SBM Offshore to pay $238M as U.S. subsidiary pleads guilty for bribery

SBM Offshore USA, a subsidiary of world’s largest FPSO provider SBM Offshore, has pleaded guilty for charges of bribing foreign officials in Brazil, Angola, Equatorial Guinea, Kazakhstan and Iraq in violation of the Foreign Corrupt Practices Act (FCPA).

The U.S. Department of Justice said on Thursday that the Dutch FPSO specialist SBM Offshore would pay a criminal penalty of $238 million in connection with the bribery schemes.

“This corrupt scheme involved some of the highest-level executives within the company, spanned five countries, and lasted for more than a decade,” said Acting Assistant Attorney General Cronan.

“The resolution announced today demonstrates the Criminal Division’s continuing commitment to work closely with our foreign partners to hold both companies and individuals accountable for their actions as we continue to level the playing field for ethical and honest businesses to compete in the marketplace,” he said.

News of SBM Offshore USA admitting to paying bribes comes less than a month after SBM Offshore’s former CEO Tony Mace pleaded guilty to the same charges.

Mace, a UK-citizen, who left the CEO position of SBM Offshore back in December 2011, earlier this month confirmed he had conspired to violate the U.S. Foreign Corrupt Practices Act, through involvement in a scheme to bribe foreign government officials in Brazil, Angola and Equatorial Guinea.

According to the U.S. Justice Department, Mace, who served as the CEO of the world’s largest FPSO provider between 2008 and 2011, admitted that prior to becoming CEO, other employees of SBM Offshore entered into an agreement to pay bribes to foreign officials.

“SBM made these payments in order to influence those officials, for the purpose of securing improper advantages”

These included officials at Brazil’s state-controlled oil company, Petrobras, Angola’s state-owned oil company, Sonangol and Equatorial Guinea’s state-owned oil company, Petroléos de Guinea Ecuatorial (GEPetrol).

Mace also admitted he joined the conspiracy by authorizing payments in furtherance of the bribery scheme and deliberately avoided learning that those payments were bribes.

In a statement on Thursday Acting U.S. Attorney Martinez said: “Deterring corporate crime requires enforcing the law on multiple fronts,” said .  “These cases involve both individual and corporate misconduct, which the guilty pleas reflect. We will continue to aggressively investigate and prosecute individuals and corporations who violate the FCPA and those who misuse our financial system to do so.”

According to the companies’ admissions and court documents, beginning by at least 1996 and continuing until at least 2012, SBM conspired to violate the FCPA by paying more than $180 million in commissions to intermediaries, knowing that a portion of those commissions would be used to bribe foreign officials in Brazil, Angola, Equatorial Guinea, Kazakhstan and Iraq.

SBM made these payments in order to influence those officials, for the purpose of securing improper advantages and obtaining or retaining business with state-owned oil companies in the five named countries. SBM acknowledged that it gained at least $2.8 billion from projects it obtained from these state-owned oil companies, DoJ said.

Deferred prosecution deal


As part of the deal with Department of Justice SBM Offshore entered into a deferred prosecution agreement in connection with a criminal information filed on Thursday in the Southern District of Texas charging the company with conspiracy to violate the anti-bribery provisions of the FCPA.

“Under the terms of the DPA, the DoJ agrees to defer prosecution of the Company during the term of the DPA (three years). After completion of the term of the DPA and fulfillment of the conditions, the charges against the Company will be dismissed,” SBM Offshore said in a separate statement.

“The agreements do not provide any protection for individuals against prosecution, regardless of their affiliation with the Company. As part of the deferred prosecution agreement and guilty plea, SBM Offshore will continue to cooperate with the DOJ,” SBM Offshore added.

Similar penalty to one paid in The Netherlands


As previously reported, SBM Offshore in November 2014 reached an out-of-court settlement with the Dutch Public Prosecutor’s Office (Openbaar Ministerie) over the inquiry into what was then labelled “alleged improper payments.” The company paid $240 million.

The amount paid in the Netherlands was taken into account by the U.S. Department of Justice when calculating the penalty for SBM Offshore.

“In calculating its fine, the Department credited SBM’s payment of penalties to the Openbaar Ministerie and the payment of penalties likely to be paid to the Brazilian Ministério Público Federal (MPF),” DOJ said on Thursday.

Worth noting, the U.S. Department of Justice said it had reached its resolution based on several factor including the fact that while SBM brought the conduct to the attention of the Criminal Division’s Fraud Section and Dutch authorities, it did not provide a complete disclosure for approximately one year; that SBM did cooperate with the Department’s investigation, including an accelerated investigation into bribery conduct related to Kazakhstan and Iraq.

The DoJ also took into account that SBM has undertaken significant remedial measures, including terminating and demoting employees who were involved in the criminal conduct, terminating longstanding agency agreements and implementing a new and enhanced system of internal controls to address and mitigate corruption and compliance risks. Therefore, SBM was entitled to a 25 percent reduction off of the bottom of the U.S. Sentencing Guidelines range.


Brazil uncertain


As for Brazil, where the company’s largest client Petrobras is based, the situation has yet to be resolved. In the first week of November,  SBM Offshore, said it was committed to closing out its legacy issues in Brazil and willing, in principle, to pay the agreed substantial amounts.

However, SBM Offshore said, to enter into the leniency agreements, the company would need to be in a position to reach satisfactorily closure with all Brazilian authorities and Petrobras on all outstanding leniency issues at the same time.

“In view of the current situation, the company cannot guarantee that a satisfactory resolution will be reached. The Company will await resolution before participating in Petrobras-operated tenders,” SBM said on November 6, 2017.

SBM Offshore had been banned from taking part in Petrobras’ tenders, pending the investigation, however, it was then in late 2015 allowed to bid for FPSO projects in Brazil, with the new contract awards remaining conditional upon the conclusion of a settlement agreement between SBM Offshore and the Brazilian authorities in the bribery investigation.

Chief Governance and Compliance Officer and member of the SBM Offshore Management Board Erik Lagendijk said earlier this month: “The Company self-reported the issues in 2012 and has completely changed its business model and ways of working since, as recognized by the Company’s stakeholders.

Lagendijk said it was “unfortunate that despite all efforts made, no global solution to bring finality is currently available. We will continue to actively seek to bring the legacy issue in Brazil to an acceptable closure.”

Offshore Energy Today Staff