol Chi)

On August 25, 2017, Mahmoud Thiam, a New York banker and the former mining minister for Guinea, was jailed for seven years for laundering bribes from Chinese companies. Thiam took $8.5 million USD in bribes from executives of China Sonangol International and China International Fund in exchange for mining rights in Guinea. The bribes were paid through US bank accounts, and were used to pay for renovations to his New York estate, a Steinway grand piano, and private schools.

On July 18, 2017, Heon-Cheol Chi, the Director of South Korea’s Earthquake Research Centre, was convicted by a jury of laundering bribes through the US financial system. He had received $1 million USD in violation of South Korean law from a California and a UK company in exchange for providing them with confidential information and market intelligence, as well as promoting them in the South Korea seismological market. He was sentenced to 14 months in prison, and ordered to pay $15,000 USD.

KEY: Both of these high-ranking foreign officials received bribes in the United States and used the US financial system, thereby providing the basis for US jurisdiction. While the FCPA is targeted at bribe payers, bribe recipients are not immune from US prosecution.

Of similar note, in March 2017, Juthamas Siriwan (the former governor of the Tourism Authority of Thailand) and her daughter, Jittisopa Siriwan, were sentenced by a Thai court to imprisonment for 50 years and 44 years, respectively, for receiving bribes related to the 2009 Bangkok International Film Festival from US film executives Gerald and Patricia Green. The United States had sought to extradite Siriwan but put the proceedings on hold while Thailand pursued its own prosecution.

  1. Patrick Ho and Cheikh Gadio

In November 2017, Patrick Ho Chi-ping (former Hong Kong home secretary, head of an Energy NGO) and Cheikh Gadio (former foreign minister of Senegal) were arrested and charged with conspiracy to violate the FCPA, along with money laundering. Together, the two high-ranking officials allegedly offered a $2 million USD bribe to the President of Chad and paid a $500,000 USD bribe to the Ugandan Foreign Minister (the former president of the UN General Assembly) to obtain oil rights. Gadio also received a $400,000 USD kickback for his role in the scheme, which was “hatched in the halls of the United Nations in New York” (Acting US Attorney SDNY Joon Kim).

KEY: Negotiating and furthering bribes in the United States or being an agent of a “domestic concern” are two ways the jurisdiction of the FCPA can be established. Additionally, as other cases described above make clear, parent companies who authorize and benefit from their subsidiaries’ bribery may also be liable. Indications are that this investigation is continuing.

  1. Bio-Rad Whistleblower Protection

In February 2017, Sanford Wadler (Bio-Rad’s former general counsel) was awarded $8 million USD in back pay, stock compensation and punitive damages for his dismissal by Bio-Rad.  Wadler was fired after sending a memo to the Bio-Rad audit committee in February 2013, expressing concern about FCPA breaches in China. Bio-Rad paid $55 million USD to resolve FCPA violations in 2014.

KEY: This case and the Las Vegas Sands case illustrate the care with which potential whistleblowers must be handled due to their protection under the Dodd-Frank Act.

  1. Declinations

In June 2017, DOJ closed its investigation of CDM Smith, a Massachusetts company that allegedly bribed officials in India’s National Highway Authority to secure contracts.  DOJ based its declination on the company’s self-disclosure of the matter, its participation in the investigation, and termination of all of the executives and employees who were involved in or directed the misconduct. CDM also agreed to disgorgement of more than $4 million USD in profits.

In November 2017, DOJ announced that, under its revised FCPA Corporate Enforcement Policy, it would continue to decline cases that could have otherwise been prosecuted, based on a company’s voluntary disclosure, full cooperation, remediation, and payment of disgorgement, forfeiture and/or restitution.

Conclusion

A few of the 2017 enforcement actions brought longstanding prosecutions to a close, but others were just the initial step in what will no doubt be lengthy investigations. It is likely that Asia Pacific will remain a focus of FCPA enforcement actions throughout 2018.


