Colombian Conglomerate Grupo Aval and Its Bank Subsidiary to Pay $40 Million to Settle FCPA Violations

The Securities and Exchange Commission (SEC) has taken action against Colombian conglomerate Grupo Aval Acciones y Valores S.A., also known as Grupo Aval S.A., along with its subsidiary bank, Corporación Financiera Colombiana S.A. (Corficolombiana), for their violation of the Foreign Corrupt Practices Act (FCPA). Grupo Aval, whose shares are publicly traded on the New York Stock Exchange, has agreed to a settlement of $40 million to resolve the charges brought by the SEC.

In accordance with the SEC’s findings, Corficolombiana and a collaborator in a joint venture secured a contract from the Colombian government pertaining to an extensive 328-mile highway infrastructure initiative in the country. The SEC’s allegations center on the claim that Corficolombiana, acting through its former president and in coordination with the joint venture partner, engaged in bribery of Colombian government officials in order to secure an extension for the contract. The SEC asserts that these illicit payments, amounting to at least $28 million, were facilitated with the involvement, approval, and support of Corficolombiana’s former president. Furthermore, the SEC’s order contends that Corficolombiana’s actions led to Grupo Aval’s own violations and conferred an improper financial benefit upon Grupo Aval, totaling approximately $32 million.

Charles Cain, head of the SEC’s FCPA Unit, highlighted the perils of lax control environments: “This case exemplifies the potential for misconduct in environments lacking robust controls, as evidenced by the funneling of bribes through payments tied to undocumented invoices and vague service contracts typically managed internally instead of through third parties. It underscores the vital necessity for issuers to establish robust internal accounting controls for third-party payments.”

Both Grupo Aval and Corficolombiana have agreed to comply with a cease-and-desist order that acknowledges their breach of the FCPA’s accounting provisions. In the specific case of Corficolombiana, the order acknowledges its violation of the FCPA’s anti-bribery provisions as well. The SEC’s decision to accept this settlement offer takes into account Grupo Aval’s cooperation and steps taken towards rectification and improvement.

Furthermore, Corficolombiana has reached an agreement with the U.S. Department of Justice to enter into a deferred prosecution arrangement. This agreement also encompasses the payment of over $20 million to settle criminal charges associated with the case.