Month in a Minute: October 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 October 2024 include an SEC fine for a New York-based defense contractor, another sentencing in the PDVSA bribery scheme, resolutions for RTX, and the sentencing of an individual involved in the Petrobras scheme.

Moog Inc. pays $1.7 million for FCPA Violations

On October 11, 2024, the SEC entered a cease-and-desist order against Moog Inc. (“Moog”), in which Moog agreed to pay nearly $1.7 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 2020 to 2022, Moog’s wholly-owned Indian subsidiary, Moog Motion Controls Private Limited (“MMCPL”), paid bribes to Indian public officials in the aerospace/defense and railway sectors in exchange for government contracts and the public officials’ assistance with tailoring public tenders to favor Moog’s products over competitors. The cease-and-desist order estimated that Moog earned approximately $504,926 in profits from this scheme.

MMCPL allegedly used a third-party agent and a distributor to facilitate corrupt payments to officials. MMCPL relied on fake and inflated invoices and charges for “commission” payments to the third-party agent to conceal the bribes.

In reaching the resolution, the SEC highlighted that Moog reported the identified misconduct to the DOJ and provided relevant information to the SEC based on Moog’s own internal investigation. Moog also engaged in remediation efforts including terminating employees and third parties involved in misconduct, enhancing internal accounting controls, strengthening its global compliance framework, conducting more frequent compliance-related audits, and performing additional anti-bribery focused trainings for staff.

Moog agreed to disgorge the $504,926 in profits, pay $78,889 in prejudgment interest, and pay a $1.1 million civil monetary penalty.

US Businessman Receives Time Served for Involvement in PDVSA Scheme

On October 19, 2024, U.S. District Judge Gray H. Miller of the U.S. District Court for the Southern District of Texas sentenced Fernando Ardila-Rueda (“Ardila”) to time served for his involvement in a scheme to bribe officials at Petroleos de Venezuela (“PDVSA”), Venezuela’s state-owned oil company. Ardila’s sentencing follows his 2017 guilty plea to one count of violating the FCPA and one count of conspiracy to violate the FCPA. Ardila was a minority owner in several U.S.-based businesses that supplied services to

PDVSA through its subsidiary, Bariven. Between 2008 and 2014, Ardila, his business partner, Abraham Jose Shiera Bastidas (“Shiera”), and their co-conspirators paid bribes to PDVSA officials in exchange for lucrative contracts. The conspirators agreed to pay PDVSA officials a percentage of any contracts their companies received and also provided them with entertainment and meals. Ardila and his co-conspirators concealed the bribes by wiring the money to accounts owned by relatives or associates of the PDVSA officials and by using private emails and code words.

In addition to time served, Judge Miller ordered Ardila to pay a personal money judgment of nearly $4.5 million and an additional fine of $100,000. Shiera previously pleaded guilty. He was ordered to forfeit $18.8 million and sentenced to one year in prison in 2022. Eight other individuals have also entered guilty pleas for their involvement in the PDVSA scheme.

RTX Resolves FCPA Charges related to Qatar Scheme

On October 16, 2024, RTX Corporation (“RTX”), the Virginia-headquartered multinational aerospace and defense company, agreed to pay more than $950 million in a series of agreements to resolve investigations of alleged violations of the FCPA, ITAR, and the Truthful Cost or Pricing Data Act (formerly known as the Truth in Negotiation Act (“TINA”)). To resolve the FCPA and ITAR criminal allegations, RTX’s subsidiary, Raytheon Company (“Raytheon”), entered into a three-year DPA and RTX agreed to pay approximately $380 million, in response to allegations that Raytheon bribed a Qatari official in violation of the FCPA and subsequently failed to disclose those bribes in export licensing applications to the Department of State in violation of the ITAR. On the same day, the SEC also announced that RTX had agreed to pay more than $124 million to resolve allegations that it had violated the anti-bribery, books- and-records, and internal controls provisions of the FCPA based on the alleged Qatari bribery scheme.

Pursuant to its FCPA and ITAR-related DPA, Raytheon agreed to pay a criminal penalty of $252.3 million and forfeiture of $36.6 million, $7.4 million of which will be credited against any disgorgement it pays to the SEC. Under its resolution with the SEC, Raytheon must pay $37.4 million in disgorgement, $11.7 million in prejudgment interest and a $75 million civil penalty, $22.5 million of which will be offset by the DOJ’s criminal penalty.

Connecticut Energy Trader Sentenced in Petrobras Bribery Case

On October 28, 2024, Judge Kari Dooley of the U.S. District Court for the District of Connecticut sentenced oil trader Gary Oztemel to two years of probation and ordered to him pay over $310,000. Oztemel had previously pleaded guilty to one count of engaging in a monetary transaction involving criminally derived property, relating to the bribery of executives at Petrobras, Brazil’s state-owned energy company. Oztemel, the former owner of two Connecticut-based energy trading companies, admitted to using his company Oil Trade and Transport to pay bribes to Petrobras officials between 2010 and 2013.

The fine issued at Oztemel’s sentencing hearing included forfeiture in the amount of $301,575 and a criminal fine of $8,774. In a filing ahead of the sentencing hearing, Oztemel’s lawyers argued against any period of incarceration, citing Oztemel’s ongoing bladder cancer and his exit from the scheme in 2013. Prosecutors argued that the federal sentencing guidelines called for 21-27 months in prison and noted that while Oztemel may have ended his business relationship with Petrobras in 2013, he continued to receive commissions generated by the scheme through 2018.

For additional information regarding the scheme and related prosecutions, see HHR’s Month in a Minute Updates for August 2023, December 2023, June 2024, July 2024, and September 2024.

Fact of the Month

On October 1, 1908, the first Ford Model T automobile was produced and shipped. Due to its innovative production process, the Model T was sold for a fraction of the price of its competitors. In 1908, the Model T sold for $850 (compared to $2,000-$3,000 for competing products). By 1924, the price had dropped to less than $300. The Model T became widely regarded as the first mass-affordable automobile and made car travel available to middle-class Americans.

2024 FCPA and Antibribery Alert update!! The latest edition of Hughes Hubbard’s comprehensive annual FCPA and Antibribery Alert will be available for download in just a few weeks. The Alert discusses the last year’s anti-bribery developments in detail, and once again includes a deep dive into FCPA enforcement, as well as anti-bribery enforcement and developments in France, Brazil, and the UK, and by multilateral development banks. Click here to sign up for your copy.