Richard L. Cassin Publisher and Editor

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SBM Offshore pays $238 million to settle FCPA violations

Dutch oil services company SBM Offshore NV agreed Wednesday to pay a criminal penalty of $238 million to resolve FCPA offenses in Brazil, Angola, Equatorial Guinea, Kazakhstan, and Iraq.

SBM entered into a three-year deferred prosecution agreement (pdf) with the DOJ.

Prosecutors filed a criminal information in federal court in Texas charging the company and a U.S. subsidiary with conspiracy to violate the anti-bribery provisions of the FCPA.

The subsidiary, SBM Offshore USA Inc., pleaded guilty Wednesday.

SBM agreed to pay a total criminal penalty of $238 million. That includes a $500,000 criminal fine and $13.2 million in criminal forfeiture that SBM agreed to pay on behalf of SBM USA.

All payments are due within ten business days, SBM said in a statement.

SBM provides floating production systems for the oil and gas industry.

Earlier this month, two former SBM executives pleaded guilty to bribing officials at Brazil’s Petrobras and two state-owned energy firms in Africa.

Anthony Mace, 65, a UK citizen, was SBM’s chief executive officer from 2008 to 2011 and a former board member of SBM USA. He pleaded guilty in federal court in Houston to one count of conspiring to violate the FCPA.

Robert Zubiate, 66, pleaded guilty to the same charge. He was based in California and served as the sales and marketing director for SBM USA.

Mace authorized a total of $16 million in bribes to officials at Petrobras, and at Angola’s Sonangol and Equatorial Guinea’s GEPetrol.

Sentencing for Mace and Zubiate is pending. They each face up to five years in prison.

From 1996 until at least 2012, SBM paid more than $180 million in commissions to intermediaries, according to the company's admissions.

SBM knew some of the money would be used to bribe officials in Brazil, Angola, Equatorial Guinea, Kazakhstan, and Iraq. 

The bribes helped SBM win projects worth at least $2.8 billion.

In 2014, SBM settled overseas bribery offenses with the Dutch Public Prosecutor’s Office (Openbaar Ministerie) by disgorging $200 million in profits and paying a $40 million fine. 

In July last year, SBM signed a settlement agreement with state-owned Petrobras and prosecutors in Brazil to resolve graft allegations.

Under the Brazil leniency agreement, SBM agreed to pay Petrobras $342 million by a cash penalty and discounts on future work.

The DOJ said Wednesday "SBM has paid a combined worldwide total in criminal penalties in excess of $475 million."         

SBM said in an SEC filing this month that it had reserved $238 million for a settlement with the DOJ.

The filing said the U.S. investigation involved Monaco-based Unaoil and certain "legacy issues."

The DOJ said Wednesday it reduced SBM's penalties by 25 percent "off of the bottom of the U.S. Sentencing Guidelines range."

Although SBM didn't provide a complete disclosure for about a year, the company eventually cooperated with the DOJ's investigation.

SBM also undertook "significant remedial measures, including terminating and demoting employees who were involved in the criminal conduct" and ending long-standing agency agreements.

The company also put in place a "new and enhanced system of internal controls to address and mitigate corruption and compliance risks."

The DOJ said another consideration was SBM’s "inability to pay a fine."

The DOJ thanked the Brazilian Ministério Público Federal, the Netherlands’ Dutch Public Prosecutor’s Office (Openbaar Ministerie), and Switzerland’s Office of the Attorney General and Federal Office of Justice -- "for providing substantial assistance in gathering evidence during this investigation."


Richard L. Cassin is the publisher and editor of the FCPA Blog.