Month in a Minute: September 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 September 2023 include two corporate resolutions, acquittals for FIFA defendants, a sentence for a Canadian citizen involved in a bribery scheme, and charges against a Venezuelan intermediary.

Albemarle Reaches Settlements with the DOJ and SEC

On September 29, 2023, the SEC and DOJ announced that North Carolina chemical producer Albemarle Corporation (“Albemarle”) entered into parallel resolutions related to its involvement in a scheme to bribe government officials in Vietnam, Indonesia, and India from 2009 until 2017. In Vietnam, Albemarle obtained contracts with two state-owned oil refineries by paying an intermediary sales agent an inflated commission that the intermediary used to pay bribes to PetroVietnam officials in exchange for bid requirements favorable to Albemarle. Albemarle earned an estimated $69.25 million in profits. Albemarle also used an intermediary to facilitate bribe payments in Indonesia, paying the intermediary an inflated commission, which it used to pay officials at PT Pertamina, an Indonesian state-owned and controlled oil company. Albemarle subsequently obtained two purchase orders for trial tests with PT Pertamina, through which it earned approximately $18.1 million in profits. In India, Albemarle used a third-party intermediary to pay bribes in order to prevent Albemarle from being placed on a “holiday list” by India’s state-owned oil company, IOCL, which would have prevented Albemarle from bidding on certain contracts. After paying these bribes, Albemarle was not placed on the “holiday list” and instead obtained approximately $11.1 million in profits from business with IOCL. In total, Albemarle is estimated to have made approximately $98.5 million in profits from its schemes.

To resolve the allegations against it, Albemarle entered into a three-year non-prosecution agreement (“NPA”) with the DOJ under which it agreed to pay a $98.2 million criminal penalty, and to forfeit $98.5 million in illegally obtained profits—$81.8 million of which the DOJ agreed to credit against Albemarle’s disgorgement payment to the SEC. The DOJ awarded Albemarle a 45% reduction off the bottom of the applicable U.S. Sentencing Guidelines fine range. Albemarle received this reduction due to its voluntary (though not prompt) disclosure of the misconduct and its cooperation with the government’s investigation, which included among other things, providing information from its internal investigation, making foreign-based employees available for interviews, and collecting, producing, and translating relevant documents. The DOJ also credited Albemarle’s remedial measures, which included terminating 11 employees and withholding a total of $763,453 in bonuses from 16 others, for which it received an additional reduction in its criminal penalty, pursuant to the DOJ’s Pilot Program Rewarding Compensation Incentives and Clawbacks. Albemarle also agreed to cooperate with the DOJ in future investigations, to continue to enhance its compliance program, and to provide reports to the DOJ for the duration of the NPA. Albemarle also agreed to a cease-and- desist consent order with the SEC to resolve charges that it violated the FCPA’s anti-bribery, recordkeeping, and internal accounting controls provisions in relation to its misconduct in Vietnam, Indonesia, and India. In agreeing to the settlement, the SEC noted Albemarle’s self-disclosure, cooperation, and remediation efforts. Ultimately, as part of the settlement, Albemarle agreed to pay the SEC $81.8 million in disgorgement and $21.7 million in prejudgment interest for a total of $103.6 million. Combined, Albemarle paid approximately $218 million to resolve these bribery charges.

Texas Media Company Pays SEC $26.1 Million Over FCPA Violations

On September 29, 2023, Clear Channel Outdoor Holdings, Inc. (“Clear Channel”), a Texas-based media company, agreed to an SEC cease-and-desist order to resolve allegations that it violated the FCPA’s anti-bribery, recordkeeping, and internal accounting controls provisions between 2012 and 2019. The SEC alleged that from 2012 to 2017, Clear Channel’s Chinese subsidiary, Clear Media Limited (“Clear Media”) paid bribes to Chinese government officials in order to obtain contracts to sell public advertising displays. In particular, the SEC alleged that Clear Media directly provided Chinese officials with gifts, entertainment, meals, and paid travel expenses in order to win contracts with local government transport authorities. Per the SEC, Clear Media also used third-party vendors, referred to as “cleaning and maintenance entities,” to pay bribes to government officials, and disguised the bribes as “subsidies” or “special request expenses.” From 2013 to 2017, Clear Media also allegedly engaged in a “customer development expense scheme” through which it used off-the-books funds to pay consultants approximately $9.8 million to retain business from 70 private and government customers. The SEC also noted that between 2012 and 2017, Clear Channel’s internal auditors raised numerous concerns regarding Clear Media, its compliance program, and internal accounting controls. These concerns related directly to Clear Media’s use of cleaning and maintenance vendors and consultants, and highlighted Clear Media’s elevated bribery risks. While Clear Channel outlined remedial measures for Clear Media to take, it failed to ensure those measures were implemented. In accepting the settlement with the SEC, Clear Channel did not admit or deny the charges but agreed to pay a total of $26.1 million, which included $16.3 million in disgorgement, $3.7 million in prejudgment interest, and a $6 million civil penalty. Clear Channel received recognition for its cooperation efforts, which included sharing facts from its internal investigation, proactively producing relevant overseas documents, and producing documentation regarding Clear Media audits. The SEC further recognized Clear Channel’s remediation efforts, which included enhancing its anti-corruption compliance policies, implementing annual compliance reviews of internal audit issues and actions, and eliminating its interest in Clear Media.

