On November 8, the U.S. Department of Justice (DOJ) announced that Telefónica Venezolana C.A., a Venezuela-based subsidiary of Telefónica S.A., agreed to pay $85 million to settle charges that the company violated the Foreign Corrupt Practices Act (FCPA) by engaging in a bribery scheme in Venezuela.
According to the DOJ, “in 2014, Telefónica Venezolana participated in a government-sponsored currency auction in Venezuela that allowed it to exchange its Venezuelan bolivars for U.S. dollars. To ensure its success in the auction, Telefónica Venezolana recruited two suppliers to make approximately $28.9 million in corrupt payments to an intermediary, knowing that some of those funds would be paid as a “commission” to Venezuelan government officials.”
The DOJ further alleges that “to conceal the bribe payments, Telefónica Venezolana covered the cost of the bribes by purchasing equipment from the two suppliers at inflated prices.”
“Telefónica Venezolana bribed Venezuelan government officials to participate in a government auction through which it exchanged Venezuelan bolivars for U.S. dollars. The company concealed the illicit payments by purchasing equipment at inflated prices from two suppliers who paid the bribes on the company’s behalf,” said Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division. “Telefónica Venezolana chose to support a corrupt regime to circumvent the difficulties of conducting legal business in Venezuela. This resolution is yet another example of the Justice Department’s commitment to fight corruption and hold companies accountable for their criminal conduct.”
Under both the SEC Whistleblower Program and the DOJ Whistleblower Program, whistleblowers from across the globe can report FCPA violations and may be eligible for monetary awards based on the sanctions collected in connection with their disclosure.
The Dodd-Frank Act, which established the SEC Whistleblower Program, extended whistleblower provisions to the FCPA in 2010. Through the SEC Whistleblower Program, qualified SEC whistleblowers, individuals who voluntarily report original information that leads to a successful enforcement action, are eligible to receive 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.
In August, the DOJ unveiled its own whistleblower award program, which covers FCPA cases not covered under the SEC program. While the program offers awards they are discretionary and are capped, issues whistleblower advocates warn will undermine the program.
Further Reading:
Telefónica Venezolana to Pay Over $85M to Resolve Foreign Bribery Investigation
