• Uncategorized

Corficocolombiana and Grupo Aval Pay $80 Million to Settle DOJ and SEC FCPA Violations in Colombia (Part I of II)

The Department of Justice has been relatively quiet this year in bringing corporate FCPA enforcement actions and settlements.  Aside from the Ericsson breach of its Deferred Prosecution Agreement, the Corficocolombiana (“Corfico”) and Grupo Aval settlement is the first in 2023 involving a corporate FCPA resolution.  For the SEC, the Corfico and Grupo Aval settlement is the sixth corporate resolution in 2023.

Corfico is a subsidiary of Grupo Aval, a Colombian financial holding company based in Bogota, Colombia.  Grupo Aval’s shares are listed on the New York Stock Exchange and its securities are registered under the SEC regulations. Corfico is Grupo Aval’s merchant bank subsidiary and the largest finance company in Colombia.

Corfico and its parent Grupo Aval agreed to pay $80 million to resolve DOJ and SEC enforcement actions stemming from their involvement in a bribery scheme in Colombia.

Corfico entered into a three-year Deferred Prosecution Agreement (“DPA”) with DOJ in exchange for a payment of $40.6 million. DOJ filed a criminal information in the District of Maryland charging Corfico and Grupo Aval of violating the FCPA.  DOJ credited half of the criminal penalty Corfico already paid Colombia’s prosecuting agency, Superintendencia de Industria y Comerico.  This was DOJ’s first coordinated FCPA settlement with Colombian authorities.

Corfico agreed to pay the SEC roughly $40 million in disgorgement and prejudgment interest.

Corfico and Grupo Aval executed a comprehensive bribery scheme to pay $23 million in bribes to high-ranking government officials in Colombia. Corfico paid bribes to secure a lucrative contract to contruct and operate a 328-mile highway toll road called the Ocaña-Gamarra extension.  Corfico conspired with Odebrecht, the Brazilian construction company, to pay executive and legislative officials, as well as an executive at Colombia’ state-run infrastructure agency.

Under DOJ’s Corporate Enforcement Policy, DOJ credited Corfico’s cooperating, citing Corfico’s production of facts obtained through the company’s internal investigation; making numerous detailed factual presentations that distilled certain key factual information; producing documents that the government may not be able to access because of foreign data privacy laws; providing sworn testimony from Colombian criminal and administrative proceedings of relevant witnesses whom the government could not independently interview; and proactively identifying information previously unknown to the government.

Corfico promptly engaged in extensive remedial measures including, among other things: (i) conducted a root cause analysis of the bribery scheme identified during internal investigations; (ii) promptly took actions to enhance its corporate governance and controls at joint venture entities, as well as improved its oversight of non-controlled joint ventures and investments; (iii) overhauled its compliance program; (iii) enhanced its third-party intermediary risk management process; (iv) implemented a robust process for reporting and investigating allegations of misconduct; (v) established a disciplinary process overseen by a cross-functional ethics committee; (vi) conducted testing of its anticorruption compliance program; and (vii) engaged in a periodic review of and updated its anticorruption compliance program. In light of these considerations, DOJ awarded Corfico a 30% reduction off the bottom of the applicable guidelines fine range. 

You may also like...

1 Response

  1. Mario A. de Castro says:

    Excellent write up!