Top 10 International Anti-Corruption Developments for December 2023

Designed for busy in-house counsel, compliance professionals, and anti-corruption lawyers, this newsletter summarizes some of the most important international anti-corruption law and enforcement developments from the past month, with links to primary resources. This month we ask: How will the newly enacted U.S. Foreign Extortion Prevention Act impact the fight against foreign bribery? Which company resolved foreign bribery allegations with the U.S. Department of Justice (DOJ) and Commodity Futures Trading Commission (CFTC)? Which company was the first to be sent to Switzerland’s Federal Criminal Court on foreign bribery charges? The answers to these questions and more are here in our December 2023 Top 10.

1. U.S. Enacts Foreign Extortion Prevention Act, Broadening Scope of Antibribery Laws

On December 22, 2023, President Biden signed into law the National Defense Authorization Act (NDAA) for Fiscal Year 2024. The NDAA included the Foreign Extortion Prevention Act (FEPA), a provision that will broaden both the scope and reach of United States’ antibribery laws. A complement to the Foreign Corrupt Practices Act, FEPA makes it a crime for foreign officials to demand or accept bribes from issuers, domestic concerns, and foreign non-issuers while in the territory of the United States. Because the FCPA only governs the supply side of bribery (paying bribes), FEPA acts as a complement by addressing the demand side (taking or demanding bribes). Although rooted in legitimate policy concerns—namely, the potential political ramifications of the U.S. charging other countries’ officials with bribery and the belief that those countries would instead prosecute their own officials—the business community, anti-bribery organizations, and policymakers frequently expressed concerns that the FCPA’s exclusive focus on supply side bribery did not go far enough to combat foreign bribery. In partial response, DOJ has used the federal anti-money laundering laws to pursue foreign officials who used the U.S. banking system to launder the proceeds of FCPA violations, but this practice had holes; for example, DOJ could not use the anti-money laundering laws for mere bribery demands or for cash or in-kind bribes that did not implicate U.S. banks. Together, the FCPA and the FEPA expand the scope of U.S. antibribery laws significantly, arming the United States to combat the influence of corrupt foreign officials more robustly. (For more on the FEPA, see our August 2019 and July 2023 Top 10s, as well as our commentary in the following articles Dissecting The Proposed Foreign Extortion Prevention Act, Foreign Bribe Taking Targeted in US Defense Authorization Bill, and Newly Signed Foreign Extortion Prevention Act Complements FCPA.)

2. Connecticut-Based Commodities Trading Company Resolves Brazil FCPA Allegations

On December 14, 2023, DOJ announced that it had entered into a Deferred Prosecution Agreement (DPA) with Freepoint Commodities LLC, resolving allegations that the company conspired to violate the FCPA in a bribery scheme involving Brazilian officials. On the same day, the CFTC announced a parallel resolution alleging violations of the Commodity Exchange Act (CEA). According to the agencies, between 2012 and 2018, Freepoint paid approximately $3.9 million in consultancy and commission payments to a third-party agent, knowing that all or a portion of the payments would be used to bribe officials of Brazil’s national oil company, Petróleo Brasileiro S.A. (“Petrobras”), and a U.S.-based Petrobras subsidiary in exchange for confidential information about pricing and bids submitted by the company’s competitors, resulting in over $30 million in profits. The company allegedly concealed the scheme by communicating using code words and encrypted messaging applications, engaging in sham negotiations, and funneling bribes through the third-party agent, who used offshore bank accounts and shell companies. Pursuant to the DPA, which was filed in the District of Connecticut, the company agreed to pay a criminal penalty of $68 million and to forfeit approximately $30.5 million. According to DOJ, the criminal penalty amount reflected a 15% discount off the bottom of the U.S. Sentencing Guidelines’ fine range; DOJ stated that the company did not receive full cooperation credit because its cooperation “was limited in degree and impact, and largely reactive.” Pursuant to the CFTC Order, the company is required to pay more than $91 million in civil monetary penalties and disgorgement. DOJ stated that it would credit portions of the amounts paid to Brazilian enforcement authorities and to the CFTC against the criminal penalty and forfeiture amounts. In February 2023 and August 2023, DOJ announced related charges against the third-party agent, Eduardo Innecco, and two other individuals.

