Background

A global financial institution and its Malaysian subsidiary have agreed to pay more than $2.9 billion in criminal fines, civil penalties, and disgorgement for bribing foreign officials to obtain lucrative business contracts, a Department of Justice press release reports. A DOJ official said this represents the largest monetary penalty ever paid to the U.S. in a corporate criminal foreign bribery resolution.

According to the press release, the company admitted that between approximately 2009 and 2014 it conspired with others to violate the Foreign Corrupt Practices Act by engaging in a scheme to pay more than $1.6 billion in bribes to foreign officials in Malaysia and Abu Dhabi to obtain and retain business from a Malaysian state-owned and state-controlled fund created to pursue investment and development projects for the economic benefit of Malaysia and its people. The co-conspirators allegedly paid these bribes using more than $2.7 billion in funds that were diverted and misappropriated from bond offerings underwritten by the company. The company also admitted that there were significant red flags raised during the due diligence process and afterward that were either ignored or only nominally addressed so that the transactions would be approved.

The parent company entered into a deferred prosecution agreement with the DOJ while the subsidiary pleaded guilty to a charge of conspiracy to violate the anti-bribery provisions of the FCPA. The DOJ states that it reached this resolution based on a number of factors, including the company’s failure to voluntarily disclose the conduct, the nature and seriousness of the offense (including high-level employees and others who ignored significant red flags), the involvement of various subsidiaries across the world, the amount of the bribes, the number and high-level nature of the bribe recipients, and the significant amount of actual loss incurred as a result of the conduct. The company received partial credit for its cooperation with the DOJ’s investigation but not full credit because it significantly delayed producing relevant evidence.

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