Top 10 International Anti-Corruption Developments for August 2024

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: What kind of monetary awards can whistleblowers obtain from the U.S. Department of Justice (DOJ) for reporting foreign bribery offenses? Which company obtained a declination with disgorgement from DOJ in connection with an alleged African bribery scheme? What advice has Australia provided to companies on how to prevent foreign bribery? The answers to these questions and more are here in our August 2024 Top 10.

1. DOJ Whistleblower Pilot Program Comes into Effect

In March 2024, Deputy Attorney General Lisa Monaco announced that DOJ would establish a whistleblower Pilot Program to incentivize individuals to report allegations of corporate wrongdoing to DOJ, including FCPA cases outside the jurisdiction of the SEC, criminal abuse of the U.S. financial system, and domestic corruption cases. Monaco stated that DOJ would undertake a “90-day policy sprint” to gather information, consult with stakeholders, and design the whistleblower Pilot Program. On August 1, 2024, Monaco announced that the Corporate Whistleblower Awards Pilot Program was now in effect. Under the three-year Pilot Program managed by the Criminal Division’s Money Laundering and Asset Recovery Section (MLARS), those who voluntarily provide DOJ with original information about corporate misconduct involving financial institutions, foreign corruption, domestic corruption involving bribes or kickbacks to government officials, or health care fraud involving private insurance plans that isn’t already covered by whistleblower programs at other agencies and that results in a successful civil or criminal forfeiture exceeding $1 million can receive up to 30% of the first $100 million in net proceeds forfeited and up to 5% of any net proceeds forfeited between $100 million and $500 million. The policy includes no award on net proceeds forfeited above $500 million. The Criminal Division also amended its Corporate Enforcement and Voluntary Self-Disclosure Policy, last amended in January 2023, to allow companies to qualify for a presumption of a declination if the company discloses an internal whistleblower report to DOJ within 120 days of receipt. (For more in-depth analysis of the Pilot Program, please see our full Client Alert.)

2. U.S.-Based Consulting Firm Receives Declination with Disgorgement for Angola Conduct

On August 28, 2024, DOJ issued a declination letter stating that it would not prosecute a U.S.-based consulting firm for its former employees’ alleged violation of the Foreign Corrupt Practices Act (FCPA) involving bribes to Angolan officials. According to the letter, the firm paid about $4.3 million in commissions to its agent in Angola from 2011 to 2017 to help secure approximately $22.5 million in revenue from business with Angola's Ministry of Economy and the National Bank of Angola. The agent allegedly had close ties to, and sent a portion of its commissions to, Angolan government officials. DOJ required the firm to disgorge the approximately $14.4 million in profits it made from this business. DOJ noted that the firm self-disclosed the misconduct in a timely manner after uncovering a 2014 email evidencing the potential violation, proactively cooperated in the matter, fired the personnel involved in the misconduct, withheld bonuses from implicated partners, and required the implicated partners to give up their equity in the company. This was the first FCPA declination with disgorgement of 2024, following two such resolutions in 2023.

3. Three Executives of an Election Voting Machine and Service Provider Company and a Former Government Official Charged in Connection with Philippines Bribery Scheme

On August 8, 2024, DOJ announced that three executives of a UK-headquartered election voting machine and service provider company, identified in media reports as Smartmatic, had been indicted in the Southern District of Florida in connection with a scheme to pay at least $1 million in bribes to the former chairman of the Republic of the Philippines’ Commission on Elections (COMELEC) to secure contracts to provide voting machines and election services in connection with the 2016 Philippines elections. The payments allegedly came from a slush fund created by over-invoicing the cost for each voting machine sold to the Philippines for the elections. The defendants allegedly used coded language to refer to the slush fund and created fraudulent contracts and sham loan agreements to justify the transfers of the bribe payments. Funds related to the bribery scheme were allegedly laundered through bank accounts located in Asia, Europe, and the United States, including in the Southern District of Florida. Two of the defendants were charged with one count of conspiracy to violate the FCPA and one count of violating the FCPA, while all four were charged with one count of conspiracy to commit money laundering and three counts of international laundering of monetary instruments.

