The Biden Administration Continues to Target Corruption in Central America: What You Need to Know

The Biden Administration Continues to Target Corruption in Central America: What You Need to Know

July 6, 2021, Covington Alert

On July 1, 2021, the U.S. Department of State (the “State Department”) released the so-called Engel List, Section 353 Corrupt and Undemocratic Actors Report (the “Report”), which identifies 55 high-ranking current and former government officials and private individuals who are now barred from entering the U.S. and who could face other sanctions. The State Department released the Report in response to Congress’s requirement that the State Department “devise strategies to address economic development, corruption, and other issues” in the Northern Triangle countries of Guatemala, El Salvador, and Honduras. In particular, the State Department issued the Report to fulfill a requirement under the December 2020 United States-Northern Triangle Enhanced Engagement Act (the “Act”). Under the Act, the U.S. government may impose sanctions on “foreign persons determined to be involved in a significant act of corruption in a Northern Triangle country,” including prohibitions on travel to the U.S. and seizure of U.S. assets. The Report follows other recent efforts by the Biden Administration to prioritize combating corruption, including through increased investigation and enforcement resources focused on the Northern Triangle to address corruption as an underlying factor leading to migration from Central America to the U.S., which we covered in a previous alert.

The Report lists 55 individuals—14 from El Salvador, 20 from Guatemala, and 21 from Honduras—who the State Department has determined knowingly engaged in any of the following conduct: “(1) actions that undermine democratic processes or institutions; (2) significant corruption; and (3) obstruction of investigations into such acts of corruption, including the following: corruption related to government contracts; bribery and extortion; the facilitation or transfer of the proceeds of corruption, including through money laundering; and acts of violence, harassment, or intimidation directed at governmental and nongovernmental corruption investigators.” The Report includes two former presidents and a former first lady, as well as current and former members of congress, supreme court judges, ministers, and other high-ranking government officials. The named individuals’ U.S. visas were immediately revoked. Ricardo Zúñiga, White House special envoy to the Northern Triangle, said in a special briefing that the list is not final and that other sanctions against the listed individuals, including blocking their U.S. assets, could follow.

The Report underscores the anti-corruption risk facing companies operating in the Northern Triangle. Together with the recent announcement of increased resources for investigating corruption in the region, the Report further highlights the importance of establishing and maintaining an effective compliance program, including a robust due diligence process, targeted to specific risks in the Northern Triangle. Companies with operations in the region should consider proactive steps to assess their local risks and the controls in place to address them.

The following Covington lawyers assisted in preparing this client update: Don Ridings, Jennifer Saperstein, Daniel Shallman, Veronica Yepez, Adam Studner, Nafissa Pio, and Diane Ramirez.

 If you have any questions concerning the material discussed in this client alert, please contact these members of our Anti-corruption/FCPA practice.