3. Switzerland Charges Netherlands-Based Oil and Metals Trader Over Alleged Angolan Bribery

On December 6, 2023, the Office of the Attorney General of Switzerland (OAG) announced that it had filed an indictment against Trafigura Beheer BV, a former Switzerland-based senior executive of the company, a former intermediary, and a former Angolan public official in connection with an alleged scheme to bribe Angolan public officials. According to the OAG, the company, with the aid of the intermediary, paid over €4.5 million to the Angolan official, who in return assisted the company in obtaining eight ship-chartering contracts and one ship-bunkering contract with a subsidiary of Angola’s national oil company, Sociedade Nacional de Combustíveis de Angola EP (“Sonangol”), between 2009 and 2010, resulting in over $143 million in profits. The OAG alleged that the company failed to take all reasonable and necessary organizational measures to prevent foreign bribery, in violation of Swiss law. Under Swiss law, Trafigura faces penalties equivalent to the total illicit profit plus a fine of up to 5 million Swiss francs, or around $150 million in total. According to the OAG, this is the first time Switzerland’s Federal Criminal Court will be called upon to judge the criminal liability of a company for bribery of foreign public officials.

4. UK-based Gaming Company Ordered to Pay £615 Million to Resolve Turkish Bribery Case

On December 5, 2023, the UK Crown Prosecution Service (CPS) announced that it had entered into a deferred prosecution agreement (DPA) with a UK-based gaming company that allegedly failed to prevent bribery by its former business unit in Turkey, in violation of Section 7 of the UK Bribery Act 2010 (UKBA). In its summary of judgment approving the DPA, the Southwark Crown Court recognized that the company had provided significant cooperation to the CPS investigation, undergone a wholesale change in senior management, sold off its Turkish business, and exited approximately 160 international markets in response to the investigation and charges. Pursuant to the DPA, the company agreed to pay a financial penalty plus disgorgement of profits totaling £585 million, to make a charitable donation of £20 million, and to pay a contribution of £10 million to CPS and Revenue & Customs costs. This resolution marks the first time that the CPS has entered into a DPA since DPAs were introduced in the UK in 2014. The UK Serious Fraud Office (SFO) has used DPAs in approximately a dozen cases, including several foreign bribery cases (see, for example, our January 2017 and July 2019 Top 10s).

5. Three Individuals Charged in Connection with Honduran Bribery and Money Laundering Scheme

On December 22, 2023, DOJ announced the unsealing of an indictment in the Southern District of Florida charging three individuals in connection with an alleged scheme to bribe Honduran government officials to secure contracts to provide uniforms and other goods to the Honduran National Police. According to DOJ, between 2015 and 2019, Carl Zaglin, the owner of a Georgia-based manufacturer of law enforcement uniforms and accessories, and Aldo Nestor Marchena, a Florida resident, conspired to bribe Honduran officials, including Francisco Roberto Cosenza Centeno, the former Executive Director of the Comité Técnico del Fideicomiso para la Administración del Fondo de Protección y Seguridad Poblacional (TASA), to help secure TASA contracts worth over $10 million. Bribery proceeds were allegedly laundered through bank accounts and front companies in the United States and Belize. All three defendants were charged with money laundering offenses, while Zaglin and Marchena were also charged with FCPA offenses. The DOJ press release suggests that the prosecution is related to the Anticorruption Task Force established in 2021 to focus on investigations, prosecutions, and asset recoveries related to corruption in Guatemala, Honduras, and El Salvador. (For more on the Task Force, see our October 2021 Top 10.)

6. Fat Leonard Part of Prisoner Swap Deal Between the United States and Venezuela

On December 20, 2023, the Biden administration announced that it had reached a deal with Venezuelan leader Nicolás Maduro securing the release of ten American prisoners and the extradition of Leonard Glenn Francis, known as “Fat Leonard.” Francis, a Malaysian national and owner of Glenn Defense Marine Asia (GDMA), who was charged with bribing dozens of U.S. Navy officials over a nine-year period from 2004 to 2013, pleaded guilty to bribery and fraud charges in federal court in 2015, and was placed on house arrest. In September 2022, Francis cut off his GPS monitor and fled to Venezuela before he could be sentenced. According to reports, Francis had traveled to Venezuela from Mexico, with a stopover in Cuba, and was arrested at the Caracas Airport as he was about to board a flight to Russia. Among those exchanged for Francis was Alex Saab, who was charged in July 2019 in the Southern District of Florida for laundering the proceeds of a Venezuelan bribery scheme and extradited to the United States from Cabo Verde in October 2021. President Maduro characterized the extradition at the time as a “kidnapping of the Venezuelan diplomat Alex Saab by the government of the United States.” According to the Biden administration, this “extremely difficult decision” was made to reunite the American prisoners with their families and “to ensure that one of the most notorious fugitives from justice” was “returned and held to account for his crimes.” (For more on Fat Leonard, see our May 2016, September 2021, June 2022, and September 2022 Top 10s.)

