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Holy Smokes

It’s a Friday in August, but a busy day for FCPA enforcement.

The DOJ and SEC announced today enforcement actions against two major tobacco companies, Universal Corporation, Inc. and Alliance One International, Inc.

“The DOJ filed criminal actions against a Universal subsidiary and two Alliance One subsidiaries charging each of them with one count of conspiring to violate the FCPA and one count of violating the anti-bribery provisions of the FCPA. Universal and Alliance One entered into non-prosecution agreements with the DOJ and agreed to pay criminal penalties of $4,400,000 and $9,450,000, respectively, and retain independent monitors for a period of three years.”

The SEC charged Universal and Alliance One with violating, among other things, the anti-bribery provisions of the FCPA for their “involvement in a multi-million dollar bribery scheme with government officials in Thailand to obtain nearly $30 million in sales contracts to supply tobacco. The SEC also charged Alliance One with paying bribes in Kyrgyzstan and making improper payments in China, Greece, and Indonesia and Universal with making improper payments in Malawi and Mozambique. Moreover, the SEC’s complaints alleged Universal and Alliance One engaged in books and records and internal control violations.”

More analysis to follow next week.

More on Snamprogetti, ENI

Yesterday’s post (see here) provided a high-level overview of the joint DOJ / SEC FCPA enforcement action.

Today’s post provides a summary of the DOJ criminal information (here), deferred prosecution agreement (here), and SEC civil complaint (here).

For starters, the conduct at issue focuses on Snamprogetti Netherlands BV (“Snamprogetti”), a Dutch company headquartered in Amsterdam. Snamprogetti was a wholly-owned subsidiary of Snamprogetti, S.p.A., an Italian company, which in turn was a wholly-owned subsidiary of ENI, S.p.A., an Italian company headquartered in Rome that has been an issuer since 1995 and currently has common stock and American Depository Shares listed on the New York Stock Exchange. In February 2006, ENI sold Snamprogetti to Saipem, S.p.A., an Italian company. As indicated in this Saipem press release, even though Snamprogetti is a current subsidiary of Saipem, “in connection with the sale of Snamprogetti to Saipem, Eni agreed to indemnify Saipem for losses resulting” from the Bonny Island bribery investigation and accordingly neither the DOJ or SEC penalty “will impact Saipem’s consolidated income statement and balance sheet.” According to the SEC, “ENI owns 43% of, and exercises control over” Saipem.

With that out of the way, back to Snamprogetti.

Information

Not surprisingly, the Snamprogetti information largely mirrors the criminal informations previously filed last week against Technip (see here) and in February 2009 against the Kellogg Brown & Root (see here) – entities also part of the joint venture engaged in the Bonny Island bribery scheme.

The Snamprogetti information charges conspiracy to violate the FCPA and aiding and abetting violations of the FCPA’s antibribery provisions and alleges that Snamprogetti was part of a joint venture (“JV”) in Nigeria to design, build and expand LNG facilities on Bonny Island. According to the information, JV profits, revenues, and expenses were equally shared among the four JV partners. The JV’s Steering Committee consisted of high-level executives from each of the four companies and the Steering Committee made major decisions on behalf of the JV, including whether to hire agents to assist the JV in winning contracts, who to hire as agents, and how much to pay the agents.

The information charges that the JV operated through three Portuguese special purpose corporations, including a corporation (#3), 25% owned by Snamprogetti, specifically used to enter into consulting agreements with JV agents.

The criminal conduct charged centers on two agents hired by the JV.

The first agent, Jeffrey Tesler was a citizen of the United Kingdom who used a Gibraltar-based company as a vehicle to enter into agent contracts and receive payments from the JV. The information charges that the JV paid the company over $130 million to bribe high-ranking Nigerian government officials. According to the information, Tesler was an agent of the JV and each of the JV companies.

