Top 10 FCPA-Related Cases in Latin America
The Top 10 FCPA-Related Cases in Latin America
In an effort to highlight FCPA enforcement activity in Latin America, particularly in the last few years, we have summarized what we believe are the top 10 FCPA-related cases in Latin America. [Note: This ranking is subjective, based on the impact of these cases in the region beyond only monetary sanctions and/or number of individual prosecutions.]
One distinctive feature of this list is that 8 out of the top 10 cases involve bribes paid in Brazil, which may not necessarily mean that Brazil is the most corrupt country in the region, but it is certainly the country where most FCPA-related enforcement activity has occurred in the region. To read more generally about FCPA trends in Latin America, see FCPA, International Cooperation, Global Settlements and Focus on Latin America.
The Top 10 List:
- Petróleo Brasileiro S.A. (“Petrobras”) (Brazil, ongoing investigation)
- Odebrecht S.A. and Braskem S.A. (Brazil and others — 2016)
- *JBS S.A. (Brazil, ongoing investigation) *Settled in Brazil.
- Siemens AG (Argentina, Mexico, Venezuela — 2008)
- Wal-Mart Stores, Inc. (Mexico and Brazil, ongoing investigation)
- SBM Offshore N.V. (Brazil — 2017)
- Keppel Offshore & Marine Ltd (Brazil — 2017)
- Embraer S.A. (Brazil — 2016)
- Rolls-Royce plc (Brazil — 2017)
- Petróleos de Venezuela, S.A. (“PDVSA”) (Venezuela — starting in 2015 and ongoing)
Description of Cases:
- Petróleo Brasileiro S.A. (“Petrobras”) (Brazil, ongoing investigation)
The Petrobras case is arguably the biggest corruption scandal in the history of Brazil. The investigation (dubbed Lava Jato -Operation Car Wash- in Brazil) began in March 2014 initially centered on a currency exchange business at a petrol station in Brasilia suspected of money laundering, and it would go on to uncover a massive corruption scheme involving the Brazilian state oil company Petrobras.
The scheme involved illegal payments of more than $5 billion, exposing a culture of systemic corruption at the heart of the Brazilian political and corporate establishment. According to the Brazilian public prosecutor’s office (“MPF”), by December of 2017, Lava Jato had resulted in accusations against more than 300 hundred people and nearly 180 convictions for crimes including corruption, abuse of the international financial system, drug trafficking, and money laundering. None other than Luiz Inácio Lula Da Silva, Brazil’s former President, was found guilty of accepting bribes in the form of improvements to a beach house by a construction company that contracted with Petrobras. He’s currently serving a 12-year jail term.
The corruption scheme took place between 2004 and 2014 and involved mainly three groups:
- Petrobras executives: they allowed construction companies to surcharge Petrobras in exchange for bribes.
- Top executives at Brazil’s major construction companies: They secretly created a cartel to coordinate bids on Petrobras contracts and systematically overcharge the company.
- Politicians and political parties: they received personal gifts and/or donations to their campaigns. Since Petrobras is a state-owned entity, politicians could also install executives who could then turn around and reward them with bribes.
There are multiple FCPA cases that have span out of the Petrobras investigation, including Odebrecht S.A., Braskem S.A., Rolls-Royce plc, SBM Offshore N.V., and Keppel Offshore & Marine Ltd (all discussed below).
Petrobras itself is still under investigation by the DOJ and the SEC. American depositary receipts (“ADRs”) of Petrobras trade on the NYSE, and Petrobras is required to file annual reports with the SEC.
Moreover, on March 1, 2018, Petrobras announced that the U.S. District Court for the Southern District of New York (“SDNY”) granted preliminary approval to its agreement to settle the securities class action lawsuit filed in the United States alleging violations of the federal securities laws for purportedly concealing a multi-year, multi-billion dollar bribery and kickback scheme. Petrobras agreed to pay $2.95 billion to the purchasers of Petrobras securities in the United States. This settlement represents the largest securities class action settlement in a decade, the largest settlement ever in a class action involving a foreign issuer, the fifth-largest class action settlement ever achieved in the U.S., and the largest settlement achieved by a foreign lead plaintiff.
