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This Week in Compliance: Arrest in PDVSA corruption case

By GAN Integrity

Here’s what's been going on in the compliance world this week: 


  • SBM Offshore settles corruption probe with Brazilian authorities: Dutch engineering group SBM Offshore has reached a settlement in a long-running corruption investigation conducted by the Brazilian authorities. As part of the settlement, SBM will pay USD 189 million to the authorities and oil company Petrobras in fines and compensation. In addition, the company will forfeit USD 180 million in agreed performance bonuses up to 2030. The company was accused of paying bribes to government officials in order to win contracts with Petrobras, one of the companies at the center of Brazil’s sprawling corruption scandal. The settlement will end all corruption investigations into SBM in Brazil and will allow the company to bid on tenders issued by Petrobras again.
  • Chinese infotech firms debarred by World Bank: Chinese information technology firm Jiangsu Zhidehuatong Information Technology Co., Ltd. has been debarred from World Bank contracts for 15 months for providing a fake certificate for technical equipment used on a traffic control project in China. The falsified certificate was meant to mislead procurement authorities into believing that the bidder met the project’s tender requirements. The offenses relate to the USD 210 million Hubei Ziangyang Urban Transport Project of which the World Bank financed USD 100 million. The debarment period was reduced because the company took remedial action and cooperated. The debarment qualifies for cross-debarment by several other development banks.
  • Arrest in PDVSA corruption case: Businessman Jose Manuel Gonzalez Testino (Gonzalez), a dual U.S.-Venezuelan citizen was arrested at Miami International Airport on Tuesday. Gonzalez was charged by the U.S. Department of Justice with conspiring to violate the Foreign Corrupt Practices Act for bribing an official at PDVSA, Venezuela’s state-owned energy company. The indictment alleges that Gonzalez paid at least USD 629,000 in bribes to an official at the company. The official was supposed to help Gonzalez’s companies win contracts with PDVSA. Gonzalez is the seventeenth person to be indicted in relation to the PDVSA case. Twelve have pleaded guilty so far.
  • South Africa’s Treasury completes corruption probe into state-owned firms Eskom and Transnet: An investigation into corruption allegations at the South African state firms was concluded this week. Parties will have two weeks to respond before the findings will become public. Eskom is being investigated over an agreement with Tegeta Exploration and Resources, a company owned by the Gupta family which has come under scrutiny for its relationship with former president Jacob Zuma. The charges against Transet relate to the purchase of over 1,000 trains from China South Rail. The investigation relates to a larger inquiry into widespread corruption under former President Zuma’s administration. Other firms caught up in the inquiry include IT company SAP and global consultancy McKinsey.


  • China’s former internet regulator charged with bribery: Lu Wei, China’s former Chief of Internet Regulation, has been charged with taking bribes. Lu stands accused of using his position to reap personal monetary and property gain. As China’s chief of internet regulation, Lu was one of China’s most senior officials. Lu was fired from his position in July 2015 and it was announced in November 2017 that he was being detained as part of a corruption inquiry. It is unclear what will happen now that Mr. Lu has formally been charged.
  • Ex-NY State Assembly Speaker sentenced to 7 years of imprisonment: Sheldon Silver, the former speaker of the New York State Assembly was sentenced to seven years of imprisonment by a federal judge in Manhattan. Silver was found guilty of taking USD 4 million in bribes and kickbacks in return for misdirecting state money to a prominent cancer researcher as well as supporting a real estate developer’s interests on rent legislation. The former speaker was earlier convicted of corruption in 2015, but that conviction was overturned on appeal which led to a second trial.


  • FIFA council members call for release of evidence behind Qatar 2022 World Cup bid corruption claims: Several members of FIFA’s ruling council have called on the body’s ethics committee to demand evidence behind allegations that Qatar ran a secret campaign to sabotage their rivals in the bid for the 2022 World Cup. A whistleblower report holds that the bid team used a PR agency and former CIA operatives to disseminate false information about its main rivals, the United States and Australia, in a bid to sabotage their campaigns. The efforts included recruiting prominent figures in the respective countries to criticize the bids of their own countries. It has also been alleged that that professor was paid GBP 6,900 to write a damning report about the economic cost of a World Cup hosted in the U.S.

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