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Brazil State-Owned Co. Allegedly Facilitates Payments To Brazilian Politicians And Political Parties And U.S. Collects Net $170 Million In FCPA Enforcement Action

Uncle Sam3

This morning the DOJ and SEC announced (here and here) that Petrobras, a Brazilian state-owned and state-controlled energy company, entered into agreements with U.S. and Brazilian authorities “in connection with Petrobras’s role in facilitating payments to politicians and political parties in Brazil, as well as a related Brazilian investigation.”

After various credits and deductions for a related law enforcement action in Brazil, the net FCPA settlement is approximately $170 million ($85.3 million DOJ, $85.3 million SEC). Brazil will collect $682.6 million. The remainder of this post provides an in-depth summary of the enforcement action.

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An FCPA Enforcement Action That Slipped Through The Cracks

petroecuador

There is not much that goes unnoticed by the Foreign Corrupt Practices Act media.

However, this April 19, 2018 indictment of Frank Roberto Chatburn Ripalda (a dual United States and Ecuadorian citizen) appears to have slipped through the cracks.

The indictment alleges that between 2013 and 2015, Chatburn conspired with others by making corrupt payments to PetroEcuador officials in order to obtain and retain contracts for Galileo (described as an Ecuadorian company that provided services in the oil and gas industry) from PetroEcuador.

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SBM Offshore Resolves $238 Million FCPA Enforcement Action

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As highlighted in this prior post, in 2014 Netherlands-based SBM Offshore resolved a $240 million Dutch law enforcement action alleging improper payments to sales agents and foreign government officials in Equatorial Guinea, Angola and Brazil between 2007 through 2011. In connection with this action, the company disclosed: ““the United States Department of Justice has informed SBM Offshore that it is not prosecuting the Company and has closed its inquiry into the matter.”

Fast forward to earlier this month when, as highlighted in this prior post, the DOJ announced resolution of criminal charges against former SBM Offshore executive Anthony Mace and Robert Zubiate for their roles in a scheme to bribe foreign government officials in Brazil, Angola and Equatorial Guinea.

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DOJ Announces FCPA Enforcement Action Against Two Former SBM Offshore Executives

sbm

If you are scoring at home, in the past 48 hours the DOJ has announced FCPA enforcement actions involving 7 individuals. (See here for the prior post regarding the FCPA enforcement action earlier this week against 5 individuals associated with Rolls-Royce).

By way of comparison, as highlighted in this post, in all of 2016 8 individuals were involved in DOJ FCPA enforcement actions and in 2015 8 individuals were also involved in DOJ FCPA enforcement actions.

In other words, those predicting a slow down in FCPA enforcement in the Trump administration were ignorant to begin with, but now really need to move on to other topics.

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Customs Issues In Argentina Result In FCPA Enforcement Action Against BJ Services

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[This post is part of a periodic series regarding “old” FCPA enforcement actions]

In 2004, the SEC brought this administrative cease and desist order against BJ Services (a Houston-based oil field services, products, and equipment company). The conduct at issue focused on the company’s Argentina subsidiary and its relationships with customs officials. As stated in the SEC’s order, there was no indication that anyone employed by BJ Services approved many of the alleged improper payments and the SEC further acknowledged that the improper payments were made in violation of BJ Services’ existing policies prohibiting payments of the kind made to the customs official.

Other interesting aspects of the enforcement include the following: (i) certain of the improper payments were facilitated by the Argentina subsidiary issuing checks “in the name of a lower’level” employee who then “cashed the checks and provided the proceeds to the customs official”; (ii) the SEC seemed to acknowledge that certain of the payments were facilitation payments under the FCPA, but nevertheless improperly booked, and thus still actionable.

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