Criminals can be creative — that is a true statement but essentially FCPA criminals have to embrace a variety of well-established techniques to accomplish a straight-forward goal — steal money from the company to funnel bribery payments to foreign officials. 

The complement of 2024 FCPA cases saw some of our standard techniques (or schemes) but a few presented some new twists.  To help organize these schemes, I will not repeat the schemes present in every case such as use of third-party intermediaries.  We know that corrupt third parties are present in virtually every case, so no surprise there.  But the way in which third parties are funded can involve interesting facts and provide important compliance reminders. Also, 2024 included the reappearance in a few more cases involving luxury travel and gifts as a means to bribe foreign officials.

Supplier Overpayments: In a twist to the standard methods, the Telefonica case had an interesting twist — using overpayments to equipment suppliers as a way to funnel bribery payments for further distribution to intermediaries and foreign officials.  Hiding in the midst of an otherwise proper transaction was the transfer of bribery funds.

Sham Contracts and Deliverables: The Raytheon case employed sham consulting contracts as a means to deliver funds for eventual payment to foreign officials.  In an interesting twist, Raytheon officials actually completed the consulting deliverable FOR the sham third-party consultant.  Specifically, Raytheon entered into and made payments on sham subcontracts for air defense operations totaling $2 million. Raytheon actually prepared the studies themselves and passed them to the third party controlled by the foreign official who then invoiced Raytheon for $2 million as a bribe payment. The air defense consulting studies were drafted by Raytheon employees, shared among Raytheon employees by using personal email accounts, and sanitized to ensure that there were no references to Raytheon employees. 

Commission Payments: The enforcement year also included return of unjustified commission payments charged by suspect third parties.  In the Moog-India case, Moog’s agent invoiced Moog-India for “commission charges,” which several Moog-India employees knew included the improper payments to government officials to eliminate competition and win contract awards. Similarly, in the Telefonica case, Telefónica knew that a significant portion of the money paid to the equipment suppliers would be paid as a “commission” for the benefit of the Venezuelan government officials.

Luxury Goods, Sightseeing and Massage Parlors: The enforcement year included some interesting methods of paying foreign officials, including luxury goods, sightseeing and massage parlor visits. 

In the Deer case, a subsidiary regularly entertained Thailand foreign officials at several massage parlors in Thailand. Many of these massage parlor entertainment expenses, which were approved by supervisors, contained round number denominations and lacked any specific justifications.

In addition, the Deere subsidiary paid for four foreign officials and two of their spouses to travel to its facilities in Germany. This “factory visit” was allegedly for the purpose of learning more about the company’s equipment. However, the itinerary for this trip indicated that no factory visit took place. Instead, the trip solely consisted of sightseeing in Switzerland, including travel to Interlaken, Zermatt, and Lake Lucerne, as well  as shopping and touring in the Alps, with stays in luxury hotels at each stop.

Deere spent approximately $47,500 entertaining government officials on this sightseeing spree to win lucrative tenders. Just after the sightseeing trip ended, the Deere subsidiary a tender valued at approximately $498,567, and a second tender worth $1,451,432 one month later.

In the SAP case, SAP made a number of bribery payments in gifts — spending $3000 on foreign officials when its gifts policy had a limit of $30.  In addition, an SAP employee took government officials on a $10,000 shopping spree and added a luxury watch for a foreign official. 

Critical Third Parties: Like every FCPA enforcement action, at the heart of the scheme are corrupt third party intermediaries who are often segregated into distinct responsibilities that reflect a commitment to execution of an overarching bribery scheme.  In the Gunvor case, the bribery schemes were carried out with the assistance of two critical third parties, along with layers of shell companies and use of “administrative-type” third parties for actual transmission and payment of bribes to foreign officials.