2. Odebrecht S.A. and Braskem S.A. (Brazil and others — 2016)
On December 21, 2016, Odebrecht S.A., a global construction conglomerate based in Brazil, and Braskem S.A., a Brazilian petrochemical company, pleaded guilty and agreed to pay a combined total penalty of at least $3,5 billion to resolve charges with authorities in the U.S., Brazil and Switzerland arising out of their schemes to pay hundreds of millions of dollars in bribes to government officials around the world.
Odebrecht is a non-listed Brazilian conglomerate that owned 50.1% of the voting shares and 38.1% of the total share capital of Braskem and effectively controlled the company. Petrobras owned 36.1% of the shares of Braskem. ADRs of Braskem trade on the NYSE, and Braskem is required to file annual reports with the SEC.
During the relevant time period, Odebrecht paid approximately $788 million in bribes in connection to more than 100 projects in twelve countries, including Angola, Argentina, Brazil, Colombia, Dominican Republic, Ecuador, Guatemala, Mexico, Mozambique, Panama, Peru and Venezuela. The benefits for Odebrecht (profits earned on a particular project for which a profit was generated as the result of a bribe payment) amounted to approximately $3.3 billion.
The main focus of the DOJ (and the exclusive focus of the SEC) was centered around the conduct of Odebrecht and Braskem in Brazil, where approximately $349 million in bribes were paid to politicians, political parties and government officials, including Petrobras officials, in order to secure an improper advantage to obtain and retain business for Odebrecht. Odebrecht benefited by more than $1.9 billion as a result of these corrupt payments.
Outside of Brazil, Odebrecht paid $439 million to foreign officials from 11 countries. Odebrecht benefited by more than $1.4 billion as a result of these corrupt payments.
Braskem authorized a division of Odebrecht known as the Division of Structured Operations to pay $250 million in bribes to government officials, in exchange for helping Braskem maintain a joint venture contract with Petrobras, a reduction in pricing for raw materials that Braskem purchased from Petrobras, as well as reductions in Braskem’s tax liabilities, plus other benefits.
The resolution of the Odebrecht case included: 1) a guilty plea; b) a criminal fine of $2.6 billion paid to the United States, Brazil and Switzerland; c) the imposition of an independent compliance monitor for a three-year term; d) ongoing reporting obligations; and e) Odebrecht’s continued obligations to enhance its compliance program and cooperate fully with authorities, among others.
The resolution of the Braskem case included a global settlement to pay $957 million. Braskem agreed to pay $325 million in disgorgement, including $65 million to the SEC and $260 million to Brazilian authorities. Braskem agreed to pay more than $632 million in criminal penalties and fines. The company was ordered to retain an independent corporate monitor for at least three years.
From Odebrecht and Braskem’s total penalties of $3.5 billion, Brazil recovered the largest amount, $2.8 billion (70% of the criminal sanctions and 80% of the civil sanctions), the U.S. got $420 million (10–15% of the criminal sanctions and 20% of the civil sanctions) and Switzerland got $355 million (10–15% of the criminal sanctions). However, on April 17, 2017 the DOJ filed a memorandum in its case against Odebrecht S.A., requesting that the Court approve a lower sentence than originally proposed based on Odebrecht’s “inability to pay” as a reason for the reduction in the U.S. criminal penalty from $260 million down to $93 million. Thus, the total amount allocated to the U.S. went from $420 million to $253 million.
It’s also important to note that this case has had a massive influence in other Latin American countries, such as the following:
- Argentina: Odebrecht paid $35 million to Argentinean government officials between 2007–2014. The corrupt payments were made in association with at least three infrastructure projects, and Odebrecht realized benefits of approximately $278 million.
