Rafael Zahralddin Speaks with Financial Times South About Recent U.S. Anti-Corruption Efforts in South America
Wilmington, Del. (August 11, 2022) - Wilmington Partner Rafael X. Zahralddin recently spoke with the Financial Times, South (Diario Financiero, Sud) for a Spanish-language article titled "U.S. Sends Message to Businesses as Part of Fight Against Corruption" ("Las señales que EEUU envía a las empresas como parte de la lucha contra la corrupción").
The article discusses Section 7031(c) of the Department of State, Foreign Operations, and Related Programs Appropriations Act, 2022, which allows the State Department to publicly ban individuals and close family members from entering the United States. Recently, former President Horacio Cartes of Paraguay was designated under the statute for his involvement in obstructing a major international investigation into transnational crime in order to protect himself and his criminal associate from potential prosecution and political damage. Former President Cartes is also a significant business partner with one of Chile’s largest conglomerates, Luksic, and the 7031 designation resulted in an emergency visit to Paraguay by both the Luksic chairman and CEO.
Mr. Zahralddin was asked to gauge the impact of the designation on former President Cartes and indicated that, "This could be the first step in an investigation which opens up international scrutiny and enforcement actions by regulators in different jurisdictions and could spread like an infection." He added, "The U.S. designation could add credibility to open allegations and prompt further investigation."
Mr. Zahralddin was also asked to assess the impact on Luksic of the 7031 designation of a close business partner and commented that, "there is reputational harm, a hit to the integrity of the company, which at minimum creates serious negative tension between the parties." The article also discussed the ongoing internal investigation by corporations that are part of Luksic. Mr. Zahralddin explained that "if an investigation is being conducted, it can impede the fact gathering process if the company distances itself from the alleged bad actor either too quickly or too forcefully."
Mr. Zahralddin further commented that “the designation process is part of a larger shift to have the private sector assume some responsibility with the government or NGOs to combat corruption, it leverages the environmental, social and corporate governance (ESG) considerations of companies into anti-corruption efforts."
Mr. Zahralddin is a member of the firm's Corporate, Bankruptcy, Complex Business & Commercial Litigation, Digital Asset, and Ukraine Conflict Response Practices. He is a skilled business lawyer and litigator with significant experience advising clients in corporate and commercial litigation, insolvency, distressed M&A, compliance, corporate law and entity formation, corporate governance, commercial transactions, cyber law, regulatory actions, and cross-border issues.
Read the full Spanish-language article here.