The second agent was a global trading company headquartered in Tokyo (the “Japanese Agent”), which was hired by the JV to help it obtain business in Nigeria, including by paying bribes to Nigerian officials. The information charges that the JV paid the consulting company over $50 million to bribe Nigerian government officials. According to the information, the Japanese Agent was an agent of the JV and each of the JV companies.

According to the information, between 1995 and 2004, the JV was awarded four contracts (collectively valued at over $6 billion) to build the Bonny Island Project and alleges that Snamprogetti, Technhip, Kellogg Brown & Root, Tesler, the Japanese Agent, and others, were engaged in a conspiracy to obtain and retain the contracts “through the promise and payment of tens of millions in bribes to officials of the Executive Branch of Nigeria, officials of Nigeria National Petroleum Corporation (NNPC), officials of Nigeria LNG Limited (NLNG) and others.”

[According to the information, NNPC was a Nigerian government-owned company and an entity and instrumentality of the Government of Nigeria whose officers and employees were “foreign officials” under the FCPA. According to the information, NLNG was also an entity and instrumentality of the Government of Nigeria whose officers and employees were “foreign officials” under the FCPA, notwithstanding the fact that NLNG was 51% owned by multinational oil companies. Why? Presumably because, as the information alleges, “through the NLNG board members appointed by NNPC, among other means, the Nigerian government exercised control over NLNG, including but not limited to the abilty to block the award” of the relevant contracts.]

Among other means of the conspiracy, the information alleges that:

“officers, employees, and agents of Snamprogetti and their co-conspirators caused wire transfers totaling approximately $132 million to be sent from [#3’s] bank account in Amsterdam, The Netherlands, to bank accounts in New York, New York, to be further credited to bank accounts in Switzerland and Monaco controlled by Tesler for Tesler to use to bribe Nigerian government officials.”

“officers and employees of Snamprogetti and their co-conspirators caused wire transfers totaling over $50 million to be sent from [#3’s] bank account in Amsterdam, The Netherlands to [Japanese Agent’s] bank account in Japan for [the Japanese Agent to use to bribe Nigerian government officials.”

Based on the same core conduct, the information also charges Snamprogetti with aiding and abetting violations of the FCPA’s antibribery provisions and alleges that “Snamprogetti aided and abetted Kellogg, Brown and Root in causing […] corrupt U.S. dollar payments to be wire transferred from [#3’s] bank account in Amsterdam, The Netherlands, via correspondent bank accounts in New York, New York, to bank accounts of [Tesler’s Gibraltar based company] in Switzerland for use in part to bribe Nigerian government officials.”

DPA

The DPA has a term of two years. Parties to the DPA include Snamprogetti, Saipem and ENI.

Pursuant to the DPA, Snamprogetti admitted, accepted, and acknowledged that it is responsible for the acts of its employees, subsidiaries, and agents as detailed in the above criminal information.

According to the DPA, the DOJ agreed to enter into the agreement with the parties based on the following factors: “(a) Snamprogetti, Saipem, and ENI cooperated with the DOJ’s investigation of Snamprogetti and others; (b)Snamprogetti, Saipem, and ENI undertook remedial measures, including the implementation of an enhanced compliance program; and (c) Snamprogetti, Saipem, and ENI agreed to continue to cooperate with the DOJ in any ongoing investigation of the conduct of Snamprogetti and its present and former employees, agents, consultants, contractors, subcontractors, subsidiaries, and others relating to violations of the FCPA.”

According to the DPA, the fine range under the advisory U.S. Sentencing Guidelines for Snamprogetti’s conduct is $300 million – $600 million. Snamprogetti agreed to pay a criminal penalty of $240 million or approximately 20% below the bottom of the fine range. Thus another example of the DOJ allowing a corporation to settle significant bribery allegations for an amount below even the bottom range of fines available under the advisory Sentencing Guidelines.

The DPA, unlike the recent Technip DPA, does require the engagement of a corporate compliance monitor.

