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FCPA Customs Investigation
A recent Wall Street Journal article reported that “members of Karachaganak Petroleum Operating VB and a logistics arm of Deutsche Post AG, which handles freight shipments for the group, received an anonymous email alleging improper payments for moving goods through the Aksai customs office.” The tipster further alleged that the Karachaganak Petroleum Operating VB (“KPO”) joint venture authorized DHL to bribe Kazakh customs officials to ignore paperwork irregularities that could have delayed shipments. KPO and DHL have both launched internal investigations to address these allegations.
Since that June 6, 2012, article, additional reports have surfaced of an investigation by Tengizcherroil Oil Consortium partners Chevron and Exxon Mobil into freight shipments handled by DHL into Kazakhstan. Within a week of these additional reports, Kazakhstan’s Ministry of Finance reported that it had launched a probe and found no evidence of corruption.
Previous Government Customs Investigation
In 2010, the Department of Justice (DOJ) and the U.S. Securities and Exchange Commission (SEC) settled a U.S. Foreign Corrupt Practices Act case with freight forwarding company Panalpina World Transport (Holding) Ltd. The Panalpina case originated with charges of improper payments to Nigerian customs officials but grew to include charges that Panalpina paid bribes on behalf of its oil and gas clients to customs officials in Angola, Azerbaijan, Brazil, Kazakhstan, Russia, and Turkmenistan. The improper payments largely involved the expedited clearing of equipment through customs. The tipster’s current allegations regarding DHL are similar to the Panalpina charges.
What to Expect?
Given the high profile of the allegations, and the government’s experience with customs investigations, it is probable that the DOJ and SEC will become involved with these new investigations. As happened in the Panalpina case, customers of the custom brokers under review could receive requests for information from the government regarding their customs activities.
What to Do?
Before being contacted by the government, companies should review their own compliance programs, including an internal review of past customs transactions in high-risk markets. An assessment of the company’s training program should also be done. Such a review could allow the company to identify and resolve any issues before government regulators become involved.
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