- Colombia: Odebrecht paid $11 million to Colombian government officials between 2009–2014. Odebrecht realized benefits of more than $50 million as a result of these corrupt payments. In August of 2017, a senior Colombian senator, close to Colombian President Juan Manuel Santos, was arrested for having received bribes from Odebrecht.
- Dominican Republic: Odebrecht paid $92 million to Dominican government officials between 2001–2014. Odebrecht realized benefits of more than $163 million as a result of these corrupt payments. In April of 2017, a judge approved an agreement by Odebrecht to pay $184 million, or double what it paid in bribes, to settle the case. In late May of 2017, nearly a dozen people, including current and former top officials, were arrested in the Dominican Republic in connection to this case.
- Ecuador: Odebrecht paid $33.5 million to Ecuadorian government officials between 2007–2016. Odebrecht realized benefits of more than $116 million as a result of these corrupt payments. On December 13, 2017, the Vice-President of Ecuador, Jorge Glas, was sentenced to 6 years in jail. Local prosecutors said he took $13.5 million in bribes from Odebrecht.
- Guatemala: Odebrecht paid $18 million to Guatemalan government officials between 2013–2015. Odebrecht realized benefits of more than $34 million as a result of these corrupt payments. In January of 2018, Odebrecht agreed to pay Guatemala $17.9 million in compensation for bribes paid to ex-infrastructure minister Alejandro Sinibaldi to arrange for Odebrecht to secure a $300 million contract. Sinibaldi has been fugitive since mid-2016.
- Mexico: Odebrecht paid $10.5 million to Mexican government officials between 2010–2014. Odebrecht realized benefits of more than $39 million as a result of these corrupt payments. In April of this year Mexico banned federal institutions and state governments from doing business with Odebrecht S.A. for the next 2–1/2 years, and fined the company around $60 million. In December of last year, Mexico had banned Odebrecht from bidding for federal public contracts for 4 years after the Public Administration Ministry (SFP) said it had sanctioned the company for an “incorrect charge” with Pemex.
- Panama: Odebrecht paid $59 million to Panamanian government officials between 2010–2014. Odebrecht realized benefits of more than $175 million as a result of these corrupt payments. In August of 2017 Odebrecht agreed to pay $220 million in fines to local authorities and will cooperate with investigators probing bribes of Panamanian officials. The current President of Panama, Juan Carlos Varela, and former President Ricardo Martinelli have both been implicated in this corruption scandal.
- Peru: Odebrecht paid $29 million to Peruvian government officials between 2005–2014. Odebrecht realized benefits of more than $143 million as a result of these corrupt payments. On March 21, 2018, the President of Peru, Pedro Pablo Kuczynski, resigned after secret video recordings entangled him in the Odebrecht corruption scandal. Three former Presidents of Peru, Alejandro Toledo, Alan García y Ollanta Humala, have been implicated in this case.
- Venezuela: Odebrecht paid $98 million to Venezuelan government officials between 2006–2015. The benefits for Odebrecht as a result of these corrupt payments have not been disclosed. The current President of Venezuela, Nicolás Maduro, allegedly received at least $35 million in bribes from Odebrecht in 2013, according to the country’s former attorney general, who fled the country in August.
Due to regional implications of this case, in February of 2017, Brazil coordinated an agreement between 10 Latin American countries including Argentina, Chile, Colombia, Ecuador, Mexico, Panama, Peru, Dominican Republic, Venezuela, Portugal and Brazil, to start a combined task force with bilateral and multilateral investigative teams to share evidence in the investigation of bribes paid by Odebrecht on construction projects across the region.
Odebrecht S.A. is now making considerable efforts to change its governance, culture and compliance, but questions remain about whether the firm can regain trust, particularly after decades of corruption. Several Odebrecht subsidiaries have changed their names amid the turmoil and the company has cut its headcount from 181,000 employees (2014) to 60,000 today. Almost 80 former and current Odebrecht employees have reached plea bargains with prosecutors in Brazil and several investigations are ongoing. The Odebrecht family is no longer in charge of day-to-day operations, but former CEO Emilio Odebrecht, the father of Marcelo, is (strangely) still chairman of the board, though he is expected to step down once a new board is voted on.
