The Department of Justice (DOJ) has announced the SBM Offshore USA Inc and its Netherlands-based parent company, SBM Offshore N.V. have agreed to pay a criminal penalty of $238 million in connection with schemes involving the bribery of foreign officials in Brazil, Angola, Equatorial Guinea, Kazakhstan and Iraq in violation of the Foreign Corrupt Practices Act (FCPA).
The fine is the 12th largest on record for violations of the FCPA.
The company designs, supplies and operates floating production systems for the offshore oil industry. It has its head office in Amsterdam and its US office is in West Houston. Its shares are traded on the Euronext Amsterdam Stock Exchange.
The bribery scheme ran from 1996 to 2012. In 2014, the parent company settled with the Dutch Public Prosecutor’s Office and paid a $40 million fine plus $200 million in disgorged profits. At that time the DOJ closed its case without taking action. They re-opened the case in 2016 when, after discussions with the Brazilian authorities, they found out a US-based executive managed a significant portion of the scheme.
In all, the DOJ stated that the company and its parent paid $180 million in bribes and gained $2.8 billion in business as a result. Worldwide, the company has now paid penalties of over $475 million.
In Brazil, typically a 3% commission was paid to an intermediary, who would keep 1% for himself and give the other 2% to Brazilian government officials. In west Africa, the intermediary used was a French former SBM executive who left the company for the sole purpose of becoming a corrupt intermediary.
The company also paid for foreign officials’ travel to sporting events and provided these officials with ‘spending money’. They also paid for tuition and living expenses of relatives of foreign officials and employed some of them at inflated salaries. The executives and intermediaries used personal emails to try and cover their tracks.
Two former executives of SBM plead guilty earlier this month in a Houston court
- Anthony Mace, a UK citizen, was a senior executive from 2000 until December 2011. He worked out of the Amsterdam or Monaco offices (the spreadsheet ledger containing a list of bribes was kept in a safe in the Monaco office). He was CEO of the parent company from April 2008 until December 2011. He was also, at times, an executive and a director of the US company.
- Robert Zubiate, a US citizen, was employed by the US company until February 2016, working on sales and marketing in Latin America.
Mace will be sentenced 2 February 2018, Zubiate on 31 January.