Prosecutors in Colombia charged six current and former employees of the state-controlled oil company with taking bribes from services company PetroTiger Ltd.
Police made the arrests in a sweep in Bogotá, Bucaramanga, and other cities, the Wall Street Journal said.
The defendants are charged with taking $800,000 in bribes in exchange for giving PetroTiger contracts from Ecopetrol SA.
PetroTiger is a privately held British Virgin Islands company with operations in Colombia and offices in New Jersey. It provides production testing services to oil and gas companies.
The U.S. charged PetroTiger’s former CEO, Joseph Sigelman, in May 2014 with bribing David Duran, an Ecopetrol official.
Duran was among those arrested in Colombia last week. He’s no longer working for Ecopetrol.
His wife, Johanna Navarro, was also arrested. The DOJ said $333,500 in bribes to Duran were paid through a phony consulting contract between PetroTiger and Navarro.
In the U.S. prosecution, Sigelman has pleaded not guilty.
Gregory Weisman, PetroTiger’s former general counsel, pleaded guilty in November 2013 to one count of conspiracy to violate the FCPA and to commit wire fraud.
Knut Hammarskjold, who served as a co-CEO of PetroTiger, also pleaded guilty to the same charges.
Neither has been sentenced yet.
Ecopetrol, the biggest company in Colombia, told the Wall Street Journal the current executives have been suspended and the company is cooperating with Colombian prosecutors.
A U.S. federal indictment charged Sigelman with one count of conspiring to violate the FCPA and three counts of violating the FCPA. He also faces charges for conspiracy to commit wire fraud and money laundering. His trial is scheduled to start next month in Camden, New Jersey.
Sigelman has asked the judge to dismiss the FCPA charges. He’s arguing that employees of state-owned Ecopetrol aren’t “foreign officials” under the FCPA.
The Colombian government owns 88.5 percent of Ecopetrol, according to a company-produced a fact sheet (pdf).
In 2012, the FBI interviewed Weisman, PetroTiger’s former general counsel, about suspicious overseas payments. Weisman agreed with the FBI to wear a hidden camera to a meeting with Sigelman.
Sigelman told Weisman to calm down — “regroup, go on vacation, collect yourself, come out [expletive] strong,” according to court documents.
Lawyers for Sigelman asked federal district judge Joseph E. Irenas to suppress the secret videos because they violated Sigelman’s attorney-client privilege with Weisman.
Judge Irenas ruled in January that attorney-client conversations are shielded by privilege only if the client is actively seeking legal advice. “I cannot find a shred of indication that Weisman is there with the intention of giving legal advice to Sigelman,” the judge said, “or the converse, that Sigelman was seeking legal advice from Weisman.”
The Wall Street Journal said it reviewed a letter from the DOJ to PetroTiger written in May 2014 saying the DOJ didn’t intend to prosecute the company.
“PetroTiger board members reported bribery allegations involving Mr. Sigelman to U.S. and Colombian authorities in 2011, according to people close to the company,” the WSJ said.
Lawyers in Colombia for David Duran and his wife have said their clients are innocent of the charges.
Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.