3. JBS S.A.(Brazil, under investigation)
On May 31, 2017, JBS S.A. the world’s largest meat-processing company, which was 42% owned by J&F Investimentos S.A. (“J&F”), announced that it had entered into leniency agreement with MPF in connection with corruption investigations in industries and sectors such as pension funds, meat-packaging, and bank loans from BNDES. Under the terms of the agreement, J&F would pay the Brazilian government a fine of $3.2 billion.
The settlement follows testimony from J&F’s owners Joesley and Wesley Batista that they spent $154 million to bribe nearly 1,900 politicians in recent years, revelations that have deepened Brazil’s political crisis.
Joesley Batista is at the center of a corruption investigation into Michel Temer, the current Brazilian President, after secretly recording a conversation in which the president appeared to condone bribing a potential witness. Other JBS executives in plea-bargain testimony accused Temer of taking nearly $4.6 million in bribes from the company in recent years. Other allegations have implicated former Brazilian Presidents Luiz Inacio Lula da Silva and Dilma Rousseff of receiving $80 million in bribes in offshore accounts.
The massive leniency agreement fine in the JBS case is even higher than the one levied against Odebrecht S.A.($2.6 billion). This is an extraordinary feat, and signals a real shift in enforcement activity. In parallel, certain executives, including Joesley and Wesley Batista, entered into cooperation agreements.
On the U.S. front, on August 3, 2017, Pilgrim’s Pride Corporation, a U.S. listed company controlled by J&F (the largest chicken producer in the United States and Puerto Rico, and the second-largest chicken producer in Mexico), announced in a 10-Q filing that “J&F is conducting an internal investigation involving improper payments made in Brazil by J&F, certain companies controlled by J&F, and certain officers of J&F (including two former directors of the Pilgrim’s Pride Corporation), as previously announced in connection with leniency agreements entered into by J&F and those individuals with Brazilian authorities. J&F has engaged outside advisors to assist it in conducting the investigation, including an assessment as to whether any of the misconduct disclosed to Brazilian authorities had any connection to the Company, or resulted in a violation of US law. The internal investigation is ongoing and the Company is fully cooperating with J&F in connection with the investigation.”
This FCPA investigation is ongoing.
4. Siemens AG (Argentina, Mexico and Venezuela — 2008)
On December 15, 2008, Siemens Aktiengesellschaft (Siemens AG), a German corporation, and three of its subsidiaries pleaded guilty to violations of and charges related to the FCPA in a global scale, including violations in Argentina, Mexico and Venezuela. Coordinated enforcement actions by DOJ, SEC and German authorities resulted in global penalties of $1.6 Billion.
The U.S. penalties were at the time by far the largest monetary sanctions ever imposed in a FCPA case, dwarfing the prior record of $44 million paid by Baker Hughes in April of 2007. The company also agreed to retain an independent compliance monitor for a term of four years.
The DOJ Criminal Information and SEC Complaint detailed systematic efforts by Siemens for nearly a decade to bribe foreign officials in an attempt to obtain or retain business. The pleadings detail elaborate payment mechanisms created by Siemens to conceal the nature of its corrupt payments and highlight how Siemens’s lax internal controls created a culture of pervasive corruption at nearly all levels and in all regions within the Company. This led to over 4,000 identified payments totaling $1.36 billion, of which the DOJ identified $805 million as used for corrupt payment to officials and $554 million for “unknown” purposes. The Company typically made illicit payments through intermediaries using a wide variety of means, including off-books accounts, “slush funds,” “cash desks,” false documentation, and other mechanisms intended to conceal the true nature of payments.
