Giuliani Pals Could Be Facing Buzzsaw Of US Anti-Foreign Bribery Statute

Igor Fruman (L) and Lev Parnas (R) remain under investigation after their October 2018 indictment on campaign finance charges. Manhattan federal prosecutors are examining the pair's involvement in a proposed deal to ... Igor Fruman (L) and Lev Parnas (R) remain under investigation after their October 2018 indictment on campaign finance charges. Manhattan federal prosecutors are examining the pair's involvement in a proposed deal to import gas into Ukraine. MORE LESS
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As the drama of the fourth impeachment in U.S. history wears on, there’s a more routine story percolating underneath.

And it only partly involves Rudy Giuliani, the Trump lawyer whose search for dirt in Ukraine arguably got his client impeached.

Prosecutors are investigating whether Lev Parnas and Igor Fruman – two Giuliani associates in his Ukraine campaign – violated an anti-foreign bribery statute while trying to score contracts to import liquefied natural gas into Ukraine this year. The law is a relatively run-of-the mill anti-corruption statute that U.S. multinational corporations have been forced to contend with in recent years, and which has been the longtime target of Trump’s ire.

Parnas and Fruman already face federal charges on an alleged campaign finance scheme, while prosecutors have indicated in recent weeks that additional charges are “likely” against the pair.

A Thursday report from CNN suggests that Manhattan federal prosecutors have expanded their inquiry to encompass potential violations of the Foreign Corrupt Practices Act, a 1977 law that criminalizes payments to foreign officials in exchange for business.

Lawyers with experience in FCPA cases suggested to TPM that publicly known facts around Parnas, Fruman, and Giuliani’s attempt to enter Ukraine’s gas market could fit into patterns set by previously prosecuted FCPA cases.

The FCPA was passed in 1977 after a series of high-profile scandals, including one in which Lockheed was found to have paid West Germany’s defense minster and Japan’s prime minister in exchange for aircraft purchase agreements.

But enforcement of the FCPA didn’t reach its modern tempo until the 2000s, when government policymakers began to identify political instability in regions like the Middle East as a product of misrule and, by extension, corruption. Multinational corporations must be deterred from funding the kinds of practices that wind up giving Washington foreign policy officials headaches, the thinking goes.

Foreign bribery trials are rare, with the Justice Department frequently settling with corporations as they agree to throw implicated employees under the bus in exchange for a better deal.

The DOJ has, in recent years, treated offers of employment as a potential bribe, forcing JP Morgan to pay $72 million to settle allegations that it offered positions and internships to the relatives of government officials around Asia in exchange for business.

In another case, an oil and gas services company called PetroTiger supplied evidence for the foreign bribery trial of its CEO and founder, who ended up admitting to conspiring to steer payments to an official at Colombia’s state-owned oil firm.

One case against French engineering conglomerate Alstom, for example, saw the firm pay $772 million to settle global bribery charges while, prosecutors said, it provided evidence against companies and individuals involved in the scheme.

But prosecutors face significant differences in any potential foreign bribery prosecution of Parnas and Fruman, experts contacted by TPM said.

The pair tried this year to gain lucrative contracts to import LNG into Ukraine by offering an official at the country’s state-run gas company a promotion to CEO, an American businessman working in the sector has alleged publicly.

Andrew Favorov, an official at a state-owned gas company in Ukraine called Naftogaz, reportedly told federal prosecutors last month that he was approached by Parnas and Fruman with an offer: if he would partner with them in an effort to import up to 100 tankers-worth of liquefied natural gas from the U.S. into Ukraine per year, then the pair would have him promoted to CEO of Naftogaz, the country’s state-owned oil and gas monopoly.

Dale Perry, an American businessman working in Ukraine’s gas sector, first reported the story to the US Embassy in April.

CNN’s report suggests that if the above allegations are a quid pro quo, the quid would be gas contracts for Parnas while the quo would be a promotion for Favorov.

Parnas and Fruman, however, may have been well-connected in Ukraine, but were not in a position to offer anyone the position of CEO.

Separate reporting from the Wall Street Journal indicates that Manhattan federal prosecutors are investigating whether a third party was involved in the alleged gas import scheme: Rudy Giuliani.

Parnas and Fruman reportedly touted their ties to Giuliani when pitching related plans around importing gas to Ukraine via a company called Global Energy Producers (GEP), telling officials in Kyiv that the former US attorney for the Southern District of New York was a potential investor.

But an enduring question has been whether Giuliani himself was involved. There has not yet been any indication beyond Parnas and Fruman’s reported statements that he was, while through his counsel Bob Costello, Giuliani flatly denies any involvement.

“Mr. Giuliani was not involved in that alleged transaction at all. Mr. Giuliani is not and has never been an equity participant in GEP. Simply put Mr. Giuliani is not part of this story at all,” Costello said.

One former DOJ prosecutor told TPM that detailing the scheme in a future superseding indictment “could be a very effective way for prosecutors to demonstrate that whatever the core crime is – the political contributions – were not a mistake or accident, but indicative of a broader set of impropriety.”

And even though it’s unclear how capable the pair were of following through on the proposition to Favorov, they could still face criminal exposure from the mere offer.

The FCPA captures an offer, a promise, an authorization, it doesn’t say whether the offerer or promiser can actually do it,” said Mike Koehler, a professor at Southern Illinois University known for his criticism of what he describes as the DOJ’s “expansive” interpretation of the statute. “It’s really no different from saying if you award me a contract I promise to get you a Lamborghini when at the end of the day that persona lacks the financial resources to obtain a Lamborghini.”

At the moment, it’s unclear if Giuliani was involved in anything to do with the offer that Parnas and Fruman allegedly made. But, Koehler said, third parties who agree to ensure that an alleged bribe agreement be completed do run the risk of exposing themselves to charges of conspiracy to violate the FCPA.

The former DOJ prosecutor who requested anonymity told TPM that while the allegations might meet the standard of conspiracy to violate the FCPA, there’s a separate question over how willing the Justice Department would be to bring charges in a case where the bribe scheme was never realized.

“The offer of a bribe is sufficient for a criminal conspiracy – that said, it’s unlikely that DOJ would ever charge that,” the former prosecutor said, adding that SDNY would have to cede part of the case to DOJ headquarters in DC were they to bring FCPA charges.

“DOJ is usually very hesitant to bring cases based on attempted bribes rather than completed bribes, simply because there’s so much corruption out there in the world already,” the source added. 


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