Lessons for Employers from Commodity Trader’s Conviction Under Foreign Corrupt Practices Act

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On February 24, 2024, a federal jury in New York convicted former oil and gas trader Javier Aguilar of conspiracy to violate the Foreign Corrupt Practices Act (FCPA), violating the FCPA, and conspiracy to commit money laundering.  The charges stemmed from Aguilar’s alleged role in bribing Ecuadoran and Mexican officials to obtain contracts from their state-owned oil companies for his employer, Vitol Inc. (Vitol).  Aguilar was also convicted of using a complex money laundering scheme that involved sham contracts, fake invoices, and shell overseas companies.

Aguilar faces up to 30 years in prison. Vitol previously agreed to pay $135 million to resolve related charges. 

The FCPA, enacted in 1977, prohibits private and public companies and their employees and agents from offering or giving “anything of value” to any foreign official or public sector employee “corruptly” in order to obtain or retain business.  As shown by the Aguilar/Vitol cases, FCPA violations can result in significant liability.  In addition, the Dodd-Frank Act provides substantial rewards to whistleblowers who report FCPA violations.

Given the high stakes, FCPA compliance is essential for any employer doing business outside the United States.  Aguilar’s conviction offers lessons for employers on steps to take to prevent illegal acts from occurring and/or to help reduce liability in the event of a potential violation.  Here are steps to consider:

• Have a written FCPA compliance program.  In 2020 the U.S. Department of Justice and the Securities and Exchange Commission published an updated resource guide.  Per the guide, compliance programs should include, among other provisions:
  • “[A] mechanism for an organization’s employees and others to report suspected or actual misconduct or violations of the company’s policies on a confidential basis and without fear of retaliation”; and
  • “[A]n efficient, reliable, and properly funded process for investigating the allegation and documenting the company’s response, including any disciplinary or remediation measures taken.”
• Train managers and employees involved in international sales on the compliance program, including how to report concerns, and when gifts, travel, entertainment, and charitable contributions provided to foreign officials may amount to a bribe.  (This is covered in the resource guide.)
• Ensure proper documentation of international sales, especially sales to foreign banks and companies in the energy, telecommunications, and transportation sectors, as these are often state-controlled.
• Carefully review foreign invoices and consulting contracts, ask questions about foreign contracting entities, and require additional information before remitting payment to an offshore account.
• Conduct due diligence on agents and distributors as well as buyers, and avoid doing business with parties that have questionable qualifications, associations, or reputations.

The risks present in the Aguilar/Vitol cases are neither new nor unique.  Employers doing business internationally need to be proactive to prevent FCPA violations from taking place.

David Dubberly and Harrison Smith are attorneys with Maynard Nexsen PC.