Month in a Minute: September 2024

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 2024 include a resolution for John Deere, updated corporate compliance guidance from the DOJ, and a conviction in the Petrobras bribery scheme.

John Deere Pays $10 Million to Resolve FCPA Charges

On September 10, 2024, the SEC filed a cease and desist order on consent against Deere & Company (a.k.a., John Deere or “Deere”), in which Deere agreed to pay $10 million to resolve allegations that it violated the books and records and internal accounting controls provisions of the FCPA. According to the cease and desist order, from 2017 to 2020, Deere’s wholly-owned subsidiary, Wirtgen Thailand (“Wirtgen”), paid bribes to government officials within the Royal Thai Air Force, the Department of Highways, and the Department of Rural Roads in exchange for Thai government contracts.

The alleged bribe payments were concealed by Wirtgen’s Managing Director and his sales team through the use of sham consulting fees, cash payments to third parties, fake “factory visit” trips to foreign countries, and false expense reports which disguised meals and massage parlor visits for government officials as “entertainment” in Wirtgen’s books and records. The SEC estimated that Wirtgen earned approximately $4.3 million in profits from this scheme.

The SEC noted that Deere failed to fully integrate Wirtgen into its compliance program after it acquired Wirtgen in 2017, allowing the alleged bribe payments to continue. In reaching the resolution, the SEC highlighted Deere’s remediation and cooperation efforts, which included providing translations, making employees available for interviews, providing details of Deere’s own internal investigations, implementing improvements to its compliance programs, and terminating employees involved in the misconduct. To resolve the matter, Deere agreed to disgorge the $4.3 million in profits, pay just over $1 million in prejudgment interest, and pay a $4.5 million civil monetary penalty.

DOJ Further Updates ECCP Guidance

On September 23, 2024, Nicole Argentieri, the acting head of the DOJ’s Criminal Division, announced updates to the DOJ’s Evaluation of Corporate Compliance Programs (“ECCP”), including the following notable changes.

First, prosecutors will consider measures companies take to protect whistleblowers from retaliation when evaluating a company’s compliance program. According to the revised ECCP, prosecutors should consider whether the company (1) has created an atmosphere in which employees can report misconduct without a fear of retaliation, (2) established proper reporting procedures through which whistleblowers can submit complaints; (3) implemented procedures to protect whistleblowers; and (4) ensured that investigations into whistleblower complaints are handled in a timely fashion and include appropriate remedial and disciplinary measures for employees involved.

Second, prosecutors should consider how the company addresses risks posed by new technology, including artificial intelligence (“AI”). Specifically, prosecutors should consider, among other items: (1) how the company assesses whether AI would impact its ability to comply with criminal laws; (2) whether the company integrates the use of AI into its enterprise risk management strategies; (3) the company’s approach to governance regarding the use of AI in its commercial business and compliance program; (4) how the company mitigates potential negative or unintended consequences from using AI; (5) steps the company takes to mitigate the deliberate or reckless misuse of AI; and (6) how the company monitors and enforces its policies surrounding the use of AI. This update to the ECCP comes after US Deputy Attorney General Lisa Monaco announced in March 2024 that the DOJ would focus more on the use AI to commit crimes and consider companies’ efforts to mitigate the risks of misusing the technology when evaluating compliance programs.

Connecticut Energy Trader Convicted in Petrobras Bribery Scheme

On September 26, 2024, a Connecticut federal jury found former oil trader Glenn Oztemel guilty on seven counts, including one count of conspiracy to violate the FCPA, three counts of violating the FCPA, one count of conspiracy to commit money laundering, and two counts of money laundering, for his role in paying of bribes to officials at Petrobras, Brazil’s state-owned energy company.

From 2010 through 2018, Oztemel, along with his brother, Gary Oztemel, and Brazilian oil trader Eduardo Innecco paid and laundered approximately $1 million to Petrobras officials in exchange for lucrative fuel oil contracts for two Connecticut-based companies Oztemel worked for—Arcadia Fuels Ltd. and Freepoint Commodities LLC. For additional information regarding the scheme and related prosecutions, see HHR’s Month in a Minute Updates for August 2023, December 2023, June 2024, and July 2024.

Oztemel’s sentencing date has not been set. He faces a maximum sentence of 80 years in prison—five years in prison on each of the FCPA-related counts and 20 years in prison on each of the money laundering-related counts.

Fact of the Month

On September 22, 1994, American audiences were introduced to Chandler, Joey, Monica, Phoebe, Rachel, and Ross for the first time when Friends premiered on NBC. It quickly gained popularity, averaging approximately 25 million viewers each week over the course of its ten-season run. The iconic show became one of the most popular sitcoms of all time and has even become a recognized tool for learning English. An astounding 52.5 million viewers tuned in to the series finale in 2004, and it remains the most watched episode of any scripted show in the 21st century.