Archives for September 2020

The German car manufacturer Volkswagen announced on September 23, 2020 that it had signed a deal with prosecutors to compensate Brazilian workers who were affected by the company’s partnership with Brazil’s former military dictatorship.

Employees who worked for VW when the Brazilian Military Regime governed the country took the company to court in 2015 over alleged collaboration between the regime and the company’s Brazilian security office, resulting in persecution of those suspected to be regime opponents. The collaboration included making political arrests on factory property and spying on VW workers.

The Deal

VW agreed to pay out 36 million reais ($6.4 million USD) in compensation to the workers and their families, as well as to various human rights-related efforts in the country. VK has also pledged to support various projects in Brazil related to the incident, such as a memorial dedicated to the victims of the regime.

“We regret the violations that occurred in the past,” VW executive Hiltrud Werner told reporters. “For Volkswagen, it is important to deal responsibly with this negative chapter in Brazil’s history and promote transparency.”

The class action lawsuit represents roughly 6o people. The compensation payments were agreed upon by the company and state, federal, and labor law prosecutions in Brazil.

Critics of the Deal

Sebastiao Neto, a representative of the victims, criticized the deal by saying that VW had only talked to the judiciary and not to the affected workers themselves. He also states that the deal was too little too late for those worst affected by the partnership between the carmaker and the military dictatorship, including Lucio Bellentani.

Bellentani was a member of a communist party cell at VW’s factory in Sao Paulo. He recounted a day in 1972 when a police officer put a machine gun to his back while he was working and then took him to the personnel office where he was tortured.

“They started to beat me, they gave me slaps, kicks and punches, wanting me to tell them names of people who were political and union militants inside the factory,” he said in a 2018 video interview. “I said I didn’t know anyone.”

Bellentani was taken to Sao Paulo’s Department of Political and Social Order the same year, where he was shocked with electricity, beaten, and had teeth forcibly removed with pliers. He died in 2019 before the Brazilian government could settle the case against VW.

Despite criticism that the deal doesn’t adequately compensate the surviving workers and their families for the suffering they endured at the hands of the VW-military dictatorship collaboration, some argue that it was the only deal possible under Brazil’s current president Jair Bolsonaro. Bolsonaro is a defender of military rule known for his far-right policies. Geovaldo Santos, one of the VW employees who was persecuted by his employers after taking part in a strike in 1980, defended the agreement. “It was the only deal that was possible with the government we have,” he said.

History is Made

Christopher Kopper, a historian from the University of Bielefeld, was commissioned by Volkswagen to look into the case.

Kopper said the settlement would be historic. “It would be the first time that a German company accepts responsibility for human rights violations against its own workers for events that happened after the end of National Socialism,” he told German broadcasting companies NDR, SWR and SZ.

The significance of the settlement will be felt in both Brazil and Germany as a result.

The United States on September 15, 2020 imposed Global Magnitsky Sanctions[1] on Union Development Group Co., Ltd., the Chinese state-owned company (“UDG”) behind the Dara Sakor development project that is part of China’s ambitious Belt and Road Initiative (“BRI” also known as the New Silk Road or One Belt, One Road). The move is significant, and might signal a ratcheting up of U.S. opposition to the BRI, which has largely been comprised of rhetoric, diplomatic lobbying, and relatively tepid competition, such as by the establishment of the U.S. International Development Finance Corporation (DFC).[2]

Global Magnitsky Sanctions target corruption and human rights abuses worldwide. Because the sanctions program defines “corruption” broadly and does not delineate what constitutes “serious human rights abuse” within the scope of sanctions, a broad range of conduct that might not be actionable under other anticorruption and human rights regimes is sanctionable under Global Magnitsky. The latitude afforded by Global Magnitsky Sanctions authorities is evident in the UDG sanctions action.

In its announcement of the UDG sanctions, the Treasury Department, which administers Global Magnitsky Sanctions through its Office of Foreign Assets Control (OFAC), stated that UDG was sanctioned for corruption, specifically “for being a person acting for or on behalf of a current or former government official . . . responsible for or complicit in . . . corruption, including the misappropriation of state assets, the expropriation of private assets for personal gain, corruption related to government contracts or the extraction of natural resources, or bribery.” The government official referred to is Kun Kim, a “senior Cambodian general” who was sanctioned under Global Magnitsky on December 2, 2019.

According to the Treasury Department, UDG, through Kun Kim, used Cambodian military forces to “intimidate local villagers” in order to clear land for the Dara Sakor project. UDG is also accused of burning down villagers’ houses and preventing them from planting rice. The Treasury Department said Kun Kim was “instrumental in the UDG development and reaped significant financial benefit from his relationships with UDG.”

