Approximately 8 years ago, a German company owned 80% of a German entity doing business in Nigeria.  The German entity doing business in Nigeria entered into a joint venture consortium agreement with subsidiaries of a Panamanian company.  The Panamanian company had principal places of business in the U.S. and had shares traded on the New York Stock Exchange.  The joint venture consortium allegedly made bribe payments to Nigerian officials.

The end result?

Why of course, $32 million dollars to the U.S. Treasury.

Yesterday, the DOJ announced (here) that “Bilfinger SE, an international engineering and services company based in Mannheim, Germany, has agreed to pay a $32 million penalty to resolve charges that it violated the Foreign Corrupt Practices Act by bribing [Nigerian] government … to obtain and retain contracts related to the Eastern Gas Gathering System (EGGS) project, which was valued at approximately $387 million.”

As noted in the DOJ’s release, the EGGS has been the focus, in whole or in part, in several prior enforcement actions against Willbros Group, Jim Brown, Jason Steph, James Tillery and Paul Novak.

The enforcement action involved a DOJ criminal information resolved via a deferred prosecution agreement.

Information

The information alleges that Bilfinger conspired with others “to obtain and retain contracts related to the EGGS project through the promise and payment of over $6 million in bribes to officials of [the Nigerian National Petroleum Corporation – NNPC], [National Petroleum Investment Management Services – a subsidiary of NNPC], the [dominant political party in Nigeria], an official in the executive branch of the Government of Nigeria, and others (collectively – the Nigerian Officials).”

According to the information, in 2003 Bilfinger “agreed to create a joint venture with [Willbros West Africa, Inc. (WWA) and Willbros Nigeria Ltd. (WNL) – both subsidiaries of Willbros International Inc., a Panamanian corporation with principal places of business in the U.S. and with shares traded on the New York Stock Exchange] to bid on the EGGS contract and its optional scopes of work.”  In late 2003, [Bilfinger Berger Gas and Oil Services Nigeria Ltd. “BBGOS” – a German company based in Nigeria that was owned 80% by Bilfinger] and WWA/WNL executed a “Consortium Agreement” which formalized Bilfinger’s agreement to create a joint venture in connection with the EGGS project.”

According to the information, “Bilfinger and its coconspirators agreed that the EGGS Consortium would inflate the price of its bids for the EGGS project by 3% so it could cover the cost of paying bribes to Nigerian officials for their assistance in obtaining and retaining the EGGS project and its optional scopes of work.

The information alleges, among other things, that when other conspirators “encountered difficulty obtaining money to make [their] share of the promised bribe payments to Nigerian officials,” Bilfinger agreed to those loan the other conspirators $1 million “with the understanding that the $1 million would be used to pay some of the promised bribe payments to Nigerian officials …”.

The information contains the following relevant jurisdictional allegations.

• “[In 2004] WWA opened a bank account in the U.S. on behalf of the EGGS Consortium, in which payments for work conducted by the EGGS Consortium would be deposited and out of which payments would be made to BBGOS or WWA when authorized by both BBGOS and WWA.”
• “[In 2005], Bilfinger Employee 1 [a German citizen] telephoned Bilfinger Employee 3 [a German citizen], who was in the United States, and asked Bilfinger Employee 3 to meet with Tillery in Boston, MA, to find out what payments had been promised to officials and whether [a relevant contract] was at risk because those payments had not yet been made.”
• [In 2005], Bilfinger Employee 3 flew from Houston, TX, to Boston, MA, to meet with Tillery and inquire about the outstanding corrupt payments and the [relevant contract].”

Based on the above allegations, the information charges conspiracy to violate the FCPA’s anti-bribery provisions and two substantive FCPA anti-bribery charges.  The two substantive charges are based on (1) a 2005 “flight from Houston, TX to Boston, MA to discuss promised bribe payments,” and (2) a 2005 “wire transfer of $2,804,496 from Houston, TX to Frankfurt, Germany in connection with the EGGS contract.”

DPA

The charges against Bilfinger were resolved via a DPA in which the company admitted, accepted, and acknowledged that it was responsible for the acts of its officers, directors, employees, and agents as charged in the information.

The DPA has a term of three years and under the heading “relevant considerations” it states:

“The Department enters into this Agreement based on the individual facts and circumstances presented by this case and the Company.  Among the facts considered were the following:  (a) the Company’s cooperation with the Department, albeit at a late date, including interviewing relevant employees and disclosing the facts learned during those interviews to the Department, facilitating the Department’s interviews of foreign employees; (b) the Company’s remediation efforts, including terminating the employment of certain employees responsible for the corrupt payments and disciplining others, and enhancing its compliance program and internal accounting controls; (c) the Company’s committment to continue to enhance its compliance program and internal accounting controls …; and (d) the Company’s agreement to continue to cooperate with the Department in any ongoing investigation of the conduct of the Company and its officers, directors, employees, agents, and consultants relating to violations of the FCPA …”.

Pursuant to the DPA, the advisory Sentencing Guidelines range for the conduct at issue was $28 million to $56 million.  The DPA states that the monetary penalty of $32 million “is appropriate given the facts and circumstances of this case, including the Company’s cooperation and remediation in this matter.”

Pursuant to the DPA, Bilfinger agreed to review its existing internal controls, policies and procedures regarding compliance with the FCPA and other applicable anti-corruption laws.   The specifics are detailed in Attachment C to the DPA.  The DPA also requires Bilfinger to engage a corporate compliance monitor for ”a period of not less than 18 months from the date the monitor is selected.”  The specifics, including the Monitor’s reporting obligations to the DOJ, are detailed in Attachment D to the DPA.

As is common in FCPA corporate enforcement actions, the DPA contains a “muzzle clause” prohibiting Bilfinger or anyone on its behalf from “contradicting the acceptance of responsibility by the company” as set forth in the DPA.

Sidley Austin attorneys Thomas Green and Jeffrey Green represented Bilfinger.

In this press release (which the company had to consult with the DOJ before releasing) Bilfinger CEO stated:

“We are pleased that we have now been able to put these events from the distant past behind us. In recent years, Bilfinger has consistently expanded its compliance instruments and today has a modern and efficient system.”