Representing Snamprogetti, Saipem, and ENI in the FCPA enforcement action was Karen Patton Seymour (here) and Nicolas Bourtin (here) of Sullivan & Cromwell LLP.

In the DOJ release (here) Principal Deputy Assistant Attorney General Mythili Raman stated: “the resolutions in this investigation demonstrate the U.S. government’s commitment to identifying and holding accountable all companies and individuals who scheme to bribe foreign government officials to win business;” “Snamprogetti and its joint-venture partners conspired to pursue lucrative contracts through a massive bribery scheme – a scheme that has led to more than $1.28 billion in criminal and civil penalties to date. The monetary penalties and enforcement actions that have resulted from this investigation should send a clear message to companies and their employees that using foreign bribery as a means of winning contracts abroad will be punished.” Kevin L. Perkins, assistant director of the FBI’s Criminal Investigative Division added: this “resolution is yet another example of the FBI’s willingness to aggressively investigate individuals and businesses that engage in corrupt conduct around the globe;” “those who elect to expand or protect their business interests through the payment of illegal bribes to foreign public officials should know that they are not beyond the reach of the FBI. Together, with our law enforcement partners around the world, we will identify these bad actors and work with the Justice Department to prosecute them under the Foreign Corrupt Practices Act and other appropriate federal statutes.”

SEC Complaint

The SEC complaint “arises from multiple violations of the Foreign Corrupt Practices Act” by ENI and its former indirect subsidiary Snamprogetti. According to the complaint: “between at least 1995 and 2004, senior executives at Snamprogetti, among others, devised and implemented a scheme to bribe Nigerian government officials to assist in obtaining multiple contracts worth over $6 billion to build liquefied natural gas production facilities on Bonny Island, Nigeria” that a four-company JV, of which Snamprogetti was a member, won the contracts to build.

Specifically, the SEC complaint alleges that “to conceal the illicit payments, Snamprogetti and others, through the JV, entered into sham ‘consulting’ or ‘services’ agreements” with Tesler and the Japanese Agent “who would then funnel their purportedly legitimate fees to Nigerian government officials.”

According to the SEC, “as a result of the scheme, numerous books and records of Snamprogetti and ENI contained false information relating to, among other things” Tesler and the Japanese Agent “and the payments made to them.” Specifically, the SEC alleged that “Snamprogetti’s business records […] contained the contracts with [Tesler] and the Japanese Agent, which falsely described the purpose of the contracts in order to make it appear that the agents would perform legitimate services.” According to the SEC, “these documents were part of Snamprogetti’s business records and supported Snampogetti’s financial statements, which were consolidated into ENI’s financial statements.”

The SEC alleges that “Snamprogetti did not conduct due diligence” on Tesler or the Japanese Agent and “ENI failed to ensure that Snamprogetti complied with ENI’s policies regarding the use of agents.” Specifically, the SEC alleged that “ENI’s policies and procedures governed Snamprogetti’s use of agents” but that “ENI failed to ensure that Snamprogetti conducted due diligence on agents hired through JV’s in which Snamprogetti participated.” “As a result,” the complaint alleged, “ENI’s internal controls failed to detect, deter or prevent the decades-long bribery scheme.”

Based on the above allegations, the SEC charged Snamprogetti, as “an agent of a U.S. issuer” with violating the FCPA’s antibribery provisions and knowingly falsifying books and records that supported the financial statements of ENI and knowingly circumventing ENI’s internal accounting controls. The SEC charged ENI with violating the FCPA’s books and records and internal control provisions. According to the SEC, “ENI exercised control and supervision of […] Snamprogetti during the relevant time and on certain of its business decisions, such as Snamprogetti’s entry into the JV.”

Without admitting or denying the SEC’s allegations, Snamprogetti and ENI consented to court orders permanently enjoining the companies from future violations of the FCPA and court orders requiring the companies, jointly and severally, to pay $125 million in disgorgement.