Other language in the Treasury Department’s announcement of the sanctions is noteworthy and bares the foreign policy and geostrategic significance of the UDG sanctions action. The release speaks of China’s “malign” investment in Cambodia, its use of the UDG projects in Cambodia to “advance ambitions to project power globally,” “disproportionality benefit” itself through BRI projects, and concerns that the Dara Kakor project “could be converted to “host military assets.” The Treasury Department’s language echoes U.S. concerns about the BRI and other Chinese international project financing activities, including that China engages in “debt trap” financing.[3]

Whether the imposition of sanctions on UDG in connection with the BRI or other Chinese state-backed financing of international projects is a one-off or the first of coming U.S. legal countermeasures in response to the BRI remains to be seen. For now, international development and project finance stakeholders should note the action and its potential significance in context. The Trump Administration has stated as policy that U.S. sanctions, anti-corruption, and other laws are “tools of economic diplomacy” to deter and coerce “rivals,” namely China.[4]

Notes

[1] For more Global Magnitsky Sanctions analysis, visit MassPoint PLLC’s Global Magnitsky Law and Sanctions publications.

[2] The DFC was established by the Better Utilization of Investments Leading to Development (BUILD) Act of 2018, and is an amalgamation of the Overseas Private Investment Corporation (OPIC) and the Development Credit Authority (DCA) office of the U.S. Agency for International Development (USAID). Responding to the BRI and China’s international development finance activities was a “key policy rationale” for the BUILD Act. Congressional Research Service, BUILD Act: Frequently Asked Questions About the New U.S. International Development Finance Corporation, Jan. 15, 2019.

[3] For context and background, see MassPoint PLLC’s chart of U.S.-China issues, including U.S. concerns about “debt trap” financing.

[4] The Department of Justice in 2018 launched the China Initiative to combat China’s “economic aggression.” The China Initiative expressly calls for the use of anti-corruption laws (particularly the Foreign Corrupt Practices Act) in relation to Chinese companies that compete against American businesses (the implicit point being that some Chinese companies employ corruption to compete unfairly). See also Hdeel Abdelhady, What Academia Must Know About DOJ’s China Initiative, Law360, Jan. 28, 2019 (discussing the China Initiative’s implications for academic and research institutions). For additional background, see also MassPoint PLLC, United States National Security Strategy in Africa Targets Chinese Dominance and Corruption, Feb. 25, 2018.

In the latest case involving French prosecution of international corruption, on September 16 the Paris Criminal Court convicted and sentenced the former longtime head of the International Association of Athletics Federations (IAAF) Lameke Diack and his son Papa Massata Diack to prison, for their respective roles in soliciting and accepting payments from Russian athletes who were suspected of doping to cover up the allegations and allow them to continue competing, including in the 2012 London Olympic Games.

In sentencing Lameke Diack, who reportedly was found guilty of multiple corruption charges and of breach of trust but acquitted of money laundering, Judge Rose-Marie Hunault accepted the prosecution’s sentencing recommendation of four years’ imprisonment and a maximum fine of €500,000 (US$593,423), but suspended two of those years, evidently because of Diack’s advanced age (87)).  Indeed, Judge Hunault indicated that he was unlikely to go to prison, saying “Given your age you can expect conditional release.”

The court also sentenced Papa Massata Diack, who had worked as a marketing consultant for the IAAF, to four years’ imprisonment and a €1 million (US$1.17 million) fine.  Papa Massata was tried in absentia because Senegal had refused to extradite him to France.

In addition to the Diacks, the court convicted and sentenced four other defendants connected with the corruption scheme.   Gabriel Dolle, a doctor who supervised drug testing at the IAAF, received a suspended sentence of two years’ imprisonment and a €140,000 (US$163,000) fine for taking money to slow doping sanctions.  Habib Cisse, Lameke Diack’s legal advisor, received a sentence of three years’ imprisonment (two of which were suspended).

Two other defendants, former IAAF treasurer Valentin Balakhnichev and Russian coach of long-distance walkers and runners Alexei Melnikov, were tried and convicted in absentia.  The court sentenced Balakhnichev to three years’ imprisonment and confiscation of nearly €1.9 million euros ($2.2 million) from his account in Monaco, and sentenced Melnikov to two years’ imprisonment.

