An extended version of senior associate Alex Swan's article 'SFO agrees tenth Deferred Prosecution Agreement – good money, but do they work?' has been published by Fraud Intelligence, discussing the announcement by the Serious Fraud Office that Amec Foster Wheeler Energy will pay a £103m penalty in a Deferred Prosecution Agreement to settle corruption allegations.
Here's an extract from the article:
"On 1 July 2021 the Deferred Prosecution Agreement ("the DPA") between the Serious Fraud Office ("the SFO") and Amec Foster Wheeler Energy Ltd ("AFWEL") was given final judicial approval by Edis LJ. This is the tenth DPA the SFO has been able to secure since the DPA regime came into force, and is yet another example of a corporate being able to simultaneously reach resolutions with multiple agencies in different jurisdictions to settle various investigations.
The SFO DPA ("the DPA") is the latest in a series of resolutions that AFWEL, now owned by the John Wood Group plc ("Wood"), has been able to achieve. On 25 June 2021, AFWEL entered into a DPA with the DOJ, and a cease and desist agreement with the SEC. It also entered into a leniency agreement with the Ministério Público Federal, the Controladoria-Geral da União (Comptroller General's Office) and the Advogado-Geral da União (Solicitor General) in Brazil. Whilst the resolutions with the American and Brazilian authorities related to the use of third-party agents to bribe decision-makers at Petrobras to win a $190 million contract in Brazil, the DPA covered the use of third-party agents for bribery and corruption in five different countries (including Brazil).
The Statement of Facts ("SoF"), which sets out the factual matrix underpinning the DPA, is yet to be published in order to prevent any prejudice to the SFO's ongoing investigation into individuals, with the SFO due to reach charging decisions in respect of those individuals within the next three months. However, it is apparent that that the period of offending covered by the DPA spanned a total period of 18 years, running from 1996 through to 2014.
A report was prepared by external lawyers to AFWEL's then parent company in October 2007 regarding potential corruption in Saudi Arabia, which was subsequently discussed at a Board meeting in November 2007 at which it was agreed that there was no obligation to make any disclosures. The same external lawyers then subsequently prepared: a risk report for Foster Wheeler Ltd in July 2008 about potential corruption in four other countries; a report into offending in Malaysia dated October 2008; and a report into events in Nigeria in 2009. At no time was any disclosure made to any authorities about these issues. Whilst Edis LJ accepted that there was no legal duty to disclose suspected crime to the authorities, in his judgment there was a moral duty, which extends to corporations, to do so, and as a matter of ethical corporate governance it should have reported the known facts at the time to the SFO. Although AFWEL had policies in place designed to prevent the type of offending which took place, those policies were not followed and documents were created that concealed the fact that AFWEL had engaged agents to pay money to public officials; consequently, there was said to have been "a culture of disregard for compliance policies and procedures" within AFWEL.
Under the DPA, AFWEL will have to pay almost £100 million in compensation, disgorgement of profits, and financial penalties. A breakdown of that penalty is as follows:
|Country||Offence||Period/s of offending||Total amount of penalty|
|Nigeria||Conspiracy to make corrupt payments||1 March 1996 – 30 June 2004||£3,934,846.04|
|Nigeria||Conspiracy to make corrupt payments||1 November 2003 – 30 May 2004||£518,627.13|
|Saudi Arabia||Conspiracy to make corrupt payments||1 June 2004 – 30 November 2007||£5,844,657.38|
|Saudi Arabia||Conspiracy to make corrupt payments||1 April 2007 – 31 May 2007||£2,836,441.50|
|Malaysia||Four offences of conspiracy to make corrupt payments||1 March 1997 – 31 January 2005; 1 October 1997 – 31 January 2005; 1 September 2002 – 31 March 2005; and 1 September 2002 – 30 November 2010||£46,263,688.39|
|India||Conspiracy to make corrupt payments||27 December 2005 – 30 November 2012||£34,662,155.69|
|Brazil||Failure to prevent bribery||1 September 2011 – 31 October 2014||£5,850,007.49|
AFWEL will also pay £3,367,088 towards the SFO's reasonable costs. For the three-year operation period of the DPA, Wood is also required (and has given an undertaking in this regard) to enhance and modify the ethics and compliance programme which applies across its business units (including AFWEL). Whilst no monitor has been appointed, Wood will further have to report to the SFO on an annual basis on the work that it has undertaken and continues to take on remediation and implementation of the compliance measures and internal controls, policies and procedures which form the ethics and compliance programme. "
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