This Week in Compliance: Democratic Convergence of Catalonia Party found guilty of corruption

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

Business

• Former co-president of Maryland transport company charged with bribery of Russian official: Mark Lambert, former co-president of Transport Logistics International, a Maryland-based company that transports nuclear materials to customers in the United States and abroad, was charged with violating the FCPA, wire fraud and money laundering among other offences. The charges are related to a scheme Lambert manoeuvred to bribe Vadim Mikerin, a Russian official at JSC Techsnabexport (TENEX), a subsidiary of the Russian State Atomic Energy Corporation. According to the DOJ, Lambert and his co-president, Daren Condrey, allegedly paid USD 2 million in bribes to the official, through a series of shell company bank accounts in Cyprus, Latvia, and Switzerland, in return for uranium transportation contracts. Condrey has pleaded guilty to conspiracy to violate the FCPA and wire fraud and is awaiting sentencing. The Russian official is serving a 48 months’ prison sentence and has been ordered to forfeit USD 2.1 million.
• SFO opens corruption investigation into Chemring and a subsidiary: The UK Serious Fraud Office (SFO) has opened a criminal investigation into corruption, bribery and money laundering within the defense technology firm Chemring Group PLC and its subsidiary Chemring Technology Solutions Limited (CTSL) following the latter’s self-disclosure of misconduct within the company. According to Chemring, the corruption investigation is connected to two contracts in particular, "the first of which was awarded prior to the Group’s ownership of the business concerned and the second in 2011." The company added that it is fully cooperating with authorities.
• Teva reaches Conditional Agreement with Israeli authorities: Teva Pharmaceuticals Industries Ltd. has reached a Conditional Agreement with the Office of the Israel’s Tax and Economic Prosecutor to settle the bribery issues Teva had resolved with U.S. authorities. According to the agreement, Teva will pay an administrative fine of approximately USD 22 million, but no indictment with be filed. This is the second enforcement action under Israel’s foreign bribery statute since its enactment in 2008, and the first in which a Conditional Agreement was used. In 2016, Teva paid USD 519 million in penalties to the DOJ to resolve an FCPA enforcement action. Reportedly, Teva had bribed government doctors in Mexico, hired a Ukrainian government official as consultant, to whom it paid USD 200,000 through monthly fees and travel, and did business in Russia with a repackaging company owned by a government official, the latter whom earned USD 65 million from the agreement.

Government

• Democratic Convergence of Catalonia Party found guilty of corruption: A court in Barcelona found the Democratic Convergence of Catalonia (CDC) guilty of receiving EUR 6.6 million in illegal commissions from building firm Ferrovial between 1999 and 2009, in exchange for lucrative public works contracts. The party’s former treasurer, Daniel Osàcar, was handed a four-year jail sentence and fined EUR 3.7 million for his role in the scheme which was channelled through the Palau de la Música Catalana concert venue, reportedly used as a front for false invoicing. A Deloitte audit report revealed that EUR 35 million have gone missing from the Palau accounts. Palau’s former director, Fèlix Millet, also received a prison sentence of almost 10 years and a fine reaching EUR 4.1 million, while Millet’s deputy, Jordi Montull, was sentenced to seven and a half years’ imprisonment and fined EUR 2.9 million.
• Argentina’s former vice president freed from jail: Argentina’s appeals court ruled that former economy minister and vice president, Amado Boudou, was to be freed from jail after ruling that Boudou was unlikely to interfere in a corruption case against him. Boudou was arrested last November on charges of racketeering and money laundering. He had served under former President Cristina Fernandez and has so far been the second senior official from the former president’s administration – after planning minister Julio De Vido – to be detained on corruption charges. Last month, a federal judge called on Congress to remove Fernandez’s immunity as senator so she could be arrested. Boudou faces three counts of illicit enrichment dating back to 2009.

Noteworthy

• Preservation order to be served on Trillian and McKinsey: South Africa’s National Prosecuting Authority (NPA) confirmed that a preservation order is expected to be served on Trillian and McKinsey for assets worth approximately ZAR 1.6 billion. Both Trillian and McKinsey are connected to the Gupta family and the order is reportedly related to consultancy work the companies had done for Eskom and Transnet. Once the order is served, the accounts of both Trillian and McKinsey will be frozen and assets preserved. If the consultancies decide to defend the case in court, they will need to prove that the assets were not acquired through corrupt means. If they fail to do so, the NPA will apply for a forfeiture order within 90 days.