In a press release (see here) with the grabbing line “SEC charges Italian Company and Dutch Subsidiary in Scheme Bribing Nigerian Officials With Carloads of Cash,” Robert Khuzami, Director of the SEC’s Division of Enforcement stated: “this elaborate bribery scheme featured sham intermediaries, Swiss bank accounts, and carloads of cash as everyone involved made a concerted effort to cover their tracks” … “but the billion-plus dollars in sanctions paid by these companies show that ultimately there is no hiding or profiting from bribery.”

[As to the carload of cash, the SEC complaint alleges that the joint venture in which Snamprogetti participated in, paid Tesler (the UK agent) $40 million under a sham consulting agreement, and that Tesler then used a subcontractor to transfer $5 million to a Nigerian government official for the benefit of a Nigerian political party. According to the SEC complaint, “on several occassions, the Subcontractor personally delivered hand-delivered $1 million in U.S. currency in a brief case to the Nigerian official in a hotel room in Abuja, Nigeria.” The complaint alleges that the “Subcontractor delivered the remainder of the $5 million to the Nigerian official in local Nigerian currency,” but that because the currency “was too bulky to deliver by hand, the Subcontractor loaded the cash into vehicles, which were delivered to the Nigerian official.”

In a press release (see here) ENI stated, among other things, as follows:

“As the U.S. authorities’ court filings indicate, the criminal activity with which Snamprogetti Netherlands B.V. was charged ceased by June 15, 2004. Eni, Saipem, and Snamprogetti cooperated with the U.S. authorities’ investigations. In the agreements, the SEC and DOJ did not require the implementation of any independent compliance monitor. Since the conduct at issue, Eni, Saipem, and Snamprogetti Netherlands B.V. have made substantial enhancements to their anti-corruption compliance programs, which monitor Eni and its subsidiaries’ compliance systems. Eni and its subsidiaries are committed to continuous improvements to their internal compliance program and policies.”

Snamprogetti The Latest to Join The Bonny Island Bribery Club

Last week (see here and here), it was French company Technip that admitted to bribing Nigerian foreign officials with the end result being $338 million paid into the United States treasury.

This week its a Dutch company and its former Italian parent company that admitted to bribing Nigerian foreign officials with the end result being an additional $365 million paid into the United States treasury.

As indicated in this DOJ release: “Snamprogetti Netherlands B.V., (Snamprogetti) has agreed to pay a $240 million criminal penalty to resolve charges related to the Foreign Corrupt Practices Act (FCPA) for its participation in a decade-long scheme to bribe Nigerian government officials to obtain engineering, procurement and construction contracts” to build liquefied natural gas facilities on Bonny Island, Nigeria.”

According to the release, the DOJ “filed a deferred prosecution agreement [DPA] and a criminal information today against Snamprogetti [a Dutch corporation headquartered in Amsterdam, The Netherlands, which was a wholly owned subsidiary of Snamprogetti S.p.A., an Italian company headquartered in Milan, Italy] charging Snamprogetti with one count of conspiracy and one count of aiding and abetting violations of the FCPA.” The release further states that pursuant to the two-year DPA “Snamprogetti, its current parent company, Saipem S.p.A., and its former parent company, ENI S.p.A. (ENI), agreed to ensure that their compliance programs satisfied certain standards and to cooperate with the department in ongoing investigations.”

In addition, the release notes that:

“Today, Snamprogetti and ENI also reached a settlement of a related civil complaint filed by the U.S. Securities and Exchange Commission (SEC), charging Snamprogetti with violating the FCPA’s anti-bribery provisions, falsifying books and records, and circumventing internal controls and charging ENI with violating the FCPA’s books and records and internal controls provisions. As part of that settlement, Snamprogetti and ENI agreed jointly to pay $125 million in disgorgement of profits relating to those violations.”

For a copy of the SEC release and complaint (see here and here).

Stay tuned for analysis of the DOJ deferred prosecution agreement, criminal information, and SEC complaint.

In the meantime, some questions to ponder.