4. Former Commodities Trader Pleads Guilty in Mexico Bribery Case

On August 21, 2024, DOJ announced that former Vitol trader Javier Aguilar had pleaded guilty to FCPA and Travel Act violations in the Eastern District of New York in connection with an alleged scheme to bribe officials of Mexico’s national oil company, Petroleos Mexicanos (Pemex), and a subsidiary in order to secure business for Vitol. Aguilar was convicted in February 2024 of conspiring to violate the FCPA and violating the FCPA in connection with a scheme to bribe officials of Ecuador’s national oil company, Petroecuador, and conspiring to commit money laundering in connection with the Petroecuador and Pemex bribery schemes. In May 2023, the court dismissed the Pemex-related FCPA charges for lack of venue, but the charges were refiled in the Southern District of Texas in August 2023. In July 2024, Aguilar failed in his attempt to have his trial conviction overturned, and he apparently decided it was better for sentencing purposes to have all charges re-consolidated in the Eastern District of New York. In December 2020, Aguilar’s former employer, Vitol Inc., agreed to pay more than $135 million to resolve criminal FCPA charges relating to bribes paid to officials in Brazil, Ecuador, and Mexico. For more on the Vitol and Aguilar prosecutions, see our September 2020, December 2020, December 2022, May 2023, August 2023, January 2024, February 2024, June 2024, and July 2024 Top 10s.

5. Ex-Mozambique Finance Minister Convicted for $2 Billion “Tuna Bonds” Scandal

On August 8, 2024, DOJ announced that Mozambique’s former finance minister, Manuel Chang, had been convicted by a jury in the Eastern District of New York of conspiracy to commit wire fraud and conspiracy to commit money laundering in connection with his role in an alleged scheme to steal approximately $200 million from a total of $2 billion in loans issued to state-controlled companies between 2012 and 2016 for three maritime projects, including one related to tuna fishing. Chang allegedly received $7 million in bribe payments in exchange for signing guarantees to secure the loans. As part of the scheme, Chang and his co-conspirators allegedly falsely stated to banks and investors—some of whom were U.S. investors—that the loan proceeds would be used for the projects and that the borrower would not pay bribes to Mozambican government officials. Chang’s pre-trial motion to dismiss the charges against him failed in May 2024. For more on Chang and the “tuna bonds” scheme, see our January 2019, March 2019, July 2023, and May 2024 Top 10s.

6. Former Aircraft Services Executive Pleads Guilty to Nepal Bribery Scheme and Also Admits to South Africa Bribery Scheme

On August 1, 2024, Deepak Sharma, a former executive of a U.S.‑based aviation services company, identified in media reports as Illinois-based AAR Corp., pleaded guilty in federal court in Washington, D.C., to violating the FCPA by conspiring to bribe Nepali officials in order to help his employer secure a $216 million deal to supply Nepal Airlines with two Airbus jets.[1] According to Sharma’s factual admissions, Sharma agreed to bribe Nepali officials to rig the deal in AAR’s favor. Sharma and his co-conspirators allegedly used several third parties and sham contracts to carry out the bribery scheme. As part of his factual admissions, Sharma also admitted to participating in a scheme to bribe South African officials in exchange for their assistance in helping AAR obtain an aircraft component support contract with South Africa Airways Technical, a wholly owned subsidiary of state-owned South African Airways. In July 2024, the U.S. District Court for the District of Columbia unsealed related charges against Julian Aires, the president of AAR’s joint venture partner in the South African deal.