Several aspects of the trial deserve mention:

• The trial had been scheduled to start in January 2020, but was postponed until June 2020 because Papa Massata Diack, though remaining in absentia, submitted documents containing testimony by him to the Paris court. He later asserted that he “refused to come to the French courts because they lacked impartiality.”
• At trial, French prosecutors argued that Lameke Diack had solicited a total of €3.45 million ($3.9 million) from the athletes, and that he had accepted a $1.5 million bribe from Russia to finance Macky Sall’s 2012 election campaign for the Presidency of Senegal in exchange for slowing doping cases involving Russian athletes.
• Testifying in his own defense, Lameke Diack admitted at trial that he should have been more vigilant during his tenure at the IAAF, and accused his son of “conduct[ing] himself like a thug” while he was at the IAAF.
• Nonetheless, at sentencing, Judge Hunault told Lameke Diack that there was “an understanding between you and your son” in diverting funds, and specifically described Lameke Diack’s role in the corruption scheme. In particular, she stated that “[t]he money was paid in exchange for a program of ‘full protection,’” and that the scheme allowed athletes who should have been suspended “purely and simply to escape sanctions.”  She also found that his actions had “undermined the values of athletics and the fight against doping.”
• With regard to Papa Massata Diack, Judge Hunault found that $15 million was funneled to the his companies, including commissions and money skimmed from contracts and the sale of television rights and other transactions while his father was head of the IAAF.
• In addition to the sentences and criminal fines, Judge Hunault awarded €16 million ($18.9 million) in damages to the IAAF. Approximately one-third is to be paid by the Diacks and the remain two-thirds by them and the four others found guilty.

This case is noteworthy for two reasons.  First, as with the 2017 trial and conviction of Equatorial Guinea Vice President Teodorin Obiang, it indicates France’s commitment to and vigor in prosecuting foreign corruption.

Second, it should not necessarily be viewed as the only case of IAAF-related corruption that France is willing to pursue.  French prosecutors are apparently investigating allegations that the bidding committee for the 2020 (now 2021) Tokyo Olympic Games bribed the Diacks in 2013 to secure votes.

While the bidding committee has denied those allegations, given the scale and duration of the corruption already proved in the Diacks’ prosecution and Lameke Diack’s 16-year tenure as IAAF head, it should surprise no one if new cases emerge from the investigation that cast further shadows over international track and field events during the Diacks’ tenure at the IAAF.

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Jonathan J. Rusch is Principal of DTG Risk & Compliance LLC and Adjunct Professor at Georgetown University Law Center and American University Washington College of Law.

On September 9, 2020, the law firm Cohen Milstein filed a lawsuit in the District Court for the Eastern District of Virginia against Anne Sacoolas, a United States citizen and wife of U.S. diplomat Jonathan Sacoolas, for her part in the wrongful death of Harry Dunn. The suit also names Jonathan Sacoolas as a defendant for vicarious liability for the conduct, actions, errors, or omissions committed by his wife.

The suit was filed on behalf of Harry Dunn’s family, including his parents Charlotte Charles and Tim Dunn, and his twin brother Niall. The lawsuit claims wrongful death of Dunn and seeks financial damages. According to the plaintiffs, Sacoolas’ unsafe driving led to a head on vehicular collision with Harry Dunn in 2019. The collision caused catastrophic injuries, including several fractures. The suit states that Ms. Sacoolas’ subsequent failure to call for an ambulance led to additional pain and suffering on the part of Harry Dunn, ultimately leading to his death.

Case Background

On August 27, 2019, Anne Sacoolas was driving her SUV on the wrong side of the road near Croughton, Northamptonshire, England when she hit 19-year-old Harry Dunn on his motorcycle. The SUV that Sacoolas was driving was owned by her husband Jonathan Sacoolas, who was working for the U.S. government at a Royal Air Force base in Croughton at the time.

Dunn had several open fractures on his extremities and internal bleeding. Although Sacoolas had her cellphone on her, she did not call an ambulance after the accident. Instead, a passerby approached the scene of the accident and called emergency services. When paramedics arrived, Dunn was conscious, breathing, and able to speak with them. He was able to tell the them that Sacoolas had been driving on the wrong side of the road and that she hit him with her SUV. Dunn died shortly after arriving at the hospital as a result of his injuries.

According to the complaint Cohen Milstein filed on behalf of the Dunn family, Sacoolas confessed that the accident was her fault and promised to cooperate with local authorities. However, she returned to the Unites States with her husband around September 15, 2019 without informing local authorities of her departure. She asserted diplomatic immunity as the reason for her return.

The British Crown Prosecution Service charged Sacoolas with causing Dunn’s death by dangerous driving, but she has refused to return to the United Kingdom for a trial. When the United Kingdom requested that she be extradited to Britain, the United States refused to comply.

Tim Dunn and Charlotte Charles accepted an invitation by President Trump to meet him at the White House on October 15, 2019. The parents refused to meet Ms. Sacoolas, who was waiting in another room, instead repeating their wish to meet with her in the UK. Charles said she “initially” thought the meeting was being held to sweep her son’s death under the rug.

The United States and the United Kingdom

The governments of the United States and the United Kingdom have been in contact with one another to discuss the handling of the case. As a result of the Dunn family’s lobbying, the loophole that allowed family members of Americans serving at the RAF base to claim diplomatic immunity was closed in July 2020. Closing the loophole ensures that if a similar accident were to occur again, a spouse of a diplomat at the base would not be immune from British prosecution.