For those scoring at home, the current U.S. treasury deposit slip, because a joint venture largely comprised of foreign companies bribed Nigerian officials, stands at $1.28 billion given the related February 2009 enforcement action against Kellogg Brown & Root entities as well as Halliburton Company – an enforcement action that was settled for $579 million in combined fines and penalties.

Bribery and corruption, the conventional wisdom goes, is not a victimless crime. Accordingly, the Bonny Island bribery scheme resulted in victims. Surely those victims were not U.S. taxpayers, but the U.S. Treasury is where the entire $1.28 billion has gone.

The Bonny Island bribery scheme, which now stands as the largest collective FCPA enforcement action in history, begs the question – where should the fines and penalties resulting from an FCPA enforcement action go? Solely to U.S. taxpayers? To the “victims” of the alleged crime? If to the “victims” who are the “victims” and how best does one get the money to the “victims?” Are the enforcement agencies willing to sacrifice portions of their current FCPA cash cow? (see here for more).

More On Technip

A post last week (see here) contained a high-level overview of the Technip matter as described in the DOJ release.

Let’s take a closer look at the criminal information (see here) and the deferred prosecution agreement (see here).

Information

Not surprisingly, the Technip information largely mirrors the criminal information previously filed in February 2009 (see here) against the Kellogg Brown & Root entity also part of the joint venture engaged in the Bonny Island bribery scheme.

That is, the Technip information charges conspiracy to violate the FCPA and violations of the FCPA’s antibribery provisions and alleges that Technip was part of a joint venture (“JV”) in Nigeria to design, build and expand LNG facilities on Bonny Island. According to the information, JV profits, revenues, and expenses were equally shared among the four JV partners. The JV’s Steering Committee consisted of high-level executives from each of the four companies and the Steering Committee made major decisions on behalf of the JV, including whether to hire agents to assist the JV in winning contracts, who to hire as agents, and how much to pay the agents.

The information charges that the JV operated through three Portuguese special purpose corporations, including a corporation (#3), 25% owned by Technip, specifically used to enter into consulting agreements with JV agents.

The criminal conduct charged centers on two agents hired by the JV.

The first agent, Jeffrey Tesler was a citizen of the United Kingdom who used a Gibraltar-based company as a vehicle to enter into agent contracts and receive payments from the JV. The information charges that the JV paid the company over $130 million to bribe high-ranking Nigerian government officials. According to the information, Tesler was an agent of the JV and each of the JV companies.

The second agent was a global trading company headquartered in Tokyo (the “Japanese Agent”), which was hired by the JV to help it obtain business in Nigeria, including by paying bribes to Nigerian officials. The information charges that the JV paid the consulting company over $50 million to bribe Nigerian government officials. According to the information, the Japanese Agent was an agent of the JV and each of the JV companies.

According to the information, between 1995 and 2004, the JV was awarded four contracts (collectively valued at over $6 billion) to build the Bonny Island Project and alleges that Technip, Tesler, the Japanese Agent, Kellogg Brown & Root, and others, were engaged in a conspiracy to obtain and retain the contracts “through the promise and payment of tens of millions in bribes to officials of the Executive Branch of Nigeria, officials of Nigeria National Petroleum Corporation (NNPC), officials of Nigeria LNG Limited (NLNG) and others.”

[According to the information, NNPC was a Nigerian government-owned company and an entity and instrumentality of the Government of Nigeria whose officers and employees were “foreign officials” under the FCPA. According to the information, NLNG was also an entity and instrumentality of the Government of Nigeria whose officers and employees were “foreign officials” under the FCPA, notwithstanding the fact that NLNG was 51% owned by multinational oil companies. Why? Presumably because, as the information alleges, “through the NLNG board members appointed by NNPC, among other means, the Nigerian government exercised control over NLNG, including but not limited to the abilty to block the award” of the relevant contracts.]

