Craig Smith, John
E. Kelly, Fatema
Merchant and Rabeha
On May 19, 2011, the United States
Department of Justice ("DOJ") announced that Jorge Granados, the former Chief
Executive Officer ("CEO") of Miami-based telecommunications company Latin Node
Inc. ("LatiNode"), pleaded guilty to one count of conspiracy to violate the
Foreign Corrupt Practices Act ("FCPA"). On December 21, 2010, the DOJ obtained
a 19-count indictment against Granados and other LatiNode senior executives for
their roles in a conspiracy to pay over $500,000 in bribes to Honduran
government officials to retain a lucrative telecommunications contract. Granados's
plea represents the latest example of the U.S. government's ongoing and
aggressive commitment to prosecute high-level business executives for FCPA
In December 2005, LatiNode was
awarded a contract with Empresa Hondurena de Telecomunicaciones ("Hondutel"),
the wholly state-owned telecommunications authority in Honduras. Almost
immediately after winning the contract, LatiNode executives learned that
LatiNode would need to bribe Hondutel employees in order to keep them from rescinding
the contract. The indictment alleged that Granados and other LatiNode
executives agreed to a secret deal to pay bribes to Hondutel officials,
including the general manager, a Hondutel senior attorney, and a minister of
the Honduran government who became a representative on the Hondutel Board of
Directors. The indictment also alleged that Granados actively participated
in making concealed payments by laundering money through LatiNode subsidiaries
in Guatemala and to accounts in Honduras controlled by government officials.
On April 7, 2009, LatiNode pleaded guilty to a one-count criminal violation of
the FCPA. As part of the plea agreement, LatiNode agreed to pay a $2 million
fine and cooperate with any further investigations by law enforcement
Three other former LatiNode senior
executives - Manuel Salvoch, the Chief Financial Officer ("CFO"), Juan Pablo
Vasquez, the Chief Commercial Officer, and Manuel Caceres, the Vice President
for Business Development - have already pleaded guilty to FCPA violations this
year for their involvement in the Hondutel bribery scheme. Granados is
scheduled for sentencing on August 22, 2011, and faces up to five years in
prison and a fine of $250,000 or more.
Granados's plea agreement reflects
the DOJ's aggressive stance on holding high-level business executives
accountable for FCPA violations. During a Senate committee hearing in November
of last year, Senator Arlen Specter had expressed concern regarding the lack of
significant prosecutions of individuals who are responsible for FCPA
violations, notwithstanding the penalties against companies and shareholders
for such violations.
Recent cases suggest that, in fact,
high-level business executives are being held accountable for FCPA violations. For
example, on January 24, 2011, the former CEO and CFO of Innospec Inc., Paul W.
Jennings, agreed to settle FCPA charges with the SEC for approving improper
payments to Iraqi and Indonesian government officials. On May 10, 2011, a
federal jury in California found the President of Lindsey Manufacturing Co.,
Keith Lindsey, its CFO, Steve Lee, and an intermediary guilty on all counts in
a criminal prosecution for FCPA violations. As Assistant Attorney General
Lanny A. Breuer of the Criminal Division of the DOJ remarked about the Granados
case, "[f]oreign bribery undermines competition in the marketplace, and weakens
democratic institutions. CEOs and other corporate executives should know that
now, more than ever, violating the Foreign Corrupt Practices Act will lead to
This article was prepared by Richard C.
Smith (firstname.lastname@example.org or 202 662 4795), John E.
Kelly (email@example.com or 202 662 0256), Fatema
Merchant (firstname.lastname@example.org or 202 662 4626) and Rabeha
Kamaluddin (email@example.com or 202 662 4576) from
Fulbright's White Collar Crime Practice Group, Fulbright's
FCPA and International Anti-Corruption
Practice Group and Fulbright's Investigations
Fulbright's White Collar Crime, FCPA
and International Anti-Corruption and Investigations Practice Groups
Attorneys in Fulbright's White Collar Crime, FCPA and International
Anti-Corruption and Investigations Practice Groups are experienced in all
phases of governmental investigations and criminal and civil litigation. They
routinely handle the management of complex federal and state civil and criminal
litigation on behalf of U.S. companies, including Fortune 500 corporations,
their officers and directors, international corporations and entities, and
individuals. Our attorneys are also experienced in the practice of preventative
counseling and compliance programs. From a strategic perspective, this is
important for reducing the risk of civil and criminal litigation.
 Criminal Indictment, United States v.
Latin Node, Inc., Case No. 10-20881, available
Id. at 22-23.
In early 2007, Florida-based eLandia International, Inc. ("eLandia") acquired
LatiNode. Following the acquisition, eLandia discovered the bribes and
self-disclosed the violations to the DOJ and Securities and Exchange Commission
Criminal Plea Agreement, United States v. Latin Node, Inc., Case No.
09-20239, available at
Specifically, Granados faces a fine of the greater of $250,000, or twice the
gross amount of any pecuniary gain or loss that any person derived or sustained
from the offense. See Criminal Plea
Agreement, 10-CR-20881 (S.D. Fla. May 19, 2011).
See "Granados and Caceres Indictments
Latest in FCPA Individual Prosecutions," Fulbright
& Jaworski L.L.P. Briefing, Dec. 22, 2010.
See SEC Press Release, SEC Charges
Former CEO of Innospec for Role in Bribery Scheme, available at http://www.sec.gov/news/press/2011/2011-21.htm.
 United States v. Noriega, et al., 2:10-CR-01031 (C.D. Cal. May 10,
DOJ Press Release, Former CEO of U.S. Telecommunications Company Pleads Guilty
to Foreign Bribery Conspiracy (May 19, 2011), available at http://www.justice.gov/opa/pr/2011/May/11-crm-644.html.
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