A Netherlands-based oil drilling equipment manufacturing company and its U.S. subsidiary agreed to pay $238 million in penalties to resolve criminal charges related to the alleged bribery of government officials in several foreign countries, in violation of the Foreign Corrupt Practices Act ("FCPA").
As detailed in the deferred prosecution agreement ("DPA") entered into by SBM Offshore N.V. ("SBM"), the company and its wholly owned U.S. subsidiary, SBM Offshore USA Inc. ("SBM USA"), were accused of paying intermediaries over $180 million with the understanding that some of the funds would be used to bribe officials in Brazil, Angola, Equatorial Guinea, Kazakhstan and Iraq. The payments were made in the form of "commissions," and allegedly were used to influence the foreign officials to secure "improper advantages" and advance business interests with state-owned oil companies in the foreign countries. In addition, the DPA alleges that SBM took various measures, including the use of codes to identify corrupt officials, in order to conceal the misconduct.
Although SBM disclosed the misconduct, the DOJ noted, it was not granted "voluntary disclosure credit" due to the timeliness of the disclosure – which the DOJ asserted was delayed by approximately one year. SBM did receive credit for full cooperation and remedial efforts, resulting in a 25-percent reduction off the bottom of the U.S. Sentencing Guidelines range. In reaching its resolution with SBM, the DOJ noted that it considered the SBM's inability to pay a greater fine without jeopardizing its "continued viability."
Commentary / James Treanor
SBM has now paid or agreed to pay over $475 million in the United States and the Netherlands to settle charges related to the aforementioned misconduct. And this worldwide total may continue to rise, as efforts to reach a resolution in Brazil are ongoing. In addition, two SBM executives involved in the bribery scheme have already pleaded guilty to FCPA violations and are currently awaiting sentencing, while the UK Serious Fraud Office announced charges against two additional SBM executives on November 30, 2017. SBM is thus a clear example of the increasingly international nature of foreign bribery enforcement – a trend that is multiplying the ability of regulators to identify, investigate and prosecute misconduct.
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