Among other means of the conspiracy, the information alleges that:

“Senior executives and employees of Technip and their co-conspirators caused wire transfers totaling approximately $132 million to be sent from [#3’s] bank account in Amsterdam, The Netherlands, to bank accounts in New York, New York, to be further credited to bank accounts in Switzerland and Monaco controlled by Tesler for Tesler to use to bribe Nigerian government officials.”

“Senior executives and employees of Technip and their co-conspirators caused wire transfers totaling over $50 million to be sent from [#3’s] bank account in Amsterdam, The Netherlands to [Japanese Agent’s] bank account in Japan for [the Japanese Agent to use to bribe Nigerian government officials.”

Based on the same core conduct, the information also charges a substantive violation of the FCPA’s antibribery provisions and alleges that “Technip
caused […] corrupt U.S. dollar payments to be wire transferred
from [#3’s] bank account in Amsterdam, The Netherlands, via correspondent bank accounts in New York, New York, to bank accounts of [Tesler’s Gibraltar based company] in Switzerland for use in part to bribe Nigerian government officials.”

DPA

The DPA has a term of two years and seven months. A DPA is a less harsh resolution to an FCPA enforcement action because, while the criminal charges are technically filed, the charges are deferred or not prosecuted during the term of the DPA. If Technip abides by its obligations under the DPA, the criminal charges will be dismissed when the DPA’s term expires.

Pursuant to the DPA, Technip admitted, accepted, and acknowledged that it is responsible for the acts of its employees, subsidiaries, and agents as detailed in the above criminal information.

According to the DPA, the DOJ agreed to enter into the agreement with Technip based on the following factors: “(a) Technip cooperated with the DOJ’s investigation of Technip and others; (b) Technip undertook remedial measures, including the implementation of an enhanced compliance program, and agreed to undertake further remedial measures; (c) Technip agreed to continue to cooperate with the DOJ in any ongoing investigation of the conduct of Technip and its employees, agents, consultants, contractors, subcontractors, subsidiaries, and others relating to violations of the FCPA; and (d) the impact on Technip, including collateral consequences, of a guilty plea or criminal conviction. (emphasis added).

According to the DPA, the fine range under the advisory U.S. Sentencing Guidelines for Technip’s conduct is $318.4 million – $636.8 million. Technip agreed to pay a criminal penalty of $240 million or approximately 25% below the bottom of the fine range. The Technip enforcement action is thus another example of the DOJ allowing a corporation to settle significant bribery allegations for an amount below even the bottom range of fines available under the advisory Sentencing Guidelines.

Pursuant to the DPA, Technip agreed to engage a corporate compliance monitor for a two year period. The DPA specifically states that this individual will be a “French national.”

Representing Technip in the FCPA enforcement action was Robert Luskin from Patton Boggs LLP (see here) and John Savarese from Wachtell Lipton Rosen & Katz (see here).

As referenced above, the Technip allegations largely mirror the previous allegations against the Kellogg Brown & Root entity also part of the joint venture engaged in the Bonny Island bribery scheme.

How does the DOJ component of these two FCPA enforcement actions compare?

Technip settled pursuant to a DPA and paid a $240 million criminal penalty – an amount 25% below the bottom range allowed under the advisory Sentencing Guidelines.

Kellogg Brown & Root was required to plead guilty and paid a $402 million criminal penalty – an amount within the advisory Sentencing Guidelines range of $376.8 million – $753.6 million.

The disparate treatment of Technip and Kellogg Brown & Root – two entities involved in the same joint venture engaged in the same bribery scheme – is likely due to the fact that, per the government’s allegations, Kellogg Brown & Root appeared to have played a more active role in the bribery scheme. Specifically, Albert Jack Stanley, a former officer and director of various Kellogg Brown & Root entities, was directly involved in the bribery scheme as evidenced by his prior guilty plea (see here).

Technip Joins the Bonny Island Bribery Club

A French company bribes Nigerian foreign officials with the end result being $338 million paid into the United States treasury.

