Colombian conglomerate Grupo Aval agreed to pay nearly $81 million as part of settlements addressing alleged bribes paid by its bank subsidiary to win a highway construction contract.
Corporación Financiera Colombiana (Corficolombiana) entered into a three-year deferred prosecution agreement with the Department of Justice (DOJ) in addition to agreeing to pay a criminal penalty of $40.6 million for violating the Foreign Corrupt Practices Act (FCPA), the agency announced Thursday. Up to half the penalty will be credited against money the company and another of its subsidiaries agreed to pay to Columbian authorities regarding the same alleged conduct.
Grupo Aval will pay an additional $40.3 million in disgorgement and prejudgment interest in settling with the Securities and Exchange Commission (SEC).
The resolution marks the first time the DOJ coordinated with Colombian authorities in a foreign bribery case, said Acting Assistant Attorney General Nicole Argentieri of the agency’s Criminal Division in a press release.
The details: Between 2012 and 2015, Corficolombiana sought to pay more than $23 million in bribes to high-ranking Colombian officials to win a contract to construct and operate a highway toll road, according to the DOJ. The company allegedly collaborated with Brazilian construction conglomerate Odebrecht to carry out its scheme.
Odebrecht is no stranger to foreign bribery cases, being ordered to pay $2.6 billion for violating the FCPA as part of a 2016 plea deal.
Corficolombiana “caused other entities to enter into fictitious contracts with companies associated with intermediaries that passed along the bribe payments to the Colombian government officials,” the DOJ said. As a result of its alleged scheme, the company earned $28.6 million in profits.
In its order, the SEC said the bribes were paid with the knowledge, approval, and assistance of Corficolombiana’s former president, who sought to both win the contract and influence the financing obligations imposed by the Colombian government.
Grupo Aval and Corficolombiana consented to a cease-and-desist order finding they violated the accounting provisions of the FCPA, the SEC said, while Corficolombiana was also faulted for anti-bribery violations.
“Lax control environments are fertile ground for mischief, as illustrated here where bribes were funded through payments made for invoices lacking supporting documentation and contracts for vaguely described services typically handled internally rather than by third parties,” said Charles Cain, chief of the SEC’s FCPA Unit, in a press release. “This case once again highlights the importance of issuers having sufficient internal accounting controls over third-party payments.”
Compliance considerations: The DOJ noted Corficolombiana received cooperation credit for:
- Timely providing facts obtained through an internal investigation;
- Presenting key factual information;
- Producing documents the government might not have had access to;
- Providing sworn testimony from relevant witnesses whom the U.S. government could not independently interview;
- Proactively identifying information previously unknown to the government; and
- Collecting and producing relevant documents and translations, including documents located outside of the United States.
Corficolombiana agreed to cooperate with the DOJ in any ongoing or future criminal investigations related to the case. The company agreed to enhance its compliance program, with remedial activities already undertaken including the enhancement of its third-party intermediary risk management process, the implementation of a new process for reporting and investigating allegations of misconduct, and the establishment of a disciplinary process overseen by a cross-functional ethics committee.
Company response: “Corficolombiana and Grupo Aval consider this painful chapter closed, insisting on their commitment to the highest ethical standards and the continuous strengthening of their control environment,” the companies said in a statement to investors.