In Latin America, corrupt schemes were disclosed in the following countries:
- In Argentina, between 1996 and 2007, Siemens S.A. (Argentina) paid at least $15,725,000 in bribes directly to entities controlled by members of the Argentine government; at least $35,150,000 directly to the Argentine Consulting Group (a group of entities headquartered in Central and South America, controlled by a board member of Siemens S.A. Argentina); and at least $54,908,000 to other entities. These bribes were paid to secure a $1 billion contract to produce national identity cards known as Documentos Nacionales de Identidad (DNI) for every Argentine citizen.
- In Venezuela, between 2001 and 2007, Siemens S.A. (Venezuela) paid bribes involving two infrastructure projects: Metro Valencia, a project to design and build a rail mass transit system in the City of Valencia (total estimated value of $240 million); and Metro Maracaibo, a project to design and build a rail mass transit system in the city of Maracaibo (total estimated value of $100 million). In total, Siemens S.A. (Venezuela) paid $18,782,965 in bribes to obtain and retain these projects.
- In Mexico, in late 2004, Siemens paid around $2.6 million in bribes to a politically connected consultant to help settle cost overrun claims with refinery modernization projects in Mexico (PEMEX).
5. Wal-Mart Stores, Inc. (Mexico, under investigation)
In November of 2011 Wal-Mart Stores, Inc. (“WalMart”) disclosed that it was under investigation by the DOJ and the SEC for potential FCPA violations by its largest subsidiary, WalMart de Mexico, for allegedly paying $24 million in bribes to Mexican public officials to help WalMart win approvals to open more stores. Since then, the FCPA investigation has involved allegations of potential FCPA violations in Brazil, China, and India.
The case got a lot of media attention after the New York Times published an investigation of Wal-Mart’s alleged bribery in Mexico and the cover up that followed in 2012. The reporters David Barstow and Alejandra Xanic von Bertrab were awarded the Pulitzer Prize in 2013 for their reports on “how Wal-Mart used widespread bribery to dominate the market in Mexico, resulting in changes in company practices”.
This case has acquired notoriety not so much due to the size and extent of the bribes (at this point uncertain, despite the explosive reporting by the NYT), but mostly because Walmart is one of the largest and most successful companies in the world. For the sixth year in a row and the 14th time, total, Walmart has secured the №1 spot on the Fortune 500 list. With revenue of $500.3 billion, the retailer tops the annual list of America’s largest companies. It employs 2.3 million associates around the world.
At the time of this writing there has been no resolution of the case. WalMart did report on November 16, 2017 that its discussions with enforcement agencies “have progressed to a point that the Company can now reasonably estimate a probable loss and has recorded an aggregate accrual of $283 million with respect to these matters. As the discussions are continuing, there can be no assurance that the Company’s efforts to reach a final resolution with the government agencies will be successful or, if they are, what the timing or terms of such resolution will be.”
Another interesting element of the WalMart case is that the company has reported spending over US$880 million on legal costs and compliance enhancements in response to these allegations. The company has undertaken a sustained effort to build a world-class global ethics and compliance program. The company redesigned their program to manage the compliance risks associated with 14 different subject areas, ranging from anti-corruption to food safety (their ethics and compliance personnel now accounts for more than 2,300 associates worldwide). For several years, Walmart has published a summary of their efforts to build and refine their ethics and compliance program. You can read more details about WalMart’s ethics and compliance program in this article.
6. SBM Offshore N.V. (Brazil — 2017)
On November 29, 2017, SBM Offshore N.V. (“SBM”), a Netherlands-based company specializing in the manufacture and design of offshore oil drilling equipment, and its wholly owned U.S. subsidiary, SBM Offshore USA Inc. (“SBM USA”), agreed to resolve criminal charges and pay a criminal penalty of $238 million in connection with schemes involving the bribery of foreign officials in Brazil, Angola, Equatorial Guinea, Kazakhstan and Iraq. It was established that between 1996 and 2012, SBM conspired to violate FCPA by paying more than $180 million in commissions to intermediaries, knowing that a portion of those commissions would be used to bribe foreign officials in Brazil, Angola, Equatorial Guinea, Kazakhstan and Iraq. SBM acknowledged that it gained at least $2.8 billion from projects it obtained from these state-owned oil companies.
