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Global engineering company subsidiary agrees to $43 million FCPA settlement

Financial Crimes SEC DOJ FCPA Bribery UK Of Interest to Non-US Persons Brazil

Financial Crimes

On June 25, the DOJ entered into a deferred prosecution agreement (DPA) with the subsidiary of a UK-based global engineering company, in which the subsidiary agreed to pay a fine of approximately $18.3 million related to a conspiracy to violate the FCPA’s anti-bribery provisions. Together with resolutions by a related subsidiary with the SEC, and various foreign authorities, the total resolution will reach over $43 million.

According to the DOJ, between 2011 and 2014, the subsidiary participated in a scheme to bribe officials in Brazil to win an approximately $190 million contract from Petrobras to design a gas-to-chemicals complex in the country. The DOJ stated that the subsidiary admitted to paying bribes in Brazil to win the contract, which involved the participation of an Italian sales agent affiliated with a Monaco-based intermediary company. The DOJ further noted that the subsidiary “took acts in furtherance of the scheme while located in New York and Texas, and earned at least $12.9 million in profits from the corruptly obtained business.”

As part of the DPA, the subsidiary agreed to cooperate with the DOJ’s ongoing or future investigations, to improve its compliance program, and to report to the DOJ on those improvements. The subsidiary’s criminal penalty reflected a 25 percent discount off the bottom of the applicable U.S. Sentencing Guidelines due largely to its cooperation and remediation. The DOJ noted that in addition to cooperation and remediation the resolution reflects a number of factors including, (i) the subsidiary’s “failure to voluntarily and timely disclose the conduct that triggered the investigation”; and (ii) “the nature and seriousness of the offence, which spanned multiple years and involved a high-level executive.”

The SEC simultaneously announced a resolution of a related matter, in which a related subsidiary consented to a cease-and-desist order finding violations of the FCPA’s anti-bribery, books and records, and internal accounting controls provisions. According to the SEC, the subsidiary paid approximately $1.1 million in bribes to obtain the Brazilian contract. Under the terms of the order, the subsidiary agreed to pay $22.7 million in disgorgement and prejudgment interest, in which up to $12.6 million will be offset by disgorgement paid to foreign authorities. 

In related proceedings, the subsidiary received provisional court approval for a settlement with the UK’s Serious Fraud Office and settled with several Brazilian authorities. Under the terms of the DPA, the DOJ will credit up to approximately $10.7 million of the criminal penalty to payments the subsidiary makes to the SFO and to Brazilian authorities.

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