7. DOJ Returns Assets to Honduras, Malaysia, and Nigeria as Part of Kleptocracy Asset Recovery Initiative

On December 12, 2023, DOJ announced that it intended to return to Malaysia $100 million recovered by the United States in connection with the 1MDB embezzlement and bribery scandal (for more on 1MDB, see our July 2016, August 2016, June 2017, December 2017, May 2018, June 2018, August 2018, October 2018, February 2019, May 2019, April 2020, August 2021, September 2021, December 2021, February 2022, March 2022, March 2023 , and April 2023 Top 10s) and to return to Honduras over $1 million recovered through the prosecution of Carlos Zelaya, who pleaded guilty in June 2018 to laundering the proceeds of a bribery scheme involving the Honduran Institute of Social Security. DOJ also noted that, in February 2023, it had returned to Nigeria approximately $1 million in proceeds allegedly stolen by a former governor of Bayelsa State and laundered in the United States. According to DOJ, its Kleptocracy Asset Recovery Initiative has recovered more than $1.7 billion and returned more than $1.6 billion to various countries since 2010.

8. President Biden Signs a Proclamation Restricting Entry into the United States for Those Who Enable Corruption

On December 11, 2023, the White House recognized International Anti-Corruption Day and announced a Presidential Proclamation restricting entry into the United States for those that enable corruption. The Proclamation suspended the entry into the United States of individuals who have enabled, facilitated, or otherwise been involved in significant corruption, including through the laundering of proceeds or obstruction of judicial or investigative processes. The suspension also applies to the immediate family members of the affected individuals but does not apply to any lawful permanent resident of the United States, any individual who has been granted asylum by the United States, any refugee who has already been admitted to the United States, or any individual granted withholding of removal or protection under the Convention Against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment. The proclamation follows up on the Biden administration’s commitment to make progress on the significant problem of corruption and the impact of corrupt actors on U.S. and international financial systems. (See our June 2021 and December 2021 Top 10s for more on President Biden’s National Security Study Memorandum and the U.S. Strategy on Countering Corruption.)

9. OECD Working Group on Bribery Publishes Reports on Croatia’s and Lithuania’s Implementation of the OECD Anti-Bribery Convention

• Croatia’s Legislative Framework Is Generally Adequate to Fight Foreign Bribery.  On December 14, 2023, the Organisation for Economic Co-operation and Development (OECD) Working Group on Bribery published its first report regarding Croatia’s implementation of the OECD Anti-Bribery Convention. All parties to the Convention are subject to a rigorous peer review process, Phase 1 of which evaluates the adequacy of a country’s legal framework to fight foreign bribery and implement the Convention. The Working Group generally commended Croatia’s legislative framework for implementing the Convention, noting that the issues identified by the Working Group will be followed up during Croatia’s Phase 2 evaluation, which will assess whether Croatia is applying its legislation in practice. Croatia became a member of the Working Group on Bribery in October 2023 and completed the process for becoming a party to the Anti-Bribery Convention in November 2023.

• Lithuania Has a Sound Legislative and Policy Framework for Fighting Foreign Bribery But Must Do More to Prosecute Foreign Bribery Offenses. On December 14, 2023, the Working Group on Bribery announced the results of its Phase 3 evaluation of Lithuania’s implementation of the OECD Anti-Bribery Convention. Phase 3 focuses on enforcement and cross-cutting issues and unimplemented recommendations from Phase 2. According to the Working Group, Lithuania “has a largely sound legislative and policy framework for fighting foreign bribery,” has actively raised awareness of foreign bribery, has improved its mutual legal assistance registry, has established a central register of beneficial owners, and requires that certain corporate annual reports provide information on fighting foreign bribery. The Working Group expressed concerns, however, that Lithuania “has yet to prosecute or convict an individual or company for foreign bribery” and might have overlooked some allegations of foreign bribery reported in the foreign media.

10. China Increases Punishments for Bribery

On December 29, 2023, the Standing Committee of the National People’s Congress, China’s top legislative body, passed an amendment to the Criminal Law, intensifying punishments for individuals offering bribes to government officials. The new law, which is due to be enforced beginning March 1, 2024, is particularly aimed at repeat offenders who bribe multiple individuals, those involved in major national projects, and those who offer bribes to officials in supervisory, administrative, or judicial departments, or in the environmental, financial, safety production, pharmaceutical, food, social insurance, rescue relief, education, and healthcare sectors, among others.