Samsung Heavy Industries to Pay USD 75 Mn in Penalties Over Bribery Case
- Business & Finance
Samsung Heavy Industries (SHI), one of major shipbuilders in South Korea, has agreed to pay total penalties of more than USD 75 million to resolve the US government’s investigation into violations of the Foreign Corrupt Practices Act (FCPA) arising out of a scheme to pay millions of dollars in bribes to Brazilian officials.
Beginning in 2007 and continuing until 2013, SHI provided about USD 20 million in commission payments to a Brazilian intermediary, knowing that portions of the money would be paid as bribes to officials at Petrobras, the Brazilian state-owned oil and state-controlled energy company.
As explained, SHI made the corrupt payments to secure improper business advantages and to cause Petrobras to enter into a contract to charter a drillship that SHI was selling to a Houston-based offshore oil drilling company, which facilitated SHI executing the sale of the drillship.
“Samsung Heavy Industries paid millions of dollars to a Brazilian intermediary, knowing that some of that money would be used to bribe high-level executives at Petrobras and obtain a lucrative shipbuilding contract,” Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, said.
“Samsung Heavy Industries caused millions of dollars in corrupt bribe payments to be paid to foreign officials to win business, upsetting what should have been a level playing field for other companies that followed the rules,” U.S. Attorney G. Zachary Terwilliger of the Eastern District of Virginia, commented.
SHI entered into a deferred prosecution agreement with the US Department of Justice in connection with a criminal information charging the company with conspiracy to violate the anti-bribery provisions of the FCPA.
Pursuant to its agreement with the US DOJ, the shipbuilder has committed to pay a total criminal penalty of USD 75,481,600. Half of that amount will be paid within 10 business days to the US government, and the other half will be paid within the next 12 months either to the Brazilian government if a separate resolution is reached with Brazilian authorities or to the US government if no such payment is made to Brazil during that 12-month period.
In related proceedings in Brazil, Samsung Heavy Industries entered into a memorandum of understanding with the Controladoria-Geral da União (CGU) and Advogado-Geral da União (AGU) and a complementary agreement for the negotiation of a leniency agreement with the Ministério Público Federal (MPF).
“We deeply regret the company’s involvement in these events, which is contrary to our values and ethical standards,” Joon Ou Nam, CEO of SHI, said in a separate statement.
“Many of the events described in our agreement happened more than a decade ago, and the individuals involved are no longer with the company. Over the past years, we have taken extensive steps, at our own initiative, to strengthen our anti-corruption compliance program to meet the highest standards of compliance and ethics,” he added.