Samsung Heavy to pay $75M in drillship bribery case settlement

South Korean shipbuilder Samsung Heavy Industries has agreed to pay a $75 million penalty as part of a settlement agreement reached with the U.S. Justice Department over bribery investigation related to a 2007 drillship construction involving Petrobras and drilling contractor Pride.

“[Samsung Heavy Industries] has agreed to pay total penalties of more than $75 million to resolve the 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 officials in Brazil,” the DOJ said last Friday.

“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,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division.

U.S. Attorney G. Zachary Terwilliger of the Eastern District of Virginia said that Samsung “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.”

According to admissions by Samsung Heavy Industries, as shared by DOJ, beginning in 2007 and continuing until 2013, Samsung provided approximately $20 million in commission payments to a Brazilian intermediary, knowing that portions of the money would be paid as bribes to officials at oil company Petrobras.

The bribes paid caused Samsung to secure improper business advantages, as Petrobras then entered into a drillship charter contract with Pride (now part of Valaris) to whom  Samsung Heavy Industries then sold the drillship for this contract.

“Samsung Heavy Industries took actions in furtherance of the bribery conspiracy from its branch office located in the United States,” the DOJ said.

Samsung and the DOJ also reached a three-year Deferred Prosecution Agreement. Upon successful completion, the DOJ will seek to dismiss the deferred charge, which relates to a drillship known as the “DS-5,” Samsung said. The rig in question, delivered in 2011, is now owned by Valaris, and is stacked without a contract in Spain.

Commenting on the DOJ settlement Samsung Heavy CEO Joon Ou Nam said: “We deeply regret the company’s involvement in these events, which is contrary to our values and ethical standards,” “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.”