Tag Archives: FCPA

Monaco-based brothers plead guilty to bribery scheme

Cyrus Ahsani and Saman Ahsani, CEO and COO of Monaco-based Unaoil, have pleaded guilty in a scheme to make millions of dollars in bribe payments to officials in multiple countries. The countries included Algeria, Angola, Azerbaijan, the Democratic Republic of Congo, Iran, Iraq, Kazakhstan, Libya and Syria.



Guilty plea in March

The pair pleaded guilty in the Southern District of Texas back in March, but the Department of Justice only announced the news today. It’s not clear why there has been a delay. However it does answer the question of why the United Kingdom’s Serious Fraud Office suddenly dropped its fraud investigation into Unaoil back in June.

Cyrus and Saman Ahsani are set for sentencing April 20, 2020.

Companies involved

Unaoil is an intermediary company that provided services for multinational companies operating in the energy sector. The information sheet lists two companies specifically;

  • Rolls Royce plc (paid £170 million in fines to the UK authorities in 2017, specifically related to Unaoil)
  • SBM Offshore NV (paid $475 million in fines worldwide in 2017 – some related to Brazil which don’t involve Unaoil)

A further 25 companies are unnamed, of which 5 have their head office in Houston.

Many of these companies have been named through previous press reports. They include;

  • TechnipFMC (paid SEC $5m to settle bribery allegations in Iraq)
  • KBR (allegedly paid Unaoil over $10 million to help it win contracts in Kazahkstan. DOJ and SEC investigations still ongoing)
  • Baker Hughes (investigation ongoing)
  • Weatherford
  • Cameron
  • Core Labs (investigation closed – no action taken)

Other companies involved include Honeywell, ABB, Samsung and Hyundai.

Downfall

Unaoil’s downfall started as a result of a 2013 court case involving an Australia company, Leighton Holdings. It had entered into an agreement with Unaoil with the aim of securing a $500 million Iraq pipeline contract but later referred the deal to the police for possible bribery.

Nick McKenzie, an Australian journalist started following the case and was soon contacted by a whistleblower who gave him a hard drive containing 10 years’ worth of internal Unaoil emails.

You can read the investigative report by The Age newspaper here

Ahsani charges filed by DOJ

https://www.justice.gov/opa/pr/oil-executives-plead-guilty-roles-bribery-scheme-involving-foreign-officials

TechnipFMC pays SEC $5 million to settle Iraq bribery violations

TechnipFMC, has agreed to pay the Securities and Exchange Commission (SEC) $5 million to settle bribery allegations in Iraq.

Between 2008 and 2013, FMC Technologies (based in Houston) made over $794,000 in payments to a third-party consultant, who used some of these funds to pay bribes to Iraqi government officials to procure metering technology contracts with Iraq state-owned oil companies.



Back in June, the Department of Justice announced that TechnipFMC had agreed to pay $296 million to settle bribery allegations in Brazil and Iraq. $214 million of that was to be paid to the Brazilian authorities, with $82 million going to the DOJ.  In June, Technip issued a press release announcing a $301 million settlement. I noted, at the time, the $5 million discrepancy. I presume the $301 million includes the $5 million just announced.

The FMC sales manager who played an active role in the bribery scheme was based outside the US. However personnel in the US sent numerous documents and approved payments to Unaoil, the consultancy firm based in Monaco. The company disguised the payments as site installation expenses.

TechnipFMC did not self-report to the SEC until after being contacted by the DOJ. It has agreed to pay $4.3 million (representing profits on the contracts won) plus interest of $0.7 million.

Technip and FMC merged in January 2017. Last month, the company announced plans to split into two having spent $231 million on integration costs since 2016.

https://www.sec.gov/enforce/34-87055-s

 

 

Petrobras sues Samsung in Harris County over bribery scheme

[UPDATE 04-24-19 Samsung successfully petitioned to move the case to federal court – Southern District of Texas]

Petrobras Americas has filed a lawsuit in Harris County against Samsung Heavy Industries over a $20 million bribery scheme involving Pride International. Pride had its head office in Houston before being acquired by Ensco in 2011. Petrobras is alleging the bribe was used to obtain a drilling contract unusually favorable to Pride.

Plea deal – Independent Consultant 

The lawsuit arises from a plea deal in 2015 involving Hamylton Padilha. He was an independent consultant that Pride hired to assist in winning the Drilling Services Contract with Petrobras. Back in November I wrote about Padilha’s role in a different bribery case involving another Houston driller, Vantage Drilling International.

As part of his plea deal, Mr Padilha stated that he negotiated bribes to Petrobras officials with the help of Hyun-Ju (“Harry”) Park, the Vice President and chief representative for Samsung’s office in west Houston. In 2007 Pride and Samsung signed a contract to build a drillship with an option to build a second one for $580 million.



The $20 million bribe

Shortly before Pride exercised that option a few months later, Samsung increased the price by approximately $30 million. This included $20 million for “unexpected labor and material costs”. Padilha would later use the $20 million to bribe Petrobras officials into signing the drilling contract with Pride. The bribes were paid by Samsung through two shell companies between February 2008 and November 2011.

Lucrative Drilling Contract

Petrobras is alleging that some of the contractual terms were unusually favorable to Pride. Over the life of the contract, Petrobras believed it paid excessive expenses due to corruption or when the drillship was non-operational in the amount of $160 million. Petrobras also states that it paid excessive expenses when the rig was placed on permanent standby, in the amount of $98 million.

Ensco – no action from SEC or DOJ

The drillship contract was canceled by Petrobras in January 2016 after they learned of the bribes. Ensco initiated arbitration proceedings against Petrobras over the cancellation in April 2016. However the two companies settled without any money changing hands in August 2018.

In its recent annual report, Ensco disclosed that, in August 2018, the SEC and US Dept of Justice closed their inquiries into the matter without taking any action. Ensco is still under investigation by the Brazilian authorities.

The lawsuit has just been filed and Samsung has not yet formally responded. It’s got a long way to go before resolution and I would imagine there will be arguments about whether Harris County is the proper jurisdiction.

Petrobras – Samsung lawsuit

TechnipFMC takes $280m charge in bribery probe

TechnipFMC (market cap $10.8 billion) announced its 2018 results and included a charge for $280 million as a probable estimate to settle bribery allegations. The company had previously disclosed that it was co-operating with authorities in the US, Brazil and France. The allegations relate to contracts in Brazil, Equatorial Guinea, and Ghana.

The charge also covers contracts with Unaoil, which is a Monaco-based consultancy run by British nationals of Iranian descent. A number of well known companies including KBR are under investigation for using Unaoil executives as middle men in deals around the world. Rolls-Royce has already paid $800m in fines and SBM Offshore paid $238 million.

Officially the company has its head office in London but it also has corporate offices in Houston and Paris. It was formed from the merger of Technip and FMC Technologies in January 2017.

The bribery allegations relate to contracts awarded prior to the merger. Both Technip and FMC were being investigated by the Department of Justice regarding the Unaoil contracts. The projects in Brazil, Equatorial Guinea and Ghana were performed by Technip.

It should be noted that no formal settlement has yet been made and the final amount could be more than the $280 million included in the 2018 results.

Back in 2010, Technip paid $338 million to settle bribery allegations in Nigeria related to the Bonny Island LNG project. KBR was part of that consortium too, and paid a $402 million fine related to the project.

TechnipFMC’s 2018 results also included a $1.7 billion asset impairment charge for goodwill and other fixed assets.

https://www.businesswire.com/news/home/20190220005889/en/TechnipFMC-Announces-Fourth-Quarter-2018-Results