According to DOJ’s Information, from at least 1996 through 2012, SBM knowingly paid bribes through an intermediary to officials within the Brazilian government for the purpose of securing an improper advantage and assisting SBM in its business from Petrobras. SBM paid bribes to at least three officials from Petrobras — all through an intermediary “who provided sales and marketing services to SBM in Brazil” and owned several Brazil-based oil and gas services intermediary companies, as well as several offshore shell companies. The intermediary received “commissions” for Petrobras projects that were awarded to SBM.
In 2014, DOJ had declined to pursue enforcement action against SBM based on the apparent absence of a jurisdictional nexus, but DOJ re-opened the case in 2016 based on new information reportedly showing that a U.S. subsidiary and a U.S. executive were involved in the misconduct at issue. SBM had settled with the Dutch Public Prosecutor’s Office in 2014 for related conduct, agreeing to pay $200 million in disgorged profits and a $40 million fine — an amount the DOJ credited when calculating the 2017 penalties. According to the Deferred Prosecution Agreement, the U.S. also credited the amount in the announced provision taken by SBM in connection with its efforts to reach a resolution in Brazil. SBM’s total penalties for the actions underlying these resolutions, therefore, constitute more than $475 million. However, this amount does not include the $342 million in cash penalties and discounts on future work that SBM has agreed to pay Petrobras. The total sanctions amount could reach approximately $820 million.
7. Keppel Offshore & Marine Ltd. (Brazil — 2017)
On December 22, 2017, Keppel Offshore & Marine Ltd. (“Keppel”), a Singapore-based company that operates shipyards and repairs and upgrades shipping vessels, and its wholly owned U.S. subsidiary, Keppel Offshore & Marine USA Inc. (“Keppel USA”), agreed to pay a combined total penalty of more than $422 million to resolve charges with authorities in the United States, Brazil and Singapore. It was established that between 2001 and 2014, Keppel paid approximately $55 million in bribes to officials at Petrobras and to the then-governing political party in Brazil, in order to win 13 contracts with Petrobras and another Brazilian entity. Keppel benefited by more than $351 million as a result of these corrupt payments.
While Keppel is neither an issuer nor a domestic concern, the DOJ alleged that it conspired with its U.S. subsidiary and the subsidiary’s agents. In addition to announcing the Keppel settlement, DOJ also unsealed charges against a senior member of Keppel’s legal department who had pleaded guilty in August 2017 to conspiring to violate the FCPA and cooperated in the investigation. In connection with his plea agreement, the Keppel lawyer — a U.S. citizen living in Singapore — admitted that he drafted contracts used to overpay a third-party agent with the understanding that the excess funds would be passed on to Brazilian officials.
The United States credited the amount the company paid to Brazil and Singapore under their respective agreements, with Brazil receiving $211,108,490 (equal to 50% of the total criminal penalty) and the U.S. and Singapore each receiving up to $105,554,245 (equal to 25% of the total criminal penalty).
8. Embraer S.A. (Brazil — 2016)
On October 24, 2016, Brazilian aircraft manufacturer Embraer S.A. (“Embraer”) agreed to pay a combined total penalty of more than $205 million to resolve charges with authorities from the United States and Brazil. This was the first case where U.S. and Brazilian authorities collaborated and coordinated their enforcement actions.
According to the company’s admissions, Embraer executives and employees paid bribes to government officials and falsified books and records in connection with aircraft sales to foreign governments and state-owned entities in multiple countries, including Dominican Republic, Saudi Arabia, Mozambique and India. Embraer earned profits of nearly $84 million on the foregoing aircraft sales.
