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.
Earlier today, the DOJ announced:
“Two former executives at a Dutch oil and gas services company (the “Oil Services Company”), Anthony “Tony” Mace and Robert Zubiate, pleaded guilty this week to conspiracy to violate the Foreign Corrupt Practices Act (FCPA) for their roles in a scheme to bribe foreign government officials in Brazil, Angola and Equatorial Guinea.
Mace, 65, of the United Kingdom, was the Oil Services Company’s CEO from 2008 to 2011, and a former board member of one of its wholly-owned Houston subsidiaries. Zubiate, 66, of California, was a former Texas and California-based sales and marketing executive at the same subsidiary.
U.S. District Judge David Hittner of the Southern District of Texas accepted Mace’s guilty plea on Nov. 9 and Zubiate’s guilty plea on Nov. 6. Sentencing for Mace is scheduled for Feb. 2, 2018, and Zubiate for Jan. 31, 2018.
As part of his guilty plea, Mace admitted that prior to becoming CEO, other employees of the Oil Services Company entered into an agreement to pay bribes to foreign officials including at Brazil’s state-controlled oil company, Petróleo Brasileiro S.A. (Petrobras), Angola’s state-owned oil company, Sociedade Nacional de Combustíveis de Angola, E.P. (Sonangol) and Equatorial Guinea’s state-owned oil company, Petroléos de Guinea Ecuatorial (GEPetrol). Mace further admitted that he joined the conspiracy by authorizing payments in furtherance of the bribery scheme and deliberately avoided learning that those payments were bribes.
Mace admitted that he maintained a spreadsheet reflecting payments to five individuals and that even though he was aware there was a high risk those individuals were Equatorial Guinean officials or persons receiving money on behalf or at the direction of those officials, he nevertheless authorized Oil Services Company to make over $16 million in payments to those individuals. Mace further admitted that he continued a practice that was instituted before he became CEO by splitting payments to Oil Services Company’s Brazilian intermediary, that is, paying a portion of the intermediary’s commission to an account in Brazil and another portion of the agent’s commission to accounts in Switzerland held in the name of shell companies. Mace admitted that he deliberately avoided learning that the ultimate recipients of the payments that he authorized to the shell companies were Petrobras officials.
As part of his plea, Zubiate’s admitted that between 1996 and 2012, he and his co-conspirators used a third-party sales agent to pay bribes to foreign officials at Petrobras in exchange for those officials’ assisting the Oil Services Company and its U.S. subsidiary with winning bids. Zubiate also admitted engaging in a kickback scheme with the bribe-paying sales agent for the Oil Services Company and its U.S. subsidiary.”
In the DOJs resolution documents, Mace (a U.K. citizen) is described as the CEO of SBM Offshore from April 2008 to December 2011 and based out of the company’s Monaco or Amsterdam offices. In addition, Mace was also an executive for a wholly-owned Houston-based subsidiary and/or a member of the Board of Directors for the U.S. subsidiary.
In charging Mace with conspiracy to violate the FCPA’s anti-bribery provisions, the only explicit allegation concerning U.S. conduct is that he authorized transfers from a bank account in the United Kingdom, through a bank account in the United, to a Switzerland-based bank account.
As stated in Mace’s plea agreement.
“Beginning by at least in or around 1996, before Defendant become CEO, [SBM Offshore, its U.S. subsidiary, and others including certain intermediaries] entered into an agreement to pay bribes to foreign officials, including officials at Petrobras, Sonangol and GEPetrol, in order to obtain or retain business for [SBM Offshore] in violaton of the FCPA.
In April 2008, Defendant become CEO [of SBM Offshore]. As CEO, Defendant held oversight authority over the entire company, including its Marketing and Sales Department. Further, Defendant was required to personally approve payments exceeding a certaini dollar amount, including those made to outside sales agents.
At the time Defendant became CEO, he was aware that paying bribe to foreign officials was a crime under the FCPA and that [SBM Offshore] was operating in countries with a high risk of corruption. Despite this, Defendant joined the conspiracy by continuing to make payments that furthered the bribery scheme and deliberately avoided learning that certain payments, including payments Defendant authorized and approved, were in fact bribes paid to foreign officials. Defendant’s deliberate avoidance was solely and entirely due to his own actions and decisions.
