In a win for transparency, the rule of law and the international fight against bribery and corruption, the Department of Justice (DOJ) secured a victory in all three categories with the sentencing of Egbert Yvan Ferdinand Koolman, a Dutch citizen residing in Miami, to 36 months in jail. According to the DOJ Press Release, he was also order by the Court to serve three years of supervised release following his prison sentence and to pay over $1.3 million in restitution.
Koolman was “Foreign Official A” in a related Foreign Corrupt Practices Act (FCPA) enforcement against Lawrence W. Parker, Jr. Koolman was an official of Servicio di Telecomunicacion di Aruba (Setar) N.V., an instrumentality of the Aruban government. He had previously pled guilty to one count of conspiracy to commit money laundering. Parker was sentenced on April 30, 2018 to serve 35 months in prison and was ordered to pay $701,750 in restitution.
The DOJ Press Release stated that “between 2005 and 2016, Koolman operated a money laundering conspiracy from his position as Setar’s product manager. Koolman admitted that, as part of the scheme, he conspired with Parker and others to transmit funds from Florida and elsewhere in the United States to Aruba and Panama with the intent to promote a wire fraud scheme and a corrupt scheme that violated the Foreign Corrupt Practices Act (FCPA).”
Koolman was promised and received bribes from individuals and Parker’s five companies which were located in the United States and abroad in exchange for using his position at Setar to award lucrative mobile phone and accessory contracts. Koolman “received the corrupt payments via wire transfer from banks located in the United States, in cash during meetings in Miami and in Aruba, and by withdrawing cash in Aruba using a bank card that drew money from a U.S.-based bank account. In exchange for the more than $1.3 million in corrupt payments that he received, Koolman also admittedly provided favored vendors with Setar’s confidential information.”
The details of the scheme were laid out in the Criminal Information for Parker. Koolman was employed by Setar as Product Manager from in or around 2003 to in or around July 2016. His responsibilities included interacting with vendors and purchasing mobile phones and accessories for Setar. As such he had influence over the approval and awarding of contracts by Setar for the purchase of mobile phones and accessories. Koolman admitted he accepted $1.3 million in bribes over 10 years. Parker admitted to paying over $700,000 in payments to corrupt Koolman. For all this Parker’s businesses received over $23 million in business from Setar.
Some of these bribes were paid the old-fashioned way – cash. Others were wire transfers to banks in the both the US and abroad. While it might seem the brazenness of this scheme was only matched by how openly it operated, no bank reported information which led to the prosecution or even raised red flags with regulators. This is where these individual enforcement actions were a victory for transparency, for it was the sunshine from the light of day which led directly to these convictions.
According to Jay Weaver, writing in the Miami Herald, “documents included in the Panama Papers database — shared by the International Consortium of Investigative Journalists with the Miami Herald and its parent company, McClatchy — show that Koolman set up an anonymous offshore company in the British Virgin Islands and used it to open two bank accounts in Panama.” Weaver also reported that Setar has filed a civil action against Koolman seeking back reimbursement of the amount stolen from the telecom entity, “A lawsuit filed last year in Miami by Setar accused Koolman of routing bribes from Parker and other vendors through his offshore firm and bank accounts in Panama. He spent the money on renovations for his house in Aruba, including pool repairs and solar panels, the lawsuit claims. Other funds were used to buy his son a pickup truck and pay rent and other expenses for his former mistress.”
After Koolman’s name surfaced in the Panama Papers, he was terminated by Setar. Rather amazingly, the telecom company apparently had no idea Koolman had been defrauding them for over 10 years. Weaver said that Setar’s attorney Benton Curtis, with the law firm Broad and Cassel, credited the Panama Papers with outing the former Setar product manager. He was quoted for the following, “Amazingly, were it not for the recent Panama Papers disclosure, this illicit conduct could have continued on unchecked indefinitely.”
Finally, the enforcement action was a win for the rule of law. Since the 11thCircuit Court correctly decided the Esquenazi appeal back in 2014, finding that a national telecom company was an instrumentality under the FCPA; the question of whether an instrumentality means only a government agency or something else has been laid to rest. As was stated in Parker’s Criminal Information, Setar “was a state-owned telecommunications provider in Aruba, a constituent country of the Kingdom of the Netherlands. Setar was controlled by the government of Aruba and performed a function that Aruba treated as its own, and was thus an instrumentality of the Aruban government as that term is used in the” FCPA.The Koolman and Parker sentencing ends a run of corruption uncovered by work of the International Consortium of Investigative Journalists and their release of the Panama Papers. In the world of FCPA enforcement, it is certainly nice to have some sunshine cleaning out corruption. These sentencings also demonstrate two other salient points. The first is that for every bribe paid there is a corresponding requirement to launder the money. The second is that companies need to pay attention to not only the how of bribery and corruption but also the who.
Support Independent Booksellers and Compliance
If you are in Houston on Thursday, I hope you will join me for refreshments, compliance and a short few words on my latest book The Complete Compliance Handbookat the River Oaks Bookstore. Store owners Jeanne Jarde and Michael Smith will provide the refreshments and hopefully you will provide the networking as we get together to celebrate the release of my new book.
Join us from 5:30 to 7 PM Thursday, June 28 at the River Oaks Bookstore, 3270 Westheimer. For more information or details, contact the River Oaks Bookstore at 713-520-0061.
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© Thomas R. Fox, 2018