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Freepoint Commodities LLC (Freepoint), a commodities buying and selling firm based mostly in Stamford, Connecticut, has agreed to pay over $98 million to resolve an investigation by the U.S. Justice Division into violations of the Overseas Corrupt Practices Act (FCPA) stemming from the corporate’s involvement in a corrupt scheme to pay bribes to Brazilian authorities officers.
Freepoint has additionally agreed to disgorge greater than $7.6 million to the Commodity Futures Buying and selling Fee (CFTC) in a associated matter.
“As right this moment’s decision demonstrates, the Felony Division stays resolute in our battle in opposition to bribery and corruption,” mentioned Appearing Assistant Legal professional Common Nicole M. Argentieri of the Justice Division’s Felony Division. “Our devoted prosecutors are working tirelessly to carry each companies and culpable people to account. Let this case additionally ship a reminder that our insurance policies supply the best advantages to corporations which are proactive and act with urgency.”
In keeping with court docket paperwork, Freepoint entered right into a three-year deferred prosecution settlement (DPA) with the division in reference to a prison data filed within the District of Connecticut. The knowledge costs the corporate with conspiracy to violate the anti-bribery provision of the FCPA for its scheme to pay bribes to Brazilian authorities officers to safe enterprise with Brazil’s state-owned and state-controlled oil firm, Petróleo Brasileiro S.A. – Petrobras (Petrobras).
“This workplace and our federal regulation enforcement companions are preserving a watchful eye on these not solely concerned within the monetary business, however all U.S. companies that function abroad, to make sure that they’re complying with our nation’s legal guidelines,” mentioned U.S. Legal professional Vanessa Roberts Avery for the District of Connecticut. “This hefty monetary sanction and deferred prosecution settlement ought to each function a deterrent to unlawful conduct within the U.S. and overseas, and as a reminder that the Justice Division incentivizes those that report unlawful conduct and work with us to right wrongdoing.”
Between roughly 2012 and 2018, Freepoint and its co-conspirators paid bribes to Petrobras officers in change for confidential details about pricing and bids submitted by Freepoint’s rivals. Freepoint and its co-conspirators hid the scheme by speaking utilizing code phrases and encrypted messaging purposes, partaking in sham negotiations, and funneling the bribes by way of an middleman who used offshore financial institution accounts and shell corporations. Freepoint earned over $30 million in earnings in reference to the scheme.
“This case exemplifies the FBI’s relentless battle in opposition to corruption and our dedication to holding corporations accountable for prison enterprise practices,” mentioned Assistant Director Michael Nordwall of the FBI’s Felony Investigative Division. “The FBI, together with our home and worldwide companions, will proceed to aggressively fight these crimes and work to degree the enjoying discipline of the worldwide market.”
“This decision and the indictment of three people show the dedication by the FBI and the Justice Division to holding accountable each corrupt corporations and actors — wherever they’re — for his or her illicit enterprise exercise,” mentioned Assistant Director in Cost Donald Alway of the FBI Los Angeles Subject Workplace. “Our tireless work with companions across the globe ensures that companies earn their contracts and that customers are shielded from inflated costs.”
Pursuant to the DPA, Freepoint has agreed to pay a prison penalty of $68 million and administrative forfeiture within the quantity of $30,551,150. Freepoint has additionally agreed to proceed cooperating with the division in any ongoing or future prison investigation regarding this conduct. The division will credit score as much as one-third of the prison penalty in opposition to quantities that Freepoint pays to resolve an investigation by regulation enforcement authorities in Brazil for associated conduct. The division may also credit score as much as 25% of the forfeiture quantity in opposition to disgorgement that Freepoint pays the CFTC in a associated matter.
The division reached this decision with Freepoint based mostly on various elements, together with, amongst others, the character and seriousness of the offense. Freepoint obtained credit score for its cooperation with the division’s investigation, which included (i) promptly and totally responding to requests by the division by producing and summarizing related paperwork and different data; (ii) partaking in vital efforts to combination and analyze complicated monetary data and commerce knowledge for greater than 4,000 transactions; (iii) making firm officers and staff obtainable for interviews, and arranging separate counsel the place acceptable; (iv) offering all related info identified to it, together with details about the people concerned within the conduct. Nevertheless, within the preliminary phases, Freepoint’s cooperation was restricted in diploma and affect, and largely reactive.
Freepoint additionally engaged in remedial measures, together with: (i) conducting an evaluation of the causes of the underlying conduct and endeavor acceptable remediation to deal with these root causes and taking further steps to enhance its compliance program, together with by retaining an advisory agency to judge its third-party compliance program; (ii) overhauling its third-party compliance and danger administration program, together with by way of the implementation of enhanced risk-based due diligence, screening, ongoing monitoring and oversight procedures, and the implementation of FCPA coaching for third-party brokers; (iii) lowering the usage of third-party intermediaries; (iv) implementing a world agent onboarding and monitoring process; (v) strengthening its company governance and danger administration buildings, together with by way of the utilization of knowledge and metrics to judge danger, enhancing the independence and stature of its compliance operate, and hiring further, skilled compliance personnel; (vi) updating the corporate’s world anti-bribery and corruption coverage to incorporate FCPA pink flags; (vii) implementing a course of for reporting and investigating allegations of misconduct; and (viii) conducting testing of its third-party compliance program.
In gentle of those concerns, the prison penalty calculated underneath the U.S. Sentencing Tips displays a 15% discount off the underside of the relevant tips high quality vary.
The division has not too long ago charged three people in relation to Freepoint’s bribery scheme, together with:
- Glenn Oztemel, who allegedly labored as a senior oil dealer at Freepoint and precipitated Freepoint to make corrupt funds to an middleman, which had been disguised as purported consulting charges and commissions, and which had been used to pay bribes to Petrobras officers.
- Gary Oztemel, the brother of Glenn Oztemel, who allegedly used his firm Oil Commerce & Transport S.A. to corruptly help Freepoint in acquiring or retaining enterprise in Brazil.
- Eduardo Innecco, who labored as an agent for Freepoint and obtained purported consulting charges and commissions that he allegedly used to pay bribes to Petrobras officers on behalf of Freepoint.
The case in opposition to Glenn Oztemel, Gary Oztemel, and Eduardo Innecco is pending.
The FBI Los Angeles Subject Workplace is investigating the case, with help from the FBI’s Worldwide Corruption Unit.
Trial Attorneys Allison L. McGuire and Clayton P. Solomon and Assistant Chiefs Derek J. Ettinger and Jonathan P. Robell of the Felony Division’s Fraud Part and Assistant U.S. Legal professional Michael McGarry for the District of Connecticut are prosecuting the case. The U.S. Legal professional’s Workplace for the Jap District of New York additionally supplied vital help.
The Justice Division’s Workplace of Worldwide Affairs and authorities in Brazil, Latvia, Switzerland, and Uruguay supplied help within the matter.
The Felony Division’s Fraud Part is liable for investigating and prosecuting FCPA issues. Extra details about the Justice Division’s FCPA enforcement efforts might be discovered at www.justice.gov/criminal/fraud/fcpa.
An indictment is merely an allegation. All defendants are presumed harmless till confirmed responsible past an affordable doubt in a court docket of regulation.
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