Gunvor Agrees to Pay $661 Million to Settle FCPA Bribery Case

The Allegations

Gunvor Group Ltd, a multinational energy trading company, registered in Cyprus and headquartered in Switzerland, has agreed to a foreign corrupt practices act settlement. The Department of Justice (DOJ) and the Commodities and Futures Trading Commission (CFTC) uncovered alleged bribes made to Ecuadorian officials through an extensive investigation. Gunvor was subpoenaed in 2020 about this conduct and a former Gunvor employee pleaded guilty in 2021 to a bribery scheme targeting Ecuadorian government officials. (Payne) According to the terms of the FCPA settlement agreed to by Gunvor and DOJ, Gunvor will pay $661 million to resolve the allegations.

Gunvor is not the first party to settle alleged FCPA violations–other major energy and commodity traders have also come under scrutiny in recent years. Companies like Trafigura, Vitol, and Glencore, have either set aside money for multimillion dollar fines or paid fines to the DOJ over allegations of bribery in multiple foreign countries. (Payne)

An Overview of the Foreign Corrupt Practices Act (FCPA) – SEC and DOJ

The Foreign Corrupt Practices Act acts as a deterrent against United States entities engaging in corrupt practices globally. It has two primary components: an anti-bribery provision, and an accounting provision.

The anti-bribery provisions of the FCPA prohibit individuals and businesses from bribing foreign government officials to obtain or retain business. This generally entails “offering to pay, paying, promising to pay, or authorizing the payment of money or anything of value to a foreign official in order to influence any act or decision of the foreign official in his or her official capacity or to secure any other improper advantage in order to obtain or retain business.” (DOJ/SEC 9)

“The FCPA’s anti-bribery provisions apply broadly to three categories of persons and entities:

(1) “issuers” and their officers, directors, employees, agents, and stockholders acting on behalf of an issuer;

(2) “domestic concerns” and their officers, directors, employees, agents, and stockholders acting on behalf of a domestic concern; and

(3) certain persons and entities, other than issuers and domestic concerns, acting while in the territory of the United States.” (DOJ/SEC 9)

Some examples of actions taken to obtain or retain business abroad include the following: (SEC/DOJ 12)

• Winning a contract
• Influencing the procurement process
• Circumventing the rules for importation of products
• Gaining access to non-public bid tender information
• Evading taxes or penalties
• Influencing the adjudication of lawsuits or enforcement actions
• Obtaining exceptions to regulations
• Avoiding contract termination

Some actions performed by foreign officials include: (SEC/DOJ 26)

• Obtaining permits, licenses, or other official documents to qualify a person to do business in a foreign country
• Processing governmental papers, such as visas and work orders
• Providing police protection, mail pickup and delivery, or scheduling inspections associated with contract performance or inspections related to transit of goods across country
• Providing phone service, power and water supply, loading and unloading cargo, or protecting perishable products or commodities from deterioration

Additionally, some ways that bribes have been mislabeled to conceal illicit activities include: (SEC/DOJ 40)

• Commissions or Royalties
• Consulting Fees
• Sales and Marketing Expenses
• Scientific Incentives or Studies
• Travel and Entertainment Expenses
• Rebates or Discounts
• After Sales Service Fees
• Miscellaneous Expenses
• Petty Cash Withdrawals
• Free Goods
• Intercompany Accounts
• Supplier / Vendor Payments
• Write-offs
• “Customs Intervention” Payments

With regards to the FCPA’s accounting provisions, there are two main parts. First, there is a “books and records” provision, which requires issuers to make and keep books, records, and accounts that accurately and fairly reflect their transactions and assets. Second, there is an internal controls provision, in which “issuers must devise and maintain a system of internal accounting controls sufficient to assure management’s control, authority, and responsibility over the firm’s assets.” (DOJ/SEC 38)

Both the Securities and Exchange Commission (SEC) and DOJ administer the FCPA, but in different aspects of the law.

SEC

• Deals with securities violations
• If you have strong evidence of improper payments or bribery to foreign officials, you might have a potentially viable FCPA whistleblower claim.
• If filed with SEC, whistleblowers can be eligible for a monetary reward under the SEC Whistleblower Program
• Under the SEC Whistleblower Program, if a case is filed properly, the SEC whistleblower can remain anonymous from start to finish
• SEC whistleblower rewards can amount to as much as 30% of the recovered funds

DOJ

• Deals with defrauding the federal government
• If filed with DOJ, whistleblower can be eligible for monetary rewards under the False Claims Act (FCA)
• Monetary rewards range from 15% to 30% of the recovered funds
• May also have expanded jurisdiction that wasn’t previously addressed through the new DOJ anti-corporate malfeasance initiative of 2024.

So, under the FCPA, you actually might be eligible for not one, but two whistleblower rewards! You can file under both whistleblower programs if certain conditions are met. Namely, you’ll need to provide information that’s generally from the inside that contains evidence of securities violations and/or defrauding of the federal government. Further, a lot of payments of bribes use United States banks and conceal the underlying crime from the bank, so the whistleblower may be eligible for an Anti-Money Laundering whistleblower award, AML, so it could be a trifecta of whistleblower cases.

At the present moment, the DOJ is expanding enforcement against FCPA violations, partially due to the increasing intersection of white-collar crime and concerns of national security. Potential whistleblowers who volunteer information of their own volition, meaning, “not in response to any government inquiry, preexisting disclosure obligation or an imminent risk of the information being otherwise revealed,” will be considered eligible. The increase in prosecutors at the DOJ working on sanctions violations, control of exports, and foreign agent laws stands only to emphasize the high priority placed on issues of foreign corruption. By coming forward with the right information, many potential whistleblowers can get a fair shot at exposing wrongdoing, and potentially get rewarded for it too. (Bishop)

Protecting Your Rights

It is best practice to consult an FCPA Whistleblower attorney seasoned in both FCPA violations and FCPA settlements to consult on the best way to report wrongdoing and walk away with a whistleblower reward. You could be eligible for between 10%-30% of the recovered funds depending on the whistleblower program, and perhaps even receive two or more rewards, if you have a strong case, and an effective FCPA whistleblower law firm to guide you through the process every step of the way.

Exclusive: Energy trader Gunvor raises US DOJ fine provision to $650 million – sources | Reuters (Payne)

Whistleblower Protection Under the Foreign Corrupt Practices Act – Lexology

DOJ Eyes FCPA For New Whistleblower Rewards Program – Law360

dl (justice.gov)