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FCPA Blog Daily News

Entries in Yemen (13)


Facebook: Perfect for selfies, likes...arms trafficking and bribery?

Frictionless mobile payments may not be as good as cash for paying bribes and buying contraband, but they're the next best thing.

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John Kerry in Davos: Corruption fuels extremism and unrest

At the World Economic Forum in Davos Thursday, Secretary of State John Kerry highlighted the links between corruption and unrest in countries including Libya, Yemen, Burundi, and Iraq.

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FinCEN: Compliance officer banned for life after Yemen money transfers

The Financial Crimes Enforcement Network (FinCEN) Tuesday fined a money transfer business based in Hamtramck, Michigan and its owner for processing millions of dollars in wire transfers to Yemen without any due diligence on those involved.

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To find terrorism, look for graft

Last year, 17,958 people were killed in terrorist attacks, 61% more than the previous year. More than 80% of all deaths from terrorist attacks occurred in five of the world's most corrupt countries -- Iraq, Afghanistan, Pakistan, Nigeria, and Syria.

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Study: Anti-graft rage fuels global jihad

We've talked about graft as a cause of war. Now the Carnegie Endowment for International Peace has weighed in. It published a landmark study this month called Corruption: The Unrecognized Threat to International Security. Every policy-maker should read it, more than once.

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The 2013 Corruption Perceptions Index

It is that time of the year again. Transparency International released its 2013 Corruption Perceptions Index (CPI) today.  The CPI, which is the most widely used indicator of corruption worldwide, measures the perceptions of public sector corruption. It uses data from international surveys that look at factors such as accountability of national and local governments, effective enforcement of anti-corruption laws, access to government information, and abuse of government ethics and conflict of interest rules.

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Stanley Sends Big Check To KBR

Jack Stanley paid his former employer Kellogg, Brown & Root LLC $9.25 million last week as partial restitution for kickbacks he took when he ran the company.

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Panalpina, Shell Near FCPA Settlements, Paper Says

The Wall Street Journal has reported that Panalpina and its customer Shell may be close to settling FCPA-related charges with the DOJ and SEC.

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Schlumberger's Signing Bonus 

Schlumberger, the Wall Street Journal reported, paid a $500,000 signing bonus to an intermediary in Yemen. Are signing bonuses for agents illegal under the FCPA? We take a look.

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Paper Reports Schlumberger Investigation

The DOJ is investigating potential bribery in Yemen by oil field services company Schlumberger Ltd., according to the Wall Street Journal.

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Speaking Out

George Terwilliger -- formerly of the DOJ and now in private practice -- had some wise words about decisions to launch internal investigations. His article in included this tightly packed and well-mannered exhortation:

Most corporate decision-makers do not have the experience necessary to anticipate the judgments and proclivities of enforcement officials. Understanding how prosecutors think and what factors are important to them is essential to deciding whether and to what extent to conduct an internal investigation. Animated discussion, in the confines of privilege, with professionals who understand what prosecutors expect and why, is essential to sound analysis of an investigation's results and good decisions based on its results. This kind of analysis also is best broadened -- within the confines of privilege -- to include in-house personnel with financial, public relations and investor-relations expertise, as the decisions made will significantly affect the portfolios of each.

Great advice, with a serious reminder about the attorney-client privilege. It protects the normal give-and-take that's essential for sound decision-making.

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Who are we fighting for? Yemen's executive, judicial, and legislative accountability mechanisms are among the worst assessed in 2008. Although there are strong anti-corruption laws on the books, the anti-corruption agency is ineffective. Furthermore, political financing is generally unregulated, while civil society organizations are ineffective in fighting corruption. The media, which is subject to political interference, also receives poor ratings. Several journalists have been arrested, harassed, or imprisoned for their corruption-related investigative stories. Government control over private radio is among the most draconian in the world.

