On March 1, the Department of Justice (DOJ) announced that international commodities trading company Gunvor pled guilty and agreed to pay $661 million to resolve charges that it violated the Foreign Corrupt Practices Act (FCPA).
The FCPA violations relate to a bribery scheme in which Gunvor paid substantial bribes to Ecuadorean government officials to secure business with Ecuador’s state-owned and state-controlled oil company, Petroecuador.
According to the DOJ, “between 2012 and 2020, Gunvor and its co-conspirators paid more than $97 million to intermediaries knowing that some of the money would be and in fact was used to bribe Ecuadorean officials.”
“As part of the scheme, Gunvor managers and agents attended meetings in the United States and elsewhere,” the DOJ continued. “The bribe payments were routed through banks in the United States using shell companies in Panama and the British Virgin Islands controlled by Gunvor’s co-conspirators.”
“In exchange for these bribe payments, high-level Ecuadorian officials helped various state-owned entities, which were acting as front companies for Gunvor, win the rights to a series of oil-backed loan contracts with Petroecuador,” the DOJ added. “This structure allowed Gunvor and its co-conspirators to avoid a competitive bidding process and to obtain contractual terms that it could not have obtained otherwise.”
“Over nearly a decade, Gunvor representatives bribed high-level government officials at Ecuador’s state-owned oil company to enter into business transactions with other state-owned entities that ultimately benefited Gunvor. As a result of this complex bribery scheme, Gunvor obtained hundreds of millions of dollars in illicit profits,” said Acting Senior Counselor Brent S. Wible of the Justice Department’s Criminal Division. “Foreign bribery emboldens corrupt officials and undermines the rule of law.”
“Corruption erodes the public’s trust in their government, prevents government officials from acting in the best interests of the people they represent and harms businesses that play by the rules, driving up prices for consumers,” said U.S. Attorney Breon Peace for the Eastern District of New York.
“Gunvor’s years-long bribery scheme involving high-level Ecuadoran officials was both detrimental to the business environment and eroded the public’s trust and confidence in their government,” said Special Agent in Charge Jeffrey B. Veltri of the FBI Miami Field Office.
The Dodd-Frank Act, which established the SEC Whistleblower Program, extended whistleblower provisions to the FCPA. Individuals can disclose information relevant to potential FCPA violations to the SEC.
Through the SEC Whistleblower Program, an individual could receive a whistleblower award for reporting violations of Rule 21F-17(a). Qualified SEC whistleblowers, individuals who voluntarily report original information that leads to a successful enforcement action, are entitled to monetary awards of 10-30% of the funds collected by the government.
With its transnational reach, the SEC Whistleblower Program has attracted disclosures on foreign bribery and other violations from thousands of whistleblowers from across the globe. According to whistleblower advocates, however, the SEC’s whistleblower rules unfairly discriminate against international whistleblowers. Advocates are therefore calling on the SEC to revise its rules around the eligibility of whistleblowers who report to the media and through other channels.
Leading whistleblower Stephen M. Kohn sees the revision of the SEC’s eligibility rules as one of the seven most urgently needed whistleblower reforms. National Whistleblower Center (NWC), where Kohn serves as Chairman of the Board, has issued an Action Alert calling on the SEC to revise its rulemaking.
Join NWC in Taking Action:
Reform the SEC Whistleblower Program