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Anti ‘Kleptocracy’ Squads To Become More Active In The Caribbean

david duran

                 David Duran of Petrotiger

ROAD TOWN, Tortola, BVI – New anti-corruption squads will extend the capabilities of the U.S. Department of Justice and the U.S. Securities and Exchange Commission to gather evidence and enforce the Foreign Corrupt Practices Act in the Caribbean and Latin America. 

Earlier this year, the Federal Bureau of Investigations (FBI) announced its establishment of three “dedicated international corruption squads” to investigate violations of the Foreign Corrupt Practices Act (FCPA) and “kleptocracy crimes.”

The corruption squads, which will be based in the FBI’s New York City, Los Angeles, and Washington, D.C., field offices, are composed of agents, analysts, and other professional staff with “experience investigating white-collar crimes.”  

Squad members will have access to a broad set of investigative resources, including “financial analysis, court-authorized wiretaps, undercover operations, [and] informants” and will work closely with the US Department of Justice’s (DOJ’s) Fraud Section, the U.S. Securities and Exchange Commission’s (SEC’s) FCPA Unit, and “overseas law enforcement counterparts.”

The FBI’s international partnerships—hailed as “an important part of [its] investigative arsenal”—are “facilitated by [the FBI’s] network of legal attaché offices situated strategically around the world.”

 
The announcement this Spring follows January press reports that the FBI planned to “bulk up [its] foreign bribery efforts” in 2015 by “more than tripl[ing] the number of agents focused on overseas bribery this year to more than 30 from around 10.” 

Companies subject to the FCPA can expect to see more aggressive investigative tactics through these increased resources, including cooperation with foreign law enforcement authorities and the use of traditional crime-fighting techniques, such as electronic surveillance.  

The FBI’s announcement comes on the heels of Spanish-language media reports that law enforcement authorities in Colombia were working with the FBI on a bribery probe of the country’s state-run oil company, Ecopetrol of South Africa. 

Six current and former Ecopetrol executives were arrested in March in connection with the investigation and charged with accepting bribes. 

One of the charged executives, David Duran, has been named in a closely watched FCPA prosecution in the United States brought against former executives of PetroTiger Ltd., a British Virgin Islands oil and gas company with operations in Colombia and offices in the United States.  

Two of the former PetroTiger executives—including the former general counsel and one of the former co-CEOs—have pleaded guilty to FCPA conspiracy charges. The other former co-CEO, Joseph Sigelman, has been indicted for FCPA and money laundering crimes but is fighting the charges. 

Although the FBI has traditionally reserved wiretaps and undercover agents for investigating organized crime syndicates, it is increasingly using such tactics in the white collar context. 

Wiretap evidence played a prominent role in several recent insider-trading prosecutions, including the trials of Raj Rajaratnam and Rajat Gupta, and recordings have been praised as an important “real-time” tool “to find and stop ongoing corrupt activity.” 

In a March 2014 speech, former Acting Assistant Attorney General Mythili Raman warned that “those who are committing acts of foreign bribery right now should be acutely aware that the middleman they are engaging could be an undercover agent [and] that the telephone calls they are making may be being recorded pursuant to a court order.” 

Raman stated that the DOJ relied on wiretaps, body wires, and surveillance in its investigation of Frederic Cilins, a French citizen who pleaded guilty in March 2014 to obstructing a federal investigation concerning FCPA misconduct. 

As explained by Raman,Our commitment to aggressively utilizing all our tools was vividly demonstrated in our prosecution of a French citizen, Frederic Cilins . . . . The evidence against Cilins was, in large part, obtained through the use of a cooperating witness, a wiretap, body wires and surveillance. Cilins was caught on tape by the FBI agreeing to pay substantial sums of money to induce a witness to the bribery scheme to give Cilins documents to destroy that Cilins knew had been requested by the FBI. 

In a September 2014 speech, Principal Deputy Assistant Attorney General of the DOJ’s Criminal Division Marshall L. Miller reaffirmed that “proactive investigative tools”—including “wiretaps, body wires and physical surveillance”—have “become a staple in our white collar investigations.” 

Undercover surveillance evidence, including a body wire video, will likely be used in the upcoming Sigelman trial. This past January, a federal district court ruled that prosecutors could introduce into evidence secret video recordings that the FBI made of Sigelman with a camera attached to PetroTiger’s former general counsel.  

The court rejected Sigelman’s argument that the video was subject to attorney-client privilege protections because it could not find any indication that Sigelman had sought, or otherwise received, legal advice. 

The FBI’s “dedicated international corruption squads” will extend the capabilities of the DOJ and the SEC to gather evidence and enforce the FCPA. 

Law enforcement experts said companies and individuals subject to FCPA enforcement actions should expect to encounter increased cooperation between foreign law enforcement and the FBI and a greater reliance on proactive investigative tools to detect and monitor misconduct.

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The Author

John McCarthy

John McCarthy

John McCarthy is primarily known for his investigative reporting on the U.S. Virgin Islands. A series of reports beginning in the 1990's revealed that there was everything from coliform bacteria to Cryptosporidium in locally-bottled St. Croix drinking water, according to a then-unpublished University of the Virgin Islands sampling. Another report, following Hurricane Hugo in 1989, cited a Federal Emergency Management Agency (FEMA) confidential overview that said that over 50 percent of the U.S. Virgin Islands public lives below the poverty line. The Virgin Islands Free Press is the only Caribbean news source to regularly incorporate the findings of U.S. Freedom of Information Act requests. John's articles have appeared in the BVI Beacon, St. Croix Avis, San Juan Star and Virgin Islands Daily News. He is the former news director of WSVI-TV Channel 8 on St. Croix.

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