~ From a comment to Yemen's Grand Corruption on the Global Graft Report left by Jonathan Eyler-Werve at Global Integrity

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Kosmos Energy, Exxon Mobil, and Ghana. A huge oil find, a struggle for control, corruption allegations, and a Chinese subplot. Here.

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Words we like. From Justice Louis Brandeis, concurring in Charlotte Anna Whitney v. California, 274 U.S. 357 (1927) at 375:

Those who won our independence believed that the final end of the state was to make men free to develop their faculties, and that in its government the deliberative forces should prevail over the arbitrary. They valued liberty both as an end and as a means. They believed liberty to be the secret of happiness and courage to be the secret of liberty. They believed that freedom to think as you will and to speak as you think are means indispensable to the discovery and spread of political truth; that without free speech and assembly discussion would be futile; that with them, discussion affords ordinarily adequate protection against the dissemination of noxious doctrine; that the greatest menace to freedom is an inert people; that public discussion is a political duty; and that this should be a fundamental principle of the American government.


In Step With The DOJ

What does it mean to "cooperate with the government" after discovering serious Foreign Corrupt Practices Act compliance problems? There's a description of organizational cooperation in a recent sentencing memo the Justice Department filed in US v. Latin Node Inc.

Latinode was a privately held company. Publicly-listed eLandia bought it and soon discovered a history of corrupt payments in Yemen and Honduras. The strategy eLandia adopted for itself and Latinode was to cooperate with the DOJ. That culminated in Latinode's guilty plea earlier this month to a one-count criminal information charging it with violating the FCPA's antibribery provisions.

In describing the cooperation, the government said eLandia and Latinode made commendable efforts to uncover evidence of corrupt activities. The cooperation was authentic throughout the investigation, the DOJ said, with significant remedial efforts upon discovery of the misconduct.

Here, largely in the government's words, is what the companies did:

  • Latinode and its corporate parent, eLandia, initiated an internal investigation of the corrupt payments immediately upon discovery of the potential problems. This investigation included numerous witness interviews and the review of thousands of documents.
  • Within three months of discovering the improper payments, counsel for Latinode and eLandia visited the government to make a voluntary disclosure of the FCPA violations. Latinode and eLandia provided timely, thorough, and exemplary cooperation in connection with the investigation of Latinode's past corporate conduct.
  • Through counsel, Latinode and eLandia produced thousands of non-privileged documents to the government and responded promptly and productively to all of its requests.
  • The cooperation provided by Latinode and eLandia substantially aided the government in developing its investigation.
  • Almost immediately upon determining the culpability of senior Latinode officers and employees, eLandia terminated those individuals.
  • Although there is no evidence of misconduct by eLandia employees, the company took steps to strengthen its own anti-corruption compliance program, including training its employees in the FCPA and related laws and committing to anti-corruption due diligence in future acquisitions.
  • Perhaps the greatest evidence of eLandia's remedial efforts, the government said, is that it dissolved Latinode from an operational perspective, at a cost to eLandia of millions of dollars, and ceased doing business relating to the tainted contracts.
Did their cooperation help the companies? You bet. eLandia wasn't charged at all in the criminal case (it may still face an SEC civil enforcement action). The government accepted a plea to a single criminal count from Latinode, eLandia's subsidiary that was already largely dormant. The government didn't put either company on organizational probation; nor did it impose a deferred prosecution agreement or require a compliance monitor, saving eLandia enormous out-of-pocket costs. Finally, the criminal penalty of $2,000,000 was far below the fine range in the U.S. sentencing guidelines -- $4,200,000 to $8,400,000 (U.S.S.G. § 8C2.7). eLandia was even given three years to pay.

The plea agreement obligates Latinode (i.e., eLandia) to continue to cooperate with any further investigations by law enforcement agencies. So individuals responsible for the corrupt payments may yet face prosecution.

Download the March 23, 2009 criminal information against Latinode here.

Download Latinode's April 3, 2009 plea agreement here.

Download the DOJ's April 3, 2009 sentencing memo here.