This Week in Compliance

This Week in Compliance: Three Final FCPA Enforcement Actions in 2018

Business

  • UK market watchdog plans overhaul of whistleblowing rules: The UK’s Financial Conduct Authority (FCA) indicated this week that it will announce details of a plan to make it easier for whistleblowers to come forward in the new year. The plan is said to focus on maintaining whistleblower confidentiality, information sharing between supervision and enforcement teams, and enhancing oversight of investigations. The FCA said last month that British banks are failing to assess and escalate whistleblower complaints consistently. It also called on these banks to improve arrangements.
  • Former anti-corruption chief of Colombia sentenced for bribery in the U.S.: Luis Gustavo Morena Rivera, the former Colombian National director of Anti-Corruption, was sentenced this week to four years of imprisonment by a federal court in Miami. Moreno was caught in a sting by the U.S. Drug Enforcement Administration (DEA) for soliciting USD 132,000 in bribes to help undermine an investigation into a local politician. The sentence could have been as high as nine years of imprisonment, but U.S. District Judge Ursula Ungaro indicated she took into account that Moreno had been sentenced to five years of jail in Colombia for extortion already.
  • Polycom settles FCPA charges related to Chinese bribe for USD 16 million: Telecommunications technology company Polycom settled FCPA books and records and internal accounting controls charges with the SEC on December 26th in relation to bribery of government officials by resellers and distributors it used in China. As part of the resolution, Polycom agreed to disgorge USD 10.7 million and also paid USD 1.8 million in prejudgment interest along with a USD 3.8 million penalty. On December 20th, the DOJ also issued a “declination with disgorgement” to Polycom, requiring the company to disgorge USD 31 million to resolve bribery offenses committed by employees of the company’s Chinese subsidiaries. The bribery started in 2006 and did not cease until at least July 2014. The company used a parallel deal-tracking and email system located in China, to avoid Polycom’s company-approved systems. The SEC said it took into account the company’s self-disclosure, cooperation, and remediation effort in the settlement. As part of these efforts, the company fired eight individuals, disciplined eighteen others, and ended a relationship with one of its partners.
  • Electrobras pays USD 2.5 million to settle FCPA offenses: Brazilian utility company Electrobras agreed to pay a penalty of USD 2.5 million to the SEC on December 26th to settle charges that it had violated the books and records and internal accounting controls provisions of the FCPA. The SEC said that between 2009 and 2015, officers at Electrobras’ majority-owned nuclear power generation subsidiary rigged bids and arranged for private construction companies to pay bribes for projects to construct a nuclear power plant. The bribes paid to these employees totaled USD 9 million, according to the SEC. The agency also said that “material weaknesses” in Electrobras’ internal controls had contributed to the fact that the bribery went undetected for years. The SEC said that it also received help from Brazil’s Federal Prosecution Service and Police.

Government

  • Former Pakistan PM Nawaz Sharif sentenced to 7 years of imprisonment for corruptionOn December 25th, a court in Islamabad sentenced former Prime Minister Nawaz Sharif to seven years of imprisonment in addition to a USD 25 million fine for corruption. Sharif was sentenced after he could not prove he bought the Al-Azizia Steel Mill in Saudi Arabia with the income that he declared. This is the second time Sharif has been sentenced for corruption offenses in 2018 by the Accountability Court. In July, Sharif was sentenced for 10 years for purchasing upscale apartments in London for which his children were named as owners; that sentence was overturned on appeal in September. Sharif has maintained his innocence and has accused his political adversaries of fabricating a case against him.
  • Peru’s Attorney General dismisses, then reinstates, team investigating Odebrecht scandalPeru’s Attorney General, Pedro Chavarry, dismissed the team investigating the Odebrecht corruption scandal late on Monday, triggering street protests in cities across the country. Chavarry said the two prosecutors had exceeded their authority. President Martin Vizcarra immediately denounced the move, saying the move subverted the country’s drive to purge corruption. Chavarry was criticized by two of the five supreme prosecutors, calling the decision “a death blow” while urging him to reverse it. The prosecutors recently signed a plea deal with Brazilian construction firm Odebrecht that committed the company to provide evidence on about USD 30 million it paid in bribes to politicians in Peru. Following protests and much criticism, Chavarry reversed his decision on Wednesday after other prosecutors declined to take the posts.
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