Embraer entered into a three-year DPA with the DOJ to resolve the case. As part of the DPA, Embraer admitted to its involvement in a conspiracy to violate the FCPA’s anti-bribery and books and records provisions and to its willful failure to implement an adequate system of internal accounting controls. Embraer agreed to: 1) pay a criminal penalty of $107,285,090; 2) continue to cooperate with the department’s investigation; 3) enhance its compliance program; 4) implement a more adequate system of internal accounting controls; and 5) retain an independent corporate compliance monitor for a term of three years.
Embraer also reached settlements with both the SEC and Brazilian authorities. Embraer reached a settlement with the SEC, under which it agreed to pay $83.8 million in disgorgement and $14.4 million in prejudgment interest. The SEC agreed to credit the disgorgement that Embraer pays to Brazilian authorities. Embraer also reached a settlement with Brazilian authorities under which it agreed to pay $20 million in disgorgement.
With the cooperation of U.S. authorities, Brazilian authorities charged 11 individuals for their alleged involvement in Embraer’s misconduct in the Dominican Republic. Saudi Arabian authorities charged two individuals for their alleged involvement in Embraer’s misconduct in Saudi Arabia.
9. Rolls-Royce plc (Brazil — 2017)
On January 17, 2017, Rolls-Royce plc, the United Kingdom-based manufacturer and distributor of power systems for the aerospace, defense, marine and energy sectors, agreed to pay the U.S. nearly $170 million as part of an $800 million global resolution to investigations by the DOJ, U.K. and Brazilian authorities into a long-running scheme to bribe government officials in exchange for government contracts.
Rolls-Royce admitted that between 2000 and 2013, the company conspired to violate the FCPA by paying more than $35 million in bribes through third parties to foreign officials in various countries in exchange for those officials’ assistance in providing confidential information and awarding contracts to Rolls-Royce, RRESI and affiliated entities. The countries where bribes were paid included Thailand ($11 million), Brazil ($9.3 million), Kazakhstan ($5.4 million), Azerbaijan ($7.8 million), Angola($2.4 million) and Iraq (undisclosed).
In Brazil, Rolls-Royce used intermediaries to pay approximately $9.3 million to bribe foreign officials at Petrobras that awarded multiple contracts to Rolls-Royce during the same time period.
Rolls-Royce entered into a DPA agreeing to: 1) pay a criminal penalty of $195,496,880 (subject to a credit that Rolls-Royce agreed to pay in Brazil against the total fine in the United States); 2) continue to cooperate fully with the DOJ’s ongoing investigation, including its investigation of individuals; 3) continue to enhance its compliance program and internal controls; and 4) self-report for a 3 year period.
In related proceedings, Rolls-Royce also settled with the United Kingdom’s Serious Fraud Office (SFO) and the Brazilian Ministério Público Federal (MPF). As part of its resolution with the SFO, Rolls-Royce entered into a DPA and admitted to paying additional bribes or failing to prevent bribery payments in connection with Rolls-Royce’s business operations in China, India, Indonesia, Malaysia, Nigeria, Russia and Thailand between in or around 1989 and in or around 2013, and Rolls-Royce agreed to pay a total fine of $604,808,392. As part of its leniency agreement with the MPF, Rolls-Royce also agreed to pay a penalty of approximately $25,579,170 for the company’s role in a conspiracy to bribe foreign officials in Brazil between 2005 and 2008.
10. Petróleos de Venezuela, S.A. (“PDVSA”) (Venezuela — starting in 2015 and ongoing)
PDVSA is the Venezuelan state-owned oil and natural gas company. It has activities in exploration, production, refining and exporting oil, as well as exploration and production of natural gas. The DOJ has been investigating corrupt schemes to secure contracts from PDVSA since at least 2015 (charges were first brought in late 2015).
The DOJ has announced charges against 15 individuals, 10 of whom have pleaded guilty, as part of the ongoing investigation into bribery at PDVSA.
