Corruption Crime & Compliance

The Justice Department continues to produce FCPA resolutions in a record year for enforcement.  The latest is DOJ’s settlement with Vitol, Inc. (Vitol), an energy trading company. DOJ agreed to a three-year deferred prosecution agreement (DPA) in exchange for a criminal penalty of $135 million.  One-third of the payment, or $45 million, would be credited if Vitol pays $45 million to Brazil prosecutors for resolution of the case. Vitol also agreed to a civil settlement with the Commodities Futures Trading Commission (CFTC) for $28.7 million, $12.7 million of which was for disgorgement.  The Vitol case represented the first coordinated FCPA enforcement action between DOJ and the CFTC. Vitol’s DOJ and Brazil settlements stem from Vitol bribery schemes in Brazil, Ecuador and Mexico.  Over a fifteen year period, Vitol paid millions of dollars in bribes to numerous public officials in Brazil, Ecuador and Mexico. In this Episode, Michael Volkov reviews Vitol's FCPA settlement and the bribery schemes.

Companies have to implement a sanctions compliance program (SCP). The Treasury Department Office of Foreign Asset Control’s sanctions guidance issued in May 2019 is an extraordinary document and includes numerous prescriptive requirements.  Companies ignore the SCP Guidance at their peril. The Treasury Department’s Office of Foreign Asset Control (OFAC) has a robust and mature enforcement program.  Over the last few years, OFAC has successfully expanded its enforcement focus beyond the financial industry and now targets manufacturing, service and other industries. The Justice Department expects companies to voluntarily disclose potential sanctions violation where there is evidence that the violation may be willful. In this Episode, Michael Volkov reviews five basic steps companies should take to implement a sanctions compliance program.

In a far-reaching action, the Health and Human Services – Office of Inspector General (HHS-OIG) issued a Special Fraud Alert underscoring the “inherent fraud and abuse risks” associated with company-sponsored speaker programs. In this Episode, Michael Volkov reviews the HHS-OIG Fraud Alert.

Brian Whisler is a long-time white collar practitioner at Baker McKenzie.  Brian joined me to discuss the new Biden Administration and the enforcement outlook from the Biden Department of Justice.  Brian has a unique perspective since he served as part of the DOJ transition in 2001 for the incoming Bush Administration. Brian has been a partner at Baker McKenzie for 12 years.  Prior to joining Baker McKenzie, Brian served for fifteen years as a federal prosecutor with the US Department of Justice. During that time, he was the Criminal Chief Assistant US Attorney in the Eastern District of Virginia, Richmond, overseeing and prosecuting cases ranging from white collar crime, violent crime, public corruption, and terrorism. His trial practice focused predominantly on white collar cases, including health care fraud, securities fraud, public corruption, money laundering and tax fraud. He previously served as an Assistant US Attorney for the Western District of North Carolina for ten years, where he focused on white collar prosecutions and received the Attorney General’s Award for his prosecutions in a money laundering investigation resulting in convictions of more than 25 defendants after three jury trials and multiple guilty pleas. Brian has extensive federal trial and appellate experience, having tried over 30 cases to verdict and argued more than 40 cases at the federal appellate level. He is experienced in handling a broad range of civil and criminal matters, including cases implicating the Foreign Corrupt Practices Act, False Claims Act, Anti-Money Laundering laws, Health Care Fraud, Securities Fraud, and Procurement Fraud. Brian has led multijurisdictional internal investigations and provided regulatory advice to multinational and domestic clients across many sectors, including oil and gas services, pharmaceuticals, financial services, manufacturing, and telecommunications. Additionally, he has developed compliance programs for Fortune 50 corporate clients, advised Boards and Audit Committees, guided companies and individuals in government investigations in multiple global jurisdictions and defended clients in criminal and civil litigation. He also represents companies and individual clients in investigations before multilateral institutions, including the World Bank, Asian Development Bank, the Inter-American Development Bank, as well as the US Agency for International Development, the United Nations, and the Global Fund.

