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DEEP BACKGROUND

THE BLOG ABOUT BACKGROUND CHECKING

Why, Exactly, Are You Background Checking That Foreign Official?

TOPICS:  Due diligence

 

A company setting out to do business overseas commonly undertakes background investigations of foreigners it plans to deal with in landing the work.  The goal is to make sure they are not notorious bribe artists who are too close to foreign officials and could get the company in trouble for corruption.

 

But Justice Department documents filed recently in federal court in Columbus, Ohio,  told a story of executives of Rolls-Royce affiliates launching a background investigation of a Kazakh government official with the opposite goal in mind.  They wanted to make sure the Kazakh official, whom they allegedly planned to bribe, actually had the access and power to deliver the contract they wanted for Rolls-Royce.

 

“A perverted twist”

 

A sealed criminal case file from 2017 said that Rolls-Royce representatives hoped to bribe someone the federal prosecutors called “Foreign Official.”  The DOJ document said the Rolls-Royce team “sought to perform due diligence to ensure that Foreign Official had decision-making authority to influence” the relevant agency in Rolls-Royce’s favor.

 

A lawyer specializing in foreign bribery cases, Michael Volkov, wrote that the Rolls-Royce team’s background screening of the Kazakh official was “a perverted twist” on most companies’ pre-deal probes, which seek to ensure the person the company was going to deal with had clean hands.

 

“Master of the game”

 

As it turned out, the Foreign Official indeed “had the authority to exert official influence over purchasing decisions” at Asia Gas Pipeline, LLC [AGP], a joint venture between Kazakh and Chinese government entities that was building a gas pipeline between the two countries, according to the DOJ document.  The Kazakh official described himself to the Rolls-Royce team as “the Master of the game,” according to an October 2017 indictment of another Rolls-Royce representative.  That indictment, which called the bribed Kazakh official “Foreign Official 1,” said that in emails setting up payments to him via a Singaporean shell company, the Rolls-Royce representatives referred to the Kazakh official as “Fox” or “Fuchs” to fuzz up his identity.

 

In recent months, several Rolls-Royce representatives have pled guilty to offenses arising from the Foreign Corrupt Practices Act, in connection with the Kazakh matter, according to a DOJ news release.

 

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