On August 8, the UK Serious Fraud Office (SFO) announced that it is conducting an investigation of an international aircraft manufacturer. The SFO stated that the investigation centers on the use of third party consultants. The SFO’s brief announcement asked for individuals with information to contact the agency through its confidential reporting system.
In an SEC cease and desist order filed on August 11, Key Energy Services, Inc., a Houston-based provider of rig-based oil well services, agreed to disgorge $5 million to settle charges that the company violated the books and records and internal control provisions of the FCPA. According to the order, from August 2010 through at least April 2013, Key Energy’s Mexican subsidiary paid bribes of at least $229,000 to a contract employee at Petroleos Mexicanos (Pemex), the Mexican state-owned oil and gas company. In exchange, the subsidiary received Pemex non-public information, advice and assistance on contracts with Pemex, and lucrative amplifications or amendments to those contracts. The funds were allegedly funneled through an entity purporting to provide consulting services, but for which there was no evidence of appropriate authorization of the relationship, and no supporting documentation regarding the purported consulting work performed. According to the SEC, the subsidiary improperly recorded the transfers to the consulting firm as legitimate business expenses, which were consolidated into Key Energy’s books and records. Key Energy allegedly failed to implement and maintain sufficient internal controls, including within the subsidiary relating to interactions with Pemex officials, and failed to respond to indications that the subsidiary was improperly using consultants. Read more…
On August 8, a medical device manufacturer announced in an SEC filing that it is “probable” that the company will incur additional liabilities in connection with the company’s 2012 deferred prosecution agreement (DPA) related to FCPA violations in Mexico and Brazil. The company stated that it had set aside funds for this purpose, but did not specify the amount. The company’s SEC filing stated that the company “expects to continue discussions with the SEC and DOJ but the terms of a potential resolution were not certain.” Two months ago, DOJ stated in a court filing that the company had breached the DPA by failing to implement and maintain a compliance program.
OFAC Issues Two Findings of Violation for Alleged Violations of Foreign Narcotics Kingpin Sanctions Regulations
On August 2, OFAC issued Findings of Violation (here and here) to two insurance companies for alleged violations of the Foreign Narcotics Kingpin Sanctions Regulations, 31 C.F.R. part 598. The findings of violation relate to a non-U.S. insurance company that issued insurance policies to persons subsequently designated as SDNs. The insurance policies were serviced by a U.S. insurance company, which collected insurance premiums from the SDNs and remitted the premiums to the non-U.S. company. Neither company identified the designations until a separate company assumed responsibilities for servicing the policies. OFAC asserted that as large and commercially sophisticated companies providing insurance products and services, they “failed to implement controls and measures to ensure [they] could identify, block and report insurance policies, premiums, or claims payments in which an OFAC sanctioned person(s) had an interest.”
On July 29, the DOJ announced that the former president of the Guatemala soccer federation pleaded guilty to racketeering conspiracy and wire fraud conspiracy charges. The individual was the president of the Guatemala soccer federation from 2009 to 2015. The former president’s guilty plea came in response to allegations that he received bribes in exchange for awarding media and marketing rights to a Florida company for the Guatemalan national soccer team’s World Cup qualifying games. The bribes, totaling hundreds of thousands of dollars, were transmitted from U.S. bank accounts. As part of the plea, the former president agreed to forfeit $350,000 and could be sentenced to a maximum of 20 years for each count.
The guilty plea came as part of the U.S. government’s investigation into corruption in international soccer. 42 individuals and entities have been charged thus far in the investigation, which has been ongoing since May 2015, and the former president is the sixteenth person to plead guilty.