The Justice Department and regulatory agencies have emphasized the importance of corporate culture and the importance of ethics.  As companies approach this important issue, it is important to examine a variety of strategies to ensure that a corporate culture adheres to ethical standards. Jeffrey Tilton, CFE, a leader in the compliance field, has an interesting perspective on this issue.  In this Episode, Michael Volkov discusses the issue of culture and ethics.

Beam Suntory, a global producer and distributor of distilled beverages, settled its FCPA case with DOJ for $19.5 million for bribes paid in India. The DOJ settlement follows an SEC FCPA settlement for $8 million announced on July 2, 2018.  The timing of the FCPA settlements is unusual and suggests that DOJ’s resolution involved unique issues relating to Beam Suntory’s cooperation. In this Episode, Michael Volkov reviews the FCPA settlement.

The Department of Justice and eleven state Attorneys General filed an antitrust case against Google in the United States Court for the District of Columbia.  DOJ’s filing was hurried at the behest of the Attorney General Bill Barr, and reflects DOJ’s growing focus on high-tech businesses and monopolization conduct.  DOJ’s case joins a long list of high-profile monopolization cases, including Microsoft, AT&T and IBM.  DOJ’s filing represents the most significant antitrust enforcement action against big technology companies since DOJ’s 1998 filing against Microsoft. In this Episode, Mike Volkov reviews DOJ's case and provides relevant analysis.

Medical device maker Merit Medical Systems (“MMS”) agreed to pay $18 million to resolve allegations that the company submitted false claims to Medicare, Medicaid and TRICARE by paying kickbacks to physicians and hospitals to induce increased use of MMS products. In this Episode, Michael Volkov discusses the MMS False Claims Act settlement.

J&F Investimentos SA (“J&F), a Brazilian private investment company, plead guilty to FCPA bribery violations in federal court in Brooklyn, New York.  As part of the plea agreement, J&F agreed to pay a fine of $256 million and to cooperate with ongoing investigations of other companies and individuals involved in the bribery schemes. J& F owns numerous companies around the globe, including in the meat and agricultural industries. Under the plea agreement. J&F will pay only half of the fine, or $128.2 million, in recognition of large fine paid by J&F as part of its resolution with Brazilian prosecutors. In March 2017, J&F reached an agreement with Brazilian prosecutors to pay $3.2 billion for bribes paid by senior executives to Brazilian government officials and politicians. In a related action with the Securities and Exchange Commission, J&F, its subsidiary, JBS, the largest meat producer in the world, and J&F’s two principal owners Joesley and Wesley Batista, agreed to pay $27 million in disgorgement and the Batista brothers each agreed to pay $550,000, to resolve SEC charges. In this Episode, Michael Volkov reviews the J&F settlement for FCPA violations with the Justice Department and the SEC.

The Justice Department finally closed out its investigation of Goldman Sachs’ massive bribery scheme involving Malaysia’s 1MDB fund.  The case is now the largest in US FCPA history (based on its payment to DOJ and related US agencies). Goldman Sachs entered into  three-year deferred prosecution agreement (“DPA”) with the filing of a criminal information charging conspiracy to violate the anti-bribery provisions of the FCPA.  At the same time, Goldman Sach’s Mayalaysia subsidiary plead guilty to conspiracy to violate the FCPA. Under the terms of settlement, Goldman will pay a criminal penalty and disgorgement of just over $2.9 billion.  Goldman reached parallel resolutions with foreign enforcement agencies in the United Kingdom, Singapore, Malaysia and Hong Kong, along with domestic agencies, including the Securities and Exchange Commission ($606 million in disgorgement and penalty of $400 million), the Board of Governors of the Federal Reserve System ($154 million), the New York State Department of Financial Services ($150 million).  DOJ will credit approximately $1.6 billion in payments with respect to these parallel resolutions. In this Episode, Michael Volkov reviews the underlying conduct and the settlement terms.