Welcome to the sometimes wacky world of Foreign Corrupt Practices Act enforcement. Except in this case, the end result is not so wacky because the French company, Technip (see here) was a U.S. issuer, and thus subject to the FCPA, because, between August 2001 and November 2007, it had American Depository Shares registered with and listed on the New York Stock Exchange. In addition to being an Issuer subject to the FCPA, “Technip and other members of the joint venture [described below] routinely made use of the U.S. mails and of U.S. common carriers, and of other instrumentalities of U.S. interstate commerce” including improper payments “routed through banks in New York.”

The Technip FCPA enforcement action has been anticipated since February when the company (see here) foreshadowed the pending settlement.

Yesterday, the DOJ and SEC announced the settlement. It includes payment of a $240 criminal penalty pursuant to a DOJ deferred prosecution agreement and payment of $98 million in disgorgement and prejudgment interest pursuant to a settled SEC civil complaint.

The below post summarizes the DOJ release (to my knowledge the DOJ deferred prosecution agreement and criminal information are not yet publicly available) and the SEC settled civil complaint.

DOJ

The DOJ release (here) states that Technip “has agreed to pay a $240 million criminal penalty to resolve charges related to the Foreign Corrupt Practices Act (FCPA) for its participation in a decade-long scheme to bribe Nigerian government officials to obtain engineering, procurement and construction (EPC) contracts […] to build liquefied natural gas (LNG) facilities on Bonny Island, Nigeria, [contracts that] were valued at more than $6 billion.”

According to the release, “Technip, Kellogg Brown & Root Inc. (KBR) (see here for the prior FCPA enforcement action), and two other companies were part of a four-company joint venture that was awarded four EPC contracts.”

The release further states that “Technip authorized the joint venture to hire two agents, Jeffrey Tesler (see here for the criminal indictment) and a Japanese trading company, to pay bribes to a range of Nigerian government officials, including top-level executive branch officials, to assist Technip and the joint venture in obtaining the EPC contracts. According to the release, “at crucial junctures preceding the award of EPC contracts, a senior executive of Technip, KBR’s former CEO, Albert “Jack” Stanley (see here and here for the prior FCPA enforcement action), and others met with successive holders of a top-level office in the executive branch of the Nigerian government to ask the office holders to designate a representative with whom the joint venture should negotiate bribes to Nigerian government officials.” According to the release, “the joint venture paid approximately $132 million to a Gibraltar corporation controlled by Tesler and more than $50 million to the Japanese trading company during the course of the bribery scheme” and that “Technip intended for these payments to be used, in part, for bribes to Nigerian government officials.”

As has become the norm in corporate FCPA prosecutions, Technip will not be required to plead guilty to anything as the criminal charges (one count of conspiracy and one count of violating the FCPA), while filed, will be deferred pursuant to two-year deferred prosecution agreement.

In a press release (see here) Technip Chairman and CEO, Thierry Pilenko said:

“The final agreement with the US authorities, completely in line with the road map that we laid out in February, puts this legacy story behind us and enables us to focus on continuing to develop Technip’s business. We stand by Technip’s commitment to carrying out its business activities ethically and according to both the spirit and letter of the law worldwide. The Board of Directors of Technip and its management are strongly committed to the continued enhancement of our internal compliance policies and processes.”

Technip’s release further states:

“The DOJ investigation of Technip was resolved through a deferred prosecution agreement, in which the Department of Justice agreed not to pursue a prosecution of Technip in return for Technip’s agreement to undertake a variety of steps during the next two years, including maintaining and enhancing its compliance program and cooperating with the DOJ. Technip agreed to pay USD 240 million to the DOJ in eight equal installments of USD 30 million over the next two years. Technip will retain a French national, approved by the Department of Justice, to serve as an independent corporate monitor, who will be chiefly responsible for reviewing Technip’s compliance initiatives and recommending improvements.”