“Since the tragic accident occurred, the United States has been closely engaged with the UK government, and we have been transparent about our positions on legal and diplomatic matters concerning this accident,” a State Department spokesperson said Wednesday. “The United States Government again expresses its profound condolences and sympathy to the Dunn family for the loss of their son.”

Radd Seiger, an adviser to the Dunn family, said the British foreign secretary will file a friend-of-the-court brief supporting the lawsuit brought by Cohen Milstein on behalf of the Dunn family, a move Seiger called “extraordinary.”

Julie Ross, a law professor at Georgetown University, said the plaintiffs in such cases could argue that a Virginia court has jurisdiction because the defendant resides there. However, Ross noted that several preliminary issues would need to be decided before the case went forward. One possible complication is that Sacoolas’s attorney could argue for dismissal due to forum non conveniens. Forum non conveniens allows a court to dismiss a case when another court, or forum, is better suited to hear the case. Sacoolas’s lawyer could argue for the case filed in Virginia to be thrown out, because the evidence and witnesses are in Britain.

Ross stated, “A lot of it depends on how much evidence is really needed to prove a wrongful-death case and how difficult or easy it is to take that evidence in the U.S. rather than pursue the case in the U.K..”

The filing of a civil suit in Virginia and charges by the Crown Prosecutor show that, even though the U.S. has asserted diplomatic immunity, the case will not go away.

On September 7, 2020, Saudi Arabia’s public prosecutor announced that eight people related to the killing of journalist Jamal Khashoggi had been issued prison sentences between seven and 20 years. The decision is “final,” according to a statement carried by the Saudi state-run news agency. The trial was closed to the public and the media.

The eight defendants, who were not named in the statement released by the Saudi state-run agency, were believed to be members of a 15-man hit squad that killed and dismembered Khashoggi in October 2018. The group reportedly traveled to Turkey from Saudi Arabia in 2018 before committing the murder inside the Saudi Consulate in Istanbul.

Khashoggi was killed when he went to the consulate in Istanbul to obtain papers that would allow him to marry his Turkish fiancée. He was a vocal critic of Saudi Arabian Crown Prince Mohammad bin Salman as well as a journalist for The Washington Post. Mohammad bin Salman is widely suspected of ordering the killing.

The Case

The new decision, delivered after Khashoggi’s sons announced they had forgiven their father’s killers, reverses the previous ruling that sentenced five of the eight defendants to death. The Saudi justice system allows families of victims in some capital cases to grant clemency to convicted killers. Both the December ruling and the latest ruling did not find any senior officials responsible for the murder of Khashoggi.

Two senior Saudi officials — Saud al-Qahtani, a powerful royal media adviser, and Ahmed al-Assiri, a former deputy head of intelligence — were exonerated by the Saudi court late last year, even after Saudi prosecutors said the two men played central roles in the plot that led to Khashoggi’s death.

Notably, the latest ruling does not answer key questions about Khashoggi’s murder, such as who ordered him to be killed and the whereabouts of his remains.

The United Nations

Human rights groups have criticized the court for its lack of transparency. Agnès Callamard, a U.N. human rights expert who conducted an investigation into the killing, wrote on Twitter after the sentences were announced, “These verdicts carry no legal or moral legitimacy. They came at the end of a process which was neither fair, nor just, or transparent.”.

U.N. spokesman Rupert Colville, noting that the United Nations opposes the death penalty, told a Geneva briefing: “This is a case where there has not been proper transparency in the justice process, those responsible should be prosecuted and given sentences commensurate with the crime.” Although the latest decision reverses the death penalty sentences that were delivered for five of the eight defendants, the UN and other human rights groups are still skeptical about how the courts reached their latest conclusion.

In the forty-first session of the Human Rights Council of the United Nations in 2019, the council condemned the killing of Khashoggi as a serious international crime and recommended that the UN Human Rights Council (UNHRC), the Security Council, or the UN Secretary General open an international investigation into Khashoggi’s death. The council also urged Turkey and Saudi Arabia to open an investigation into Khashoggi’s death and cooperate with each other and with the UN to ensure a fair and transparent trial.

Turkey

On October 8, 2018, one day after the Saudi government confirmed that Khashoggi died inside the consulate, Turkey announced that it would continue its own investigation into his death. The investigation resulted in a trial, in which 20 Saudi citizens are accused of involvement in the murder of Khashoggi. However, none of the accused were in attendance on July 3, 2020 when proceedings commenced, because Saudi Arabia declined to extradite them. The next hearing will be on November 24, 2020.

Human rights organizations praised Turkey’s opening of a trial as a step towards advancing justice in Khashoggi’s death. The trial is also understood to be the result of Turkish President Recep Tayyip Erdogan’s commitment to pursuing those responsible and even implicating the Saudi Crown Prince if necessary.