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The biggest criminal cases in the world practice

In this article we will consider the five most significant cases related to corruption and criminal liability of legal persons in the world arena. This material is based on the analysis of publications and reports of the FBI, the United States Securities and Exchange Commission (SEC), and TRACE (a world-wide organization dealing with publications related to anti-corruption activities).

  1. Siemens

The SEC stated that Siemens was involved in a series of major transactions related to corruption in 2008, such as:

  • Construction of a subway in Venezuela
  • Installation of power plants in Israel and refineries in Mexico
  • Development of mobile communications in Bangladesh
  • National identity cards in Argentina
  • Medical equipment in Vietnam, China and Russia
  • “Rollback” from oil deals to Iraqi ministers. This case affected the “Oil for Food” Program, launched by the United Nations.
  • Contracts for the supply of gas turbines. More than 7.8 million dollars were paid to state employees company Enel.

Siemens received more than $ 1.1 billion in profits from these transactions, but the company had to pay $ 350 million as a result of the charges brought by the US Securities and Exchange Commission, and another 450 million fine was paid to the US Department of Justice.

The total amount of bribes amounted to more than 1.4 billion US dollars. Payments were made to government officials around the world. Official crimes covered workers of all levels, including former managers. Since the disclosure of these crimes, Siemens management has begun cooperation with the investigation and conducted thorough internal checks in the company. A key role was played by the amnesty program for lower-level employees, as it greatly facilitated the search for violations of the norms of the Foreign Corrupt Practices Act (FCPA).

Also worth noting is the importance of the crime prevention program within the enterprise at all levels, as well as cooperation with the authorities.

  1. Alstom

In 2014 French company Alstom S.A. (Alstom), engaged in electricity and transport, was found guilty of crimes such as: bribery, forgery of documents and violation of FCPA standards. Tens of millions of dollars and subsidiaries in Switzerland and the United States were involved in this scheme. Alstom admitted that its employees paid bribes to civil servants and forged accounting reports. Because of its actions, this company paid around a $ 75 million fine not to lose its projects around the world, being the price of the latter around 4 billion dollars.

In this case, the company refused to fully cooperate with the investigation for several years. But after public accusations by the prosecutor, Alstom agreed to cooperate.

As an example of the corruption schemes, one can look into the case in Brazil. More than 6.5 million dollars were illegally paid as a commission, in order to win the state competition for the expansion of metro lines in San Paolo and another 200 million for a contract worth 1.4 billion dollars to build a hydroelectric power station. In this case, bribes were paid under the disguise of a commission.

  1. Total S.A.

This company, based in France, was accused by the US Securities and Exchange Commission of violating the FCPA rules, because it illegally paid about 60 million dollars to Iranian intermediaries of civil servants in that country, so that they would influence the receipt of state funds contracts for the development of oil and gas fields in Iran.

As a result of such manipulations, the company received more than $ 150 million in profits. To hide the criminal scheme, the company used fake consulting contracts and in its accounting reports indicated that it was spending money on “Business Development”.

Total paid more than $ 398 million to resolve the conflict with the US Securities and Exchange Commission and close the criminal proceedings initiated by the United States Department of Justice. It should also be noted that the company’s assets operate on the New York Stock Exchange.

  1. Avon

In 2014, the US Securities and Exchange Commission accused Avon Products Inc. in a series of illegal payments made by this company. The enterprise could not establish controls on the ground to detect and prevent the payment of bribes by the Chinese state employees.

According to the SEC, these payments were made from 2004 to 2008. In 2005, as a result of an internal audit by Avon, a potential violation of the provisions of the US Foreign Corrupt Practices Act was discovered. The company’s management commissioned to make appropriate reforms in this regard, but this did not happen.

In addition, due to the institution of a criminal case in this regard, the company had to pay more than $ 67 million as a fine. Also, Avon undertook to accept the FCPA Compliance Officer for a period of 18 months. In this case, the company gave its consent to cooperate with the investigation.

  1. Operación “Mini yo”

In 2012, one of the largest criminal groups in Spain was discovered. Members of this group were involved in crimes related to drug trafficking and money laundering. The head of this group planned to bring about 6.7 tons of cocaine to Spain, hiding it in heavy machinery. To carry out the plan it was necessary to transport the equipment from Spain to Venezuela, and then to transport it back already filled with drugs. The Venezuelan authorities were able to prevent the commission of this crime, after being notified by the Civil Guard of Spain. In this scheme, several legal persons were involved persons other than the criminals themselves.

It is important to note that this was the first case of criminal liability of a legal  person who has reached the Supreme Court in Spain. Criminal liability of legal persons in this country is a relatively new fact, since it was first introduced into the Spanish Penal Code in 2010 and, therefore, this case is of particular interest.

According to the verdict of the Supreme Court, the companies involved in these crimes pledged to pay more than 775 million euros fine. Some of them were dissolved, others were banned from doing business for 5 years.

Conclusion:

– The criminal liability of legal entities is a very important topic when it comes to large multinational corporations.

–  The amount of money involved in cases of this kind is always very high.

– The US Securities and Exchange Commission is one of the most important bodies for the detection and prevention of bribery.

– To monitor the activities of the company in compliance with all the laws in the staffing, it is recommended that organizations have a specialist in the position of Compliance officer

– It is important to note that all these enterprises cooperated with the investigation and it was thanks to this assistance that the disclosure of these crimes became possible.

Author: Oleksandr Predytkevych, attorney, director of the company “Lex Dictum”

autor Oleksandr Predytkevych