In Houston last week, yet another member of Venezuelan state-run oil company PDVSA's cabal that was engaged in systemic bribery and corruption was brought to justice. This time it was Cesar Rincon, brother of another felon who had previously pleaded guilty, Roberto Rincon. According to his unsealed indictment, Cesar Rincon admitted that he accepted bribes from his brother and others in exchange for taking official acts in his capacity as general manager of PDVSA’s procurement subsidiary.
Cesar Rincon was a part of a group named the PDVSA “management team,” which approached certain corrupt suppliers to the Venezuelan energy concern and offered to facilitate contract procurement, provide insider information and navigate the byzantine PDVSA payment process for corrupt payments. The monies paid by Roberto Rincon and others were laundered into Swiss bank accounts. In his indictment, Cesar Rincon signed an order of forfeiture for more than $7 million in ill-gotten gains to be paid back to the court.
The Cesar Rincon indictment and guilty plea demonstrates once again that the payment of a bribe is only one part of illegal corruption. The money must be stashed somewhere. Even if the FCPA is a supply-side law, criminalizing the payment of the bribe, there is always a corresponding money-laundering action to squirrel the money away, usually in a Swiss bank account. The pursuit of this second phase of the corruption continuum is becoming a more necessary step by the Justice Department in the global fight against corruption.
It also points up the need for every U.S. company that has done business with PDVSA to scrub their operations to see if there is anything untoward, whether it be an agent, distributor, vendor or any other business venture partner involved with PDVSA. With the tightening of sanctions by the U.S. around Venezuela and PDVSA, there will only be more scrutiny going forward.