7. Swiss Commodities Trader Ordered to Pay $152 Million in Switzerland for Failing to Prevent Africa Bribery

On August 5, 2024, Switzerland’s federal prosecutors ordered Glencore International AG to pay $152 million for failing to take adequate measures to prevent bribery of a Congolese public official by a business partner in connection with its 2011 acquisition of minority stakes in two mining companies from the Democratic Republic of Congo’s state mining company. The company was fined approximately $2.4 million and ordered to pay a “compensation claim” of $150 million in connection with the estimated benefit to the business partner. The company did not admit to the Swiss attorney general’s office’s findings but said that it would not appeal. For more on cases involving Glencore, see our July 2021, May 2022, June 2022, September 2022, November 2022, and February 2023 Top 10s and number 8 below.

8. UK Serious Fraud Office Charges Five Former Employees of Swiss Commodities Trader for Africa Bribery

On August 1, 2024, the UK’s Serious Fraud Office (SFO) announced that it had charged former Glencore employees Alex Beard, Andrew Gibson, Pail Hopkirk, Ramon Labiaga, and Martin Wakefiled with conspiring to make corrupt payments in order to benefit the company’s oil operations in West Africa. The five individuals were charged in connection with the awarding of oil contracts in Cameroon, Nigeria, and the Ivory Coast from 2007 to 2014. Gibson and Wakefiled were also charged for falsifying invoices as service fees to a Nigerian oil consultancy from 2007 to 2011. On August 9, 2024, SFO charged two additional defendants and asked them to attend a September plea hearing where the five ex-Glencore executives were also scheduled to appear. The two individuals and the charges against them were not formally identified, as the individuals were abroad at the time of SFO’s announcement regarding the new charges. SFO’s investigation into Glencore’s suspected bribery has been ongoing since December 2019 and has already resulted in convictions on seven counts of bribery, which resulted in a financial penalty of more than $400 million for the company in November 2022. For more on other Glencore individuals being charged and convicted, see our July 2021, May 2022, and June 2022 Top 10s.

9. Spanish Lawyer Arrested for Alleged Bribes to Officials Close to Equatorial Guinea Government

On August 12, 2024, the European Union Agency for Law Enforcement Cooperation (Europol) announced that Spanish National Police had arrested a Spanish lawyer suspected of corrupting high-level individuals close to the Equatorial Guinea government in order to obtain an agreement for his project development company to build a fishery products processing plant. According to the announcement, Europol analysts supported Spanish authorities as they conducted two house searches that led to the lawyer’s arrest and cross-checked the results of the house searches against Europol’s databases to provide further leads. Officers seized five pieces of real estate worth €4.5 million, 21 bank accounts containing more than €2 million, and €30,000 in cash. The lawyer is being charged with corruption, money laundering, falsification of accounts, and forgery of documents.

10. Australia Publishes Guidance on Failure-to-Prevent Foreign Bribery Offense

On August 28, 2024, the Australian government published guidance detailing, for the first time, the “adequate procedures” that companies can take to establish an effective anti-bribery compliance program. In February 2024, the Australian parliament passed the Combatting Foreign Bribery Act, which introduced the corporate failure-to-prevent foreign bribery offense. The offense, which comes into effect in September 2024, makes companies liable for failing to prevent overseas corruption by employees, agents, contractors, subsidiaries, or anyone who performs services for the company. Companies can defend themselves against the charge by showing that they had “adequate procedures” in place to prevent bribery when the alleged corruption took place. The Attorney-General Department’s guidance describes the steps companies should take to ensure their anti-bribery controls are “adequate” while noting that the guidance isn’t legally binding and that the precise definition of “adequate procedures” will “ultimately be determined by the courts on a case-by-case basis.” The Department provided six broad principles in the 30-page guidance document for companies to consider: fostering an environment of proportionate and effective controls; top-level management’s responsibility towards the compliance program; a risk-based approach on due diligence; effective internal communication and training; internal reporting mechanisms; and regular compliance monitoring and reviews.

[1] Plea Agreement, United States v. Deepak Sharma, Case No. 1:24-cr-302, ECF No. 14 (D.D.C. Aug. 1, 2024).