Judge Acquits FIFA Defendants, Leading to Stays in Related Cases

On September 1, 2023, U.S. District Judge Pamela K. Chen of the U.S. District Court for the Eastern District of New York vacated the convictions of former 21st Century Fox television executive Hernán Lopez, and Argentine sports marketing company Full Play Group. In March 2023, a jury found Lopez and Full Play Group guilty of honest services wire fraud and money laundering for their role in a FIFA bribery scheme. Lopez and Full Play Group were accused of paying millions of dollars to officials at CONMEBOL, the South American Football Confederation, in exchange for broadcasting rights. Judge Chen’s decision to vacate the convictions of Lopez and Full Play Group was made following the U.S. Supreme Court’s decision in Percoco v. United States, 598 U.S. 319, 143 S. Ct. 1130, 215 L. Ed. 2d 305 (2023). In Percoco, the Supreme Court reversed the conviction of a former aide to Governor Andrew Cuomo because the jury was given vague instructions regarding whether he could be convicted of honest services fraud as a private individual. In vacating Lopez and Full Play Group’s convictions, Judge Chen, ruled that the Percoco decision held that the honest services fraud statute does not encompass foreign commercial bribery and that there was thus not enough evidence to sustain Lopez’s and Full Play Group’s convictions under the statute. Judge Chen also vacated Lopez’s and Full Play Group’s money laundering convictions as they were based on the convictions under the honest services wire fraud statute. Following her acquittal of Lopez and Full Play Group, Judge Chen stayed sentencing in nine other DOJ prosecutions connected to the FIFA corruption scheme in light of this issue. Federal prosecutors announced their intent to appeal Judge Chen’s ruling.

Former Griffiths Energy Shareholder Sentenced to Three Years for Bribery Scheme

On September 6, 2023, U.S. District Judge Richard Leon of the U.S. District Court for the District of Columbia sentenced Naeem Riaz Tyab to three years in prison and three years of supervised release for his role in a decade-long bribery scheme involving payments to Chadian diplomats. Tyab, a Canadian businessman and the former founding shareholder of Griffiths Energy, pled guilty in 2019 to one count of conspiracy to violate the FCPA. As part of his guilty plea, Tyab admitted that he paid approximately $2 million to Chad’s Ambassador to the United States and Canada and to the Chad Embassy’s Deputy Chief of Mission in exchange for oil rights in Chad, which raised the value of Griffiths Energy shares that he subsequently sold. Tyab earned an estimated $69.7 million from his sales of Griffiths Energy Shares, $27.6 million of which was due to the bribery scheme. Under the terms of his plea agreement, Tyab agreed to forfeit the $27.6 million in illegal proceeds.

Prosecutors recommended a sentencing range of one-and-a-half to two years in prison, a steep downward departure from the applicable U.S. Sentencing Guidelines range and 60 months statutory maximum. In arguing for a downward departure, prosecutors noted that Tyab had cooperated with the government, accepted responsibility for his own conduct, and provided information regarding his codefendants and criminal conduct beyond the scope of the case. Tyab also assisted prosecutors in tracking and liquidating his assets in order to satisfy his $27.6 million forfeiture. Tyab’s counsel asked for time served. At the September 6 sentencing hearing, Judge Leon imposed a three-year prison sentence with three years of supervisory release, finding that such a sentence was necessary to act as a deterrent to white collar crimes.

Venezuelan Citizen Who Acted As Intermediary Charged With FCPA Violation

On September 11, 2023, Orlando Alfónso Contreras Saab, a citizen of Venezuela, was charged in a single-count criminal information filed in the U.S. District Court for the Southern District of Florida for his alleged role in a scheme to bribe Venezuelan government officials. Prosecutors alleged that from mid-2016 until about August 2017, Contreras Saab and his co-conspirators paid bribes to José Gregoria Vielma-Mora, the former governor of the Venezuelan state of Tachira, and two other Venezuelan government officials in exchange for business advantages, including multi-million-dollar contracts from government entities to provide food and medicine to the people of Venezuela. Under these contracts, companies owned by Contreras Saab’s co-conspirators imported and distributed food under the Venezuelan Comite Local de Abastecimiento y Produccion (CLAP) program at inflated prices. The co-conspirators used the funds generated to pay bribes to Vielma-Mora and other Venezuelan government officials in exchange for additional contracts. Contreras Saab allegedly acted as an intermediary, receiving bribe money on behalf of Vielma-Mora. The information alleges that the payments were facilitated through a network of bank accounts in the U.S. and other countries, and estimates that Contreras Saab transferred approximately $6.3 million to a bank account in the Southern District of Florida, a portion of which was used to bribe Vielma-Mora.

Fact of the Month

Fun fact to wow a seven-year-old: September is the only month with the same number of letters as the number of the month (9).