Principal Deputy Assistant Attorney General Mythili Raman of the Criminal Division stated: “The resolutions announced today demonstrate once again the department’s commitment to aggressively investigate and prosecute international bribery by U.S. and foreign corporations alike.”

SEC

In a settled civil complaint (see here) charging FCPA anti-bribery violations and FCPA books and records and internal violations, the SEC alleged that “between at least 1995 and 2004, senior executives at Technip, among others, devised and implemented a scheme to bribe Nigerian government officials to assist in obtaining multiple contracts worth over $6 billion to build liquefied natural gas (“LNG”) production facilities on Bonny Island, Nigeria.” According to the SEC, “to conceal the illicit payments, Technip and others, through the joint venture, entered into sham ‘consulting’ or ‘services’ agreements with intermediaries who would then funnel their purportedly legitimate fees to Nigerian officials.” Specifically, the SEC alleged that “Technip, through the joint venture, implemented this scheme by using a Gibraltar shell company controlled by a solicitor based in the United Kingdom (“the UK Agent” [Tesler]) and a Japanese trading company (“the Japanese Agent”) as conduits for the bribes” and that “as a result of the scheme, numerous books and records of Technip contained false information relating to, among other things, the UK Agent and the Japanese Agent, and the payments made to them.”

As to Technip’s internal controls violations, the SEC alleges as follows:

“Technip conducted due diligence on the UK Agent that was not adequate to detect, deter or prevent the UK Agent from paying bribes, and Technip conducted no due diligence on the Japanese Agent.”

“Although the executives of Technip who participated in the joint venture were aware of [the FCPA’s] prohibitions, Technip did not implement adequate controls to ensure compliance with the Act. For example, Technip did not adopt due diligence procedures as to agents that were adequate to detect, deter or prevent the payment of bribes by agents. The due diligence procedures adopted by Technip only required that potential agents respond to a written questionnaire, seeking minimal background information about the agent. No additional due diligence was required, such as an interview of the agent, or a background check, or obtaining information beyond that provided by the answers to the questionnaire. A senior executive of Technip admitted that the due diligence procedures adopted by Technip were a perfunctory exercise, conducted so that Technip would have some documentation in its files of purported due diligence. In fact, Technip executives knew that the purpose of the agreements with the UK Agent was to funnel bribes to Nigerian officials, and therefore certain answers by the UK Agent to the questionnaire were false.”

According to the SEC release (see here) “without admitting or denying the SEC’s allegations, Technip has consented to the entry of a court order permanently enjoining it from” future FCPA violations “and ordering Technip to disgorge $98 million in ill-gotten profits derived from the scheme and prejudgment interest.”

Other members of the TSKJ joint venture that also potentially face FCPA exposure include Snamprogetti Netherlands B.V. (see below information regarding Eni SpA), and JGC of Japan (see here).

In March 2010, Eni SpA of Italy disclosed (here) as follows:

“Snamprogetti SpA, the holding company of Snamprogetti Netherlands BV, was a wholly owned subsidiary of Eni until February 2006, when an agreement was entered into for the sale of Snamprogetti to Saipem SpA and Snamprogetti was merged into Saipem as of October 1, 2008. Eni holds a 43% participation in Saipem. In connection with the sale of Snamprogetti to Saipem, Eni agreed to indemnify Saipem for a variety of matters, including potential losses and charges resulting from the investigations into the TSKJ matter referred […}, even in relation to Snamprogetti subsidiaries.”

The disclosure further stated:

“As to Eni, the contacts with the US authorities have been intensified recently. Based on the ongoing status of the discussions, the Company has been able to estimate the cost of a global resolution of all potential claims arising from the investigation with the US authorities, similarly to Technip. As a result of this, a provision in the amount of €250 million has been accrued, also considering the contractual obligations assumed by Eni to indemnify Saipem as part of the divestment of Snamprogetti. Discussions with the US authorities are underway.”

Stay tuned for additional analysis of the Technip DPA, criminal information, and other issues raised by the Technip enforcement action.

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