Month in a Minute: August 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 August 2024 include a guilty plea by a former airline executive, charges against a former Philippine election official and executives at voting machine company, Smartmatic, a guilty plea for a former Vitol trader, and a declination for the Boston Consulting Group.

Former AAR Executive Pleads Guilty to Bribing Nepali Officials

Pursuant to a plea agreement unsealed on August 1, 2024, Deepak Sharma, a former executive of U.S. air services provider AAR, pleaded guilty in the U.S. District Court for the District of Columbia to one count of conspiracy to violate the FCPA. Sharma was charged in a criminal information on June 24, 2024, which alleged that, from 2015 to 2018, he conspired with an unnamed official to pay bribes to Nepali government employees to win a bid to sell two Airbus A330-200 aircraft to Nepal Airlines Corporation, the state-owned airlines of Nepal.

Sharma admitted that, in exchange for bribe payments, a Nepali government official shared non-public drafts of the Request for Proposal for the aircraft transaction with him and others at AAR and included in the RFP an aircraft delivery date that an unnamed competitor of AAR would not be able to meet. After being awarded the contract, Sharma and AAR made payments to the Nepali government official and other officials through a series of sham agreements with a partner of AAR, a German aviation company, and shell companies registered in Hong Kong and the United Arab Emirates. In total, Sharma and others orchestrated the transfer of approximately $2.5 million between the companies, an unspecified portion of which Sharma knew was intended for the Nepali officials as bribes.

In the Statement of Offense, Sharma also admitted to participating in a different bribery scheme in South Africa, in which AAR secured a $100 million servicing contract after paying bribes to illegally obtain information concerning its competitors’ contract bids. This allowed AAR to revise its bid and win a contract with South Africa Airways Technical.

Under the terms of his plea agreement, Sharma faces a maximum sentence of five years imprisonment for one count of conspiracy to violate the FCPA. Sharma also agreed to cooperate with the government’s investigation and testify in future cases.

Smartmatic Executives and Philippine Election Official Indicted in Connection with FCPA and Money Laundering Conspiracy

On August 8, 2024, a federal grand jury in the Southern District of Florida indicted the former Chairman of the Philippines’ Commission on Elections (“COMELEC”) and the co-founder and two executives of voting machine company Smartmatic for their involvement in an alleged bribery and money laundering scheme. U.S. authorities allege that between 2015 and 2018, Smartmatic officials Roger Alejandro Piñate Martinez, Jorge Miguel Vásquez, and Elie Moreno conspired to pay at least $1 million in bribes to Juan Andres Doñato Bautista, the former Chairman of COMELEC, to obtain and retain business related to providing voting machines and elections services for the 2016 Philippine elections. The bribery scheme allegedly relied on funds obtained by over-charging for election machines, the use of coded language in WhatsApp conversations, fraudulent contracts and loans, and bank accounts in Asia, Europe, and the United States.

Piñate and Vásquez were each charged with one count of conspiracy to violate the FCPA and one count of violating the FCPA, each of which carries a maximum penalty of five years in prison. Piñate, Vásquez, Moreno, and Bautista were each charged with one count of conspiracy to commit money laundering and three counts of international laundering of monetary instruments for which they face a maximum penalty of 20 years for each count.

Former Vitol Trader Enters Guilty Plea

On August 21, 2024, Javier Aguilar, a former trader for Vitol Group (“Vitol”), pleaded guilty in the U.S. District Court for the Eastern District of New York to one count of conspiracy to violate the FCPA and one count of violating the Travel Act for his role in a scheme to bribe officials at PEMEX Procurement International, Inc. (“PPI”), a U.S.-based subsidiary of Mexico’s state-owned oil company, Petróleos Mexicanos (“PEMEX”). Aguilar admitted that, between 2015 and 2020, he paid more than $600,000 in bribes to PPI officials in exchange for information that assisted Vitol in winning a contract to supply ethane to PEMEX. Aguilar and his co-conspirators concealed the bribe payments through the use of shell companies, alias email accounts, code words, and false consulting and service agreements.

Aguilar was initially charged for the PPI scheme in the U.S. District Court for the Eastern District of New York in December 2022. The charges were dismissed in May 2023 for lack of venue and were subsequently refiled in the U.S. District Court for the Southern District of Texas in August 2023. Pursuant to the terms of his plea agreement, Aguilar consented to transfer the case back to the Eastern District of New York, where U.S. District Judge Eric Vitaliano will now sentence Aguilar for both the PPI charges and for charges related to an Ecuadorian bribery scheme, for which Aguilar was convicted in the Eastern District of New York in February 2024.

Under the U.S. Sentencing Guidelines, Aguilar faces a suggested sentence of 292-365 months in prison; however, in the plea agreement, prosecutors promised that they would not seek a cumulative sentence greater than 20 years (240 months). As part of his plea agreement, Aguilar also agreed to forfeit $7.1 million. Aguilar’s sentencing date has not been scheduled.

DOJ Declines to Prosecute Boston Consulting Group

In a letter released August 27, 2024, the DOJ informed the Boston Consulting Group (BCG) that it was declining to prosecute BCG for violations of the FCPA related to a corrupt scheme by BCG employees in Angola. According to the DOJ’s letter, from 2011 to 2017, BCG employees in Portugal paid approximately $4.3 million in bribes to Angolan government officials in exchange for eleven contracts with the Angolan Ministry of Economy and one contract with the National Bank of Angola. BCG employees utilized a third party agent to facilitate the bribe payments and disguised the payments as legitimate commissions. BCG employees further concealed the bribe payments by falsifying the agent’s work product and backdating contracts. BCG earned an estimated $22.5 million from the scheme, which included $14.4 million in profits.

In declining to prosecute BCG, the DOJ noted that BCG timely and voluntarily self-disclosed the misconduct and cooperated with the DOJ’s investigation. The DOJ also highlighted BCG’s remediation efforts, which included compensation-based penalties for the individuals involved in the misconduct. In particular, BCG terminated the perpetrators of the misconduct, required them to surrender their equity in the company, withheld their bonuses, and denied them the “financial transition” normally provided to employees departing BCG.

The DOJ did not impose a criminal fine against BCG; however, as part of the declination, BCG agreed to disgorge the $14.4 million in profits it gained from the scheme and to cooperate with any future investigation and prosecutions.

Fact of the Month

On August 1, 1981, Music Television, more commonly known as MTV, was launched and a new era of pop culture emerged. MTV’s unique music video format changed how audiences consumed music and helped shape the careers of numerous artists in the ensuing decades. The first video ever played on MTV was “Video Killed the Radio Star” by the Buggles. For a fun flashback, check out the music video here.