From Pause To Pursuit: DOJ Enters Into DPA For FCPA Violations In Guatemala

The US Department of Justice recently displayed its commitment to enforcement of the Foreign Corrupt Practices Act (FCPA) through its first corporate Deferred Prosecution Agreement (DPA) since lifting the FCPA enforcement pause and issuing new FCPA investigation and enforcement guidelines earlier this year. The case of United States v. Comunicaciones Celulares S.A. underscores the importance of self-disclosure, cooperation and remediation efforts, as well as DOJ's focus on activity involving cartels and Transnational Criminal Organizations (TCOs).

Background

Recently, Comunicaciones Celulares S.A. (Comcel), currently a subsidiary of multinational telecommunications and digital services company Millicom International Cellular S.A., entered into a two-year deferred prosecution agreement (DPA) with the DOJ to resolve allegations that Comcel made improper payments to Guatemalan government officials. According to the DPA, at the time of the relevant conduct, Comcel was a joint venture between Millicom and "Panamanian company," with a 55/45 percent respective ownership split. Under the DPA, Comcel agreed to forfeit approximately $58.2 million, which represents the "proceeds traceable to the commission of the offense," and to pay a $60 million fine to fully resolve the DOJ's investigation. Millicom, who was not named as a defendant, also entered into the DPA and agreed to certain terms and obligations.

According to the DPA, from about 2012 to June 2018 executives of Comcel bribed Guatemalan officials for favorable legislation and business advantages within the country and engaged in money laundering schemes involving narcotrafficking proceeds. The DPA described the scheme as "widespread and systematic."

The DOJ's original investigation was spearheaded by Millicom's voluntary disclosure to the DOJ in 2015 regarding improper payments by Comcel (Millicom's then joint venture) to Guatemalan government officials. Despite self-reporting, Millicom lacked operational control of Comcel at the time and was unable to access Comcel information to fully cooperate with this first phase of the investigation. DOJ ultimately closed its initial investigation but later received evidence of the conduct from external sources and reopened its investigation in 2020. Once Millicom acquired full ownership of Comcel in 2021, it began cooperating with the investigation and sharing the findings of its internal investigation with DOJ.

The resulting DPA imposes obligations for continued cooperation, compliance reporting and certification by Millicom and Comcel along with nearly $118.2 million in penalties and forfeiture. Notably, the $60 million criminal monetary penalty reflects a 50 percent penalty discount from the bottom of the applicable United States Sentencing Guidelines range due to Millicom's disclosures, cooperation and remediation efforts. The DPA is set to last two years and does not require a corporate monitor.

Key Takeaways

DOJ's Actions Reinforce New Guidelines and Enforcement Priorities

The Comcel DPA exemplifies several fundamental priorities emphasized in DOJ's new FCPA guidelines, recent policy changes and statements by DOJ officials. DOJ officials have publicly commented that FCPA enforcement is active again and recounted FCPA trial victories and charges and indictments filed against corporations and individuals in recent speeches and public appearances. In these statements, DOJ officials continue to emphasize the importance of investigation of serious misconduct, voluntary disclosure and DOJ's focus on FCPA violations in regions with high cartel and TCO activity.

Focusing on "Corrupt Intent"

In its recent update on FCPA enforcement and investigation guidelines, DOJ stated that the "focus of FCPA enforcement will be on alleged misconduct that bears strong indicia of corrupt intent." For companies, this underscores the need for regular, comprehensive FCPA compliance throughout organizations and an emphasis on conduct that "directly undermines U.S. national interests."

Links to Cartels and Transnational Criminal Organizations

Consistent with the Trump administration's directive to dismantle cartels and TCOs, DOJ's foreign bribery unit is clearly prioritizing FCPA cases involving such organizations. In the Comcel DPA, DOJ highlighted that narcotrafficking proceeds were laundered through US bank accounts to fund bribes to Guatemalan officials — further exemplifying that conduct with links to cartels and TCOs increases enforcement risk.

Benefits for Voluntary Self-Disclosure

DOJ continues to emphasize the value of voluntary self-reporting and has introduced strong incentives for companies that disclose violations promptly, as seen in the Comcel DPA. DOJ noted in the Comcel DPA that it "gave significant weight" to Millicom's 2015 voluntary disclosure — a reminder to companies to ensure that thorough internal investigations are conducted on suspected or reported misconduct and consider the benefits of timely self-disclosure for known violations.

DOJ's Focus on Central and South America

The Comcel DPA highlights DOJ's focus on FCPA violations in Latin America and other high-risk jurisdictions. This case serves as a reminder of the need for due diligence and updated policies on third-party risk assessment for effective oversight of business partners and operators in these regions. Companies should ensure 'Know Your Customer' standards are current and consistently applied. Ongoing monitoring and risk assessments should also identify regions where cartels and TCOs operate and strengthen compliance procedures and targeted training to mitigate exposure in high-risk areas.

Considering Operational Control of Joint Ventures and Subsidiaries

Companies should ensure that they are prioritizing robust compliance programs across parent and subsidiary companies alike. Millicom's lack of "operational control" over its subsidiary in this case illustrates the importance of proactive compliance measures and transparency throughout an entire organization and reminds companies of the importance of comprehensive due diligence for acquisitions and investment in international businesses.

Tangible Benefits of Strong Compliance Programs

Along with the risks noted above, the Comcel DPA also exemplifies positive returns from investment in compliance programs. Not only do companies mitigate the potential for FCPA violations by employing and monitoring a strong compliance program, but policies and programs that ensure prompt internal investigations and proactive engagement with regulators can also significantly influence outcomes — as demonstrated in the Comcel DPA, where DOJ credited Millicom's internal investigation and voluntary disclosure of evidence.

Conclusion

Overall, these developments in DOJ's investigation, enforcement and view of FCPA violations reinforce the fact that organizations cannot afford to overlook compliance, culture and risk management, particularly when doing business in high-risk jurisdictions. DOJ recently reported a notable increase in disclosures and referrals to its foreign bribery unit, and organizations must be ready to respond to such disclosures and potential actions while also taking steps to prevent them from occurring.

If your organization operates in regions where cartels and TCOs are known to operate, such as in parts of Mexico and other areas in Central and South America, our team can help you review and strengthen your compliance framework, conduct risk assessments and prepare for potential DOJ inquiries.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.