- On March 23, 2016, the DOJ announced that Abraham Jose Shiera Bastidas (Shiera), of Coral Gables, Florida, pleaded guilty in federal court to one count of conspiracy to violate the FCPA and commit wire fraud and one count of violating the FCPA. Shiera’s co-conspirator, Roberto Enrique Rincon Fernandez (Rincon), of Texas, pled not guilty to all counts in December. The indictment alleges that Shiera and Rincon orchestrated a scheme whereby Shiera and Rincon’s companies allegedly would make wire payments to PDVSA officials’ bank accounts to secure energy contracts from PDVSA. That followed charges against four other individuals charged in connection with the investigation. In January 2016, Moises Abraham Millan Escobar (Millan), of Katy, Texas, pleaded guilty under seal to one count of conspiracy to violate the FCPA for his role in the PDVSA bribery scheme. Millan was Shiera’s former employee. In December 2015, three former PDVSA officials, Jose Luis Ramos Castillo (Ramos); Christian Javier Maldonado Barillas (Maldonado); and Alfonzo Eliezer Gravina Munoz (Gravina), all from Katy, each pleaded guilty under seal to conspiracy to commit money laundering. As part of their guilty pleas, Ramos, Maldonado and Gravina each admitted that while employed by PDVSA or its wholly owned subsidiaries or affiliates, they accepted bribes from Shiera and Rincon in exchange for taking certain actions to assist companies owned by Shiera and Rincon in winning energy contracts with PDVSA.
- On June 16, 2016, the DOJ and U.S. Immigration and Customs Enforcement (“ICE”) announced that Rincon, a Venezuelan national and resident of Texas, pled guilty to violating the anti-bribery provisions of the FCPA, a related conspiracy count, and making a false statement on his income tax return. Rincon had initially pled not guilty after being arrested in December 2015.
- On January 10, 2017, the DOJ announced that Juan Jose Hernandez Comerma (Hernandez) and Charles Quintard Beech III (Beech) each pled guilty in the U.S. District Court for the Southern District of Texas to one count of conspiracy to violate the anti-bribery provisions of the FCPA. The Information charging Beech alleges that he and his co-conspirators orchestrated a scheme to secure contracts from PDVSA for the provision of equipment and services by providing payments and other things of value to PDVSA officials. The Information charging Hernandez alleges similar conduct, highlighting Hernandez’s role in transferring funds to a bank account controlled by a purchasing manager of a PDVSA subsidiary and covering hotel stays for PDVSA officials in New York City and Miami Beach.
- On October 11, 2017, Fernando Ardila-Rueda (Ardila), a Florida businessman, pled guilty to one count of violating and one count of conspiring to violate the FCPA. According to admissions made in connection with his plea, Ardila conspired with Shiera and Rincon to pay bribes and other things of value to PDVSA purchasing analysts. From 2008 through 2014, while he was sales director, manager and partial owner of several of Shiera’s companies, Ardila provided entertainment and offered bribes to PDVSA officials based on a percentage of the value of contracts the officials helped to award to Shiera’s companies.
- On February 12, 2018, five former PDVSA officials were charged by the DOJ for their alleged participation in an international money laundering scheme involving bribes made to PDVSA. Two of the five defendants are also charged with conspiracy to violate the FCPA. Four of the defendants, Luis Carlos De Leon Perez (De Leon); Nervis Gerardo Villalobos Cardenas (Villalobos); Cesar David Rincon Godoy (Cesar Rincon); and Rafael Ernesto Reiter Munoz (Reiter), were arrested in Spain in October 2017 by Spanish authorities on arrest warrants. A fifth defendant, Alejandro Isturiz Chiesa (Isturiz), remains at large. The indictment alleges that the five defendants conspired with each other and others to solicit several PDVSA vendors for bribes and kickbacks in exchange for providing assistance to those vendors in connection with their PDVSA business. The indictment further alleges that the co-conspirators then laundered the proceeds of the bribery scheme through a series of complex international financial transactions.