An investment and hedge fund managing company and its wholly-owned African subsidiary have agreed to pay a $213 million criminal penalty in connection with a scheme involving the bribery of officials in the Democratic Republic of Congo and Libya, the Department of Justice announced Sept. 29. In related proceedings, the two companies have agreed to pay approximately $199 million in disgorgement and interest to the Securities and Exchange Commission, the parent company’s CEO will pay nearly $2.2 million for his role, and the CFO will be penalized later for his role.
According to a DOJ press release, company funds were used to pay tens of millions of dollars in bribes to DRC officials in exchange for investment opportunities in that country’s diamond and mining sectors that resulted in more than $90 million in profits for the company. In Libya, the company received a $300 million investment from the Libyan Investment Authority and subsequently agreed to pay a third-party agent a $3.75 million “finder’s fee,” knowing that some or all of it would be paid to Libyan officials in return for their assistance in obtaining the investment. The SEC said the companies also paid bribes to secure mining rights and corruptly influence government officials in Chad, Niger, and Guinea and that the parent company’s executives ignored red flags and corruption risks and permitted illicit transactions to proceed.
The DOJ states that the parent company has entered into a deferred prosecution agreement in connection with a criminal information charging it with two counts of conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act, one count of falsifying its books and records, and one count of failing to implement adequate internal controls. In addition to the criminal penalty, the company has agreed to implement rigorous internal controls, retain a compliance monitor for three years, and cooperate fully with the DOJ’s ongoing investigation. The African subsidiary has pleaded guilty to a one-count criminal information and will be sentenced next March.
The DOJ notes that the misconduct was not voluntarily self-disclosed and that the resolution reflects its seriousness, including the high value of the bribes paid and the involvement of a high-level employee within the parent company. However, the criminal penalty reflects a 20 percent reduction off the bottom of the U.S. Sentencing Guidelines fine range because of the parent company’s cooperation with the government’s investigation.
Copyright © 2021 Sandler, Travis & Rosenberg, P.A.; WorldTrade Interactive, Inc. All rights reserved.