Month in a Minute: October 2023

Hughes Hubbard’s anti-corruption “Month in a Minute” offers a quick look-back at the biggest foreign corruption-related developments from the prior month. The Month in a Minute is intended to provide a quick snapshot of the latest news and developments. We hope you find it a useful and perhaps even enjoyable resource.

Highlights from October 2023 include a new M&A safe harbor policy from the DOJ, an extradition to Malaysia in the 1MDB saga, a denial of dismissal for two alleged PDVSA conspirators, a new chief of the DOJ’s foreign bribery unit, and a DOJ Opinion Procedure Release.

DOJ Announces New M&A Safe Harbor Policy

On October 4, 2023, U.S. Deputy Attorney General Lisa Monaco announced a Mergers & Acquisitions Safe Harbor Policy that protects companies from criminal prosecution if they acquire a company that engaged in misconduct, so long as the acquiring company quickly discloses the misconduct, cooperates with any resulting DOJ investigation, implements remedial measures, and pays any required restitution or disgorgement. Under the Safe Harbor Policy, acquiring companies will receive a presumption of a declination to prosecute if they disclose criminal misconduct of an acquired company within the safe harbor period, generally six months. In addition, the acquiring company must fully remediate the misconduct within one year of the acquisition closing to qualify for a declination. The timelines for disclosure and remediation are subject to a reasonableness analysis and may vary based on the specific facts and circumstances at issue. Under the Safe Harbor Policy, an acquiring company can receive a declination even where aggravating factors are present at the acquired company. If no aggravating factors are present at the acquired company, the acquired company itself may also be able to receive voluntary self-disclosure benefits, including a declination. Finally, the DOJ made clear that misconduct disclosed under the Safe Harbor Policy will not impact any future recidivist analysis for the acquiring company.

Judge Orders Ng to Return to Malaysia

On October 5, 2023, U.S. District Judge Margo Brodie of the U.S. District Court for the Eastern District of New York ordered that former Goldman Sachs banker Roger Ng be placed in the custody of the U.S. Marshals Service so that he may be returned to Malaysia to stand trial there for his involvement in the 1MDB bribery scheme. Ng was sentenced to 10 years in prison in the U.S. in March 2023 after being convicted of conspiracy to violate the FCPA and money laundering for his role in the 1MDB scheme. Ng, who was alleged to have received approximately $35.1 million in kickbacks from the scheme, was initially set to surrender to the Federal Bureau of Prisons (“BOP”) in August. However, Ng’s surrender date was delayed due to talks between the U.S. government and Malaysian officials regarding the extradition agreement between the two countries. In September, counsel for Malaysia appeared for the first time in the case and wrote a letter to Judge Brodie arguing that the U.S. had not met its obligations under the extradition agreement. Specifically, Malaysia’s counsel stated that the U.S. had backtracked on its commitment to return Ng to Malaysia before he serves his term of imprisonment in the U.S. U.S. prosecutors also submitted a letter to Judge Brodie in which they highlighted the U.S.’s strong interest in Ng serving his sentence. Both parties supported a one-month adjournment of Ng’s surrender date so that the U.S. and Malaysia could further discuss these issues. Judge Brodie granted the extension and Ng was scheduled to surrender to BOP custody on October 6, 2023. Pursuant to Judge Brodie’s latest order, Ng’s surrender date has been delayed indefinitely. Instead, Ng will return to Malaysia to face charges and potentially cooperate with other 1MDB investigations and proceedings. Once he has faced charges in Malaysia, Ng will be returned to the U.S. where he will immediately begin his sentence.

Alleged PDVSA Conspirators’ Dismissal Request Denied

On October 10, 2023, U.S. District Judge Kenneth Hoyt of the U.S. District Court for the Southern District of Texas denied motions to dismiss made by two Venezuelan nationals who allegedly participated in a bribery scheme involving Petróleos de Venezuela, S.A. (“PDVSA”), Venezuela’s state energy company. Nervis Villalobos Cárdenas, Venezuela’s former vice minister of energy, and Javier Alvarado-Ochoa, former president of PDVSA’s procurement subsidiary Bariven, were charged in an August 2019 superseding indictment with conspiracy to commit money laundering and multiple counts of money laundering for their roles in a scheme to bribe PDVSA officials in exchange for securing lucrative energy contracts between 2011 and 2013. Villalobos was also charged with conspiracy to violate the FCPA.

In their motions to dismiss, Villalobos and Alvarado argued that (1) the FCPA and money laundering statutes did not apply to them as they are foreign nationals who were not physically in the U.S. when they allegedly committed crimes; and (2) the charges against them were untimely, as the five-year deadline to prosecute under the relevant statutes had passed. Judge Hoyt rejected both arguments. Judge Hoyt pointed to the Fifth Circuit Court of Appeals’ February 2023 decision in United States v. Rafoi, which overturned Judge Hoyt’s own ruling dismissing charges against two other foreign nationals in the PDVSA bribery case. In Rafoi, the Fifth Circuit held that a foreign national could be subject to prosecution even where the conduct occurred entirely overseas and even if the foreign national never entered the U.S. during the conspiracy. Judge Hoyt also rejected the defendants’ timeliness claim, holding that the filing of a superseding indictment and utilization of the mutual legal assistance treaty process brought the charges within the 5-year statute of limitations.

David Fuhr Becomes FCPA Unit Chief

On October 10, 2023, the DOJ announced that David Fuhr had been made the permanent chief of the DOJ’s foreign bribery unit. Fuhr had previously served as acting chief of the unit since May 2023 after his predecessor, David Last, left the department. Fuhr joined the DOJ in 2013 and worked as a trial attorney in the Fraud Section before being named assistant chief of the foreign bribery unit in 2019.

DOJ Declines to Take Action Regarding Stipends to Foreign Officials

On October 25, 2023, the U.S. Department of Justice issued Opinion Procedure Release No. 23-02. On September 20, 2023, a U.S.-based company that provides training events and logistical support was awarded a task order from a U.S. government agency under which it would provide certain trainings to multiple U.S. government entities. Under the task order, the U.S. company was required to provide stipends to foreign officials who would attend the trainings. Specifically, the stipends, which range from $8 to $40 per day, would cover meals not served at the trainings and driving mileage costs. The stipends were approved or determined by the U.S. government, not the company. In addition, the stipends would be paid to a U.S. officer who would then deliver them to the foreign officials. In declining to take action, the DOJ noted that the stipends did not reflect a corrupt intent and were authorized under the Foreign Assistance Act, which allows for at-issue payments to foreign officials. The DOJ also noted that the stipends were not being paid to assist the company in obtaining or retaining business, an opinion that was bolstered by the fact that U.S. government officials requested the payments in the first place and would deliver them to the foreign officials.

Fact of the Month

October is host to Halloween, a night in which many children across the U.S. go door-to-door collecting candy. It is estimated that the average trick-or-treater collects between 3,500 to 7,000 calories of candy. No wonder the National Confectioners Association describes Halloween as its industry’s Super Bowl!

2023 FCPA and Antibribery Alert update!! The latest edition of Hughes Hubbard’s comprehensive annual FCPA and Antibribery Alert will be available for download in just a few weeks. The Alert discusses the last year’s anti-bribery developments in detail, and once again includes a deep dive into FCPA enforcement, as well as anti-bribery enforcement and developments in France, Brazil, the UK, and China, and by multilateral development banks. Click here to sign up for your copy.