Tags: AMLFCPA Enforcement Actions
Previous Post

Considering an M&A Deal? What You Should Know

Next Post

TRACE: Understanding Suspension, Debarment and Blacklisting

Wendy Wysong

Wendy Wysong

Wendy L. Wysong is a partner at Steptoe & Johnson. She served previously as a litigation partner with Clifford Chance, offering clients advice and representation on compliance and enforcement under the Foreign Corrupt Practices Act, the Arms Export Control Act, International Traffic in Arms Regulations, Export Administration Regulations, and OFAC Economic Sanctions. She was appointed by the State Department as the ITAR Special Compliance Official for Xe Services (formerly Blackwater) in 2010. Wendy combines her experience as a former federal prosecutor with the United States Attorney for the District of Columbia for 16 years with her regulatory background as the former Deputy Assistant Secretary for Export Enforcement at the Bureau of Industry and Security, U.S. Department of Commerce. She managed its enforcement program and was involved in the development and implementation of foreign policy through export controls across the administration, including the Departments of Justice, State, Treasury and Homeland Security, as well as the intelligence community. Wendy received her law degree in 1984 from the University of Virginia School of Law, where she was a member of the University of Virginia Law Review.

Related Posts

Danske Bank: Money Laundering at Its Finest

Danske Bank: Money Laundering at Its Finest

by Corporate Compliance Insights
January 23, 2023

Something rotten in Denmark: Unpack the $2B settlement Danske Bank made with the U.S. government DOJ, SEC Settlements & Fines...

kleptocracy

Using FinCEN Alerts as a Roadmap to Comply With New Anti-Kleptocracy Regulations

by Jason Ross
January 11, 2023

FinCEN’s mandate to create a beneficial ownership database will continue creating ripple effects for businesses and individuals across all sectors....

investigating real estate money

Show Me (Where You Got) the Money: New AML Rules Promise to Upend Real Estate

by Miles Kellerman
July 13, 2022

In our hot housing market, the only concern for the typical real estate professional is getting the highest dollar they...

russia ukraine war burned out building

Ukraine War Highlights Importance of Banks Investing in the Future of Compliance

by Aidan Houlihan
July 6, 2022

The struggles financial institutions face when it comes to compliance are nothing new. And while technology is often billed as...

Next Post
legal meeting

TRACE: Understanding Suspension, Debarment and Blacklisting

Compliance Job Interview Q&A

Jump to a Topic

AML Anti-Bribery Anti-Corruption Artificial Intelligence (AI) Automation Banking Board of Directors Board Risk Oversight Business Continuity Planning California Consumer Privacy Act (CCPA) Code of Conduct Communications Management Corporate Culture COVID-19 Cryptocurrency Culture of Ethics Cybercrime Cyber Risk Data Analytics Data Breach Data Governance DOJ Download Due Diligence Enterprise Risk Management (ERM) ESG FCPA Enforcement Actions Financial Crime Financial Crimes Enforcement Network (FinCEN) GDPR HIPAA Know Your Customer (KYC) Machine Learning Monitoring RegTech Reputation Risk Risk Assessment SEC Social Media Risk Supply Chain Technology Third Party Risk Management Tone at the Top Training Whistleblowing
No Result
View All Result

Privacy Policy

Founded in 2010, CCI is the web’s premier global independent news source for compliance, ethics, risk and information security. 

Got a news tip? Get in touch. Want a weekly round-up in your inbox? Sign up for free. No subscription fees, no paywalls. 

Follow Us

Browse Topics:

  • CCI Press
  • Compliance
  • Compliance Podcasts
  • Cybersecurity
  • Data Privacy
  • eBooks Published by CCI
  • Ethics
  • FCPA
  • Featured
  • Financial Services
  • Fraud
  • Governance
  • GRC Vendor News
  • HR Compliance
  • Internal Audit
  • Leadership and Career
  • On Demand Webinars
  • Opinion
  • Resource Library
  • Risk
  • Uncategorized
  • Videos
  • Webinars
  • Well-Being
  • Whitepapers

© 2022 Corporate Compliance Insights

No Result
View All Result
  • Home
  • About
    • About CCI
    • Writing for CCI
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Explore Topics
    • See All Articles
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Well-Being at Work
    • Leadership and Career
    • Opinion
  • Vendor News
  • Career Connection
  • Events
    • Calendar
    • Submit an Event
  • Library
    • Whitepapers & Reports
    • eBooks
    • CCI Press & Compliance Bookshelf
  • Podcasts
  • Videos
  • Subscribe

© 2022 Corporate Compliance Insights

Welcome to CCI. This site uses cookies. Please click OK to accept. Privacy Policy
Cookie settingsACCEPT
Manage consent

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
CookieDurationDescription
cookielawinfo-checbox-analytics11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checbox-functional11 monthsThe cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checbox-others11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-necessary11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-performance11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
viewed_cookie_policy11 monthsThe cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
Performance
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytics
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
Advertisement
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
Others
Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet.
SAVE & ACCEPT