Beginning by in or around the Fall of 2008, Defendant was in possession of a spreadsheet reflecting over $16 million in payments to five individuals to be paid through a company controlled by [a SBM executive]. Defendant was aware of a high risk that those individuals were either Equatorial Guinean officials or persons receiving money on behalf or at the direction of such officials. Defendant nevertheless authorized … transfers from a bank account in the United Kingdom under [SBM’s] control, through a bank account in the United States, to a Switzerland-based bank account controlled by [the SBM executive].
Defendant updates the spreadsheet to reflect that the payments were made.
Beginning in or around November 2008, Defendant continued a practice that was instituted before he became CEO, which was to authorized [SBM’s] finance department to issue split payments to [Intermediary]. Specifically, Defendant authorized a portion of Intermediary’s commission paid to an account in Brazil, and another portion of Intermediary’s commission paid to accounts in Switzerland, which were held in the name of shell companies. Defendant deliberately avoided learning the ultimate recipients of those payments, which were, in fact, employees of Petrobras.”
Petrobras, Sonangol and GEPetrol as described as follows:
“At all relevant time, the Brazilian government directly owned more than 50% of Petrobrass common shares with voting rights. Petrobras was controlled by Brazil and performed government functions, and thus was an ‘instrumentality’ of a foreign government as those terms are used in the FCPA.”
“GEPetrol was the national oil company of Equatorial Guinea … GEPetrol was controlled by the Republic of Equatorial Guinea’s Ministry of Mines, Industry and Energy and performed government functions for Equatorial Guinea, and thus was an ‘instrumentality’ of the government as that term is used in the FCPA.”
“Sonangol was an Angolan state-owned and state-controlled oil company. Sonangol was controlled by the Angolan government and performed government functions for Angola and thus was an ‘instrumentality’ of the government as that term is used in the FCPA.”
In the DOJ’s resolution documents, Zubiate is described as an agent of SBM and a Sales and Marketing Executive for the U.S. subsidiary, during which time he was based in California and Houston. The bribes to Petrobras officials were alleged to “induce Petrobras officials to do and omit to do certain acts, including but limited to:
assisting [SBM] and U.S. subsidiary in winning bids for offshore oil and gas drilling equipment and other projects with Petrobras;
providing Intermediary’s owner and others with inside information concerning the Petrobras bidding process, which Intermediary’s owner would then forward on to Zubiate and others for use by [SBM] and U.S. subsidiary; and
omitting to undertake acts that would inhibit [SBM] and U.S. subsidiary from securing offshore oil and gas drilling equipment projects with Petrobras.”
As alleged by the DOJ:
Intermediary “would pay and did pay, Zubiate ‘kickbacks’ on commission payments that Intermediary received from [SBM] on certain lease payments Petrobras paid to [SBM] to an account in Switzerland over which Zubaiate, for a time, held power of attorney. […] Between 1996 and 2011, Intermediary directed at least $5.5 million in kickbacks to Zubiate’s designated account in Switzerland.”
Earlier this week, SBM Offshore disclosed:
“The Company is in advanced discussions with the United States DoJ concerning a potential resolution of the DoJ’s investigation that the DoJ had closed in 2014 and reopened in 2016 and its inquiry into the Company’s relationship with Unaoil. Based on these investigations and the applicable U.S. statutory rules, the DoJ has concluded that the evidence not only supports jurisdiction in the United States but also requires a further penalty in the United States. Confronted with the DoJ’s conclusions and in anticipation of a final resolution, the Company has made a provision of US$238 million. The proposed terms under discussion reflect confidence in the quality of the Company’s compliance program and efforts by current management. Final resolution with the DoJ remains subject to, amongst other matters, agreement on the terms and conditions of the resolution, including subsequent approval thereof by the Company’s Supervisory Board.”
FCPA Institute - Houston (March 26-27, 2020)
A unique two-day learning experience ideal for a diverse group of professionals seeking to elevate their FCPA knowledge and practical skills through active learning. Learn more, spend less. CLE credit is available.