Turns out, things were not so well at Honeywell.
As highlighted in this prior post, in mid-2019 Honeywell disclosed that it was cooperating with the DOJ/SEC and Brazilian law enforcement investigations relating to its use of third parties in relation to Petrobras (Brazil) business as well as a matter involving a foreign subsidiary’s prior engagement of Unaoil in Algeria.
Yesterday, the DOJ and SEC announced (see here and here) a parallel Foreign Corrupt Practices Act enforcement action against Honeywell UOP (a U.S. based subsidiary of Honeywell International) and Honeywell International.
The net $82 million enforcement action involved a DOJ component (net $39.6 million) and an SEC component (net $42.4 million).
DOJ
The DOJ enforcement action involved a criminal information against UOP LLC (doing business as Honeywell UOP – a Delaware corporation headquartered in Illinois that is a global provider of technology to various industries including petroleum refining, gas processing, and petrochemical production) charging conspiracy to violate the FCPA’s anti-bribery provisions.
The information alleges:
“From in or about and between at least 2010 and 2014, Honeywell UOP, through certain of its employees and agents, knowingly and willfully conspired and agreed with others to corruptly offer a bribe to, and for the benefit of, Petrobras Official 1, a foreign official in Brazil … to secure improper advantages in order to obtain and retain business from Petrobras in connection with Honeywell UOP’s efforts to win an approximately $425 million contract from Petrobras to design and build an oil refinery called Premium (the “Premium Refinery Contract”).
The bribe was offered with the knowledge, authorization, and at the direction of Honeywell UOP Employee 1 [a U.S. citizen and resident of Brazil who was an account director for Honeywell UOP]. In furtherance of the scheme, among other things, Honeywell UOP, through Honeywell UOP Employee 1, entered into an agency agreement with Brazil Sales Company [a Brazil-based company that served as an agent for Honeywell UOP] for the purpose of funding and paying a bribe of $4 million to Petrobras Official 1 to win the Premium Refinery Contract. In exchange for the offer of a $4 million bribe, and after obtaining business advantages, including inside information and secret assistance, from Petrobras Official 1, Honeywell UOP won the Premium Refinery Contract. Honeywell UOP ultimately earned approximately $106 million in profits from the corruptly obtained business.
In or about July 2009, Honeywell UOP submitted a technical proposal to Petrobras in connection with Honeywell UOP’s bid to win the Premium Refinery Contract.
In or about January 2010, Honeywell UOP Employee 1 attended a meeting in Houston with several Petrobras officials for the purpose of discussing, among other things, the Premium Refinery project.
In or about March 2010, Petrobras invited Honeywell UOP to participate in the design competition phase of the bidding process for the Premium Refinery Contract. At the time, Honeywell UOP was competing against two other companies for the contract.
On or about May 17, 2010, two Honeywell UOP employees provided their management with a PowerPoint presentation stating that the two other companies bidding on the Premium Refinery Contract were “STILL a[] threat to us.” Around this time, Honeywell UOP Employee 1 recommended that Honeywell UOP hire Brazil Sales Company to serve as a sales agent for Honeywell UOP to help it win the Premium Refinery Contract.
On or about May 27, 2010, two Honeywell UOP employees submitted a form requesting that Honeywell’s compliance department approve Brazil Sales Company to serve as Honeywell UOP’s sales agent. To increase the likelihood of receiving internal approvals, the Honeywell UOP employees lied on the request form, stating that Brazil Sales Company had been “known to” Honeywell UOP and a Honeywell UOP employee for two years, when, in fact, the companies had no common history and the Honeywell UOP employee had no prior knowledge of Brazil Sales Company.
In or about the summer of 2010, Honeywell UOP Employee 1 met in Brazil with Petrobras Official 1. During the meeting, Honeywell UOP Employee 1 offered to pay Petrobras Official 1 a percentage of Honeywell UOP’s revenue on the Premium Refinery Contract if Petrobras Official 1 would agree to help Honeywell UOP win the contract from Petrobras.
In or about the summer of 2010, Honeywell UOP Employee 1 also met in Brazil with Intermediary 1 [a citizen of Brazil], a “lobbyist” who collected bribe payments on behalf of Petrobras Official 1 and Intermediary 2 [a citizen of Brazil and the owner of Brazil Sales Company]. During the meeting, Honeywell UOP Employee 1 and Intermediary 2 offered to pay Petrobras Official 1 one percent of the expected revenue from the Premium Refinery Contract, or approximately $4 million, in exchange for Petrobras Official 1 using his influence to help Honeywell UOP win the contract. They agreed to use a portion of Brazil Sales Company’s expected three-percent sales commission (approximately $12 million) from Honeywell UOP to pay the $4 million bribe. They also agreed that the remaining $8 million from the sales commission paid to Brazil Sales Company would be divided equally between the Intermediary 1 and Intermediary 2.
In furtherance of the bribery scheme, Petrobras Official 1 evaluated Honeywell UOP’s proposed bid on the Premium Refinery Contract and determined that Honeywell UOP would not win at that price. Petrobras Official 1 and Intermediary 1 then told Honeywell UOP Employee 1 the maximum amount that Honeywell UOP could bid and still win the contract, given Petrobras’s budget, which resulted in (1) Honeywell UOP wining the contract; (2) Honeywell UOP receiving the largest possible profit; and (3) Petrobras Official 1 receiving the largest possible bribe, given that Brazil Sales Company’s sales commission, which was to fund the “one-percent” bribe payment, was based on the contract’s overall revenue.
In internal correspondence, certain Honeywell UOP employees, including Honeywell UOP Employee 1, used the code words “King” to refer to Petrobras Official 1 and “King’s Assistant” to refer to Intermediary 1 when discussing the confidential Petrobras information and secret assistance to Honeywell UOP that Petrobras Official 1 was providing in exchange for the $4 million bribe.
For example, on or about July 12, 2010, a Honeywell UOP employee wrote an email to another Honeywell UOP employee, stating “in today’s meeting between [Honeywell UOP Employee 1] and King [i.e., Petrobras Official 1], I am wondering if we can get a feeling from King [sic] what is the ballpark and NOT TO EXCEED number” for the bid on the Premium Refinery Contract.
On the next day on or about July 13, 2010, the same Honeywell UOP employee referenced above … wrote, “Hope King’s assistant [i.e, Intermediary 1] can provide us the number (either with or without tax) this week.”
On or about July 21, 2010, Honeywell UOP Employee 1 wrote to two Honeywell UOP employees, “KING [Petrobras Official 1] – yesterday – confirms that budget is 500 . . . [and] [a]dvises that differences greater than 20-25% make it difficult to justify selecting us over others[.]”
On or about August 6, 2010, Honeywell UOP Employee 1 sent an email to two Honeywell UOP employees, “I am proceeding to clarify situation with King [Petrobras Official 1] and receive orientation as to how to proceed.”
On or about August 11, 2010, a Honeywell UOP employee sent an email to two Honeywell UOP executives, stating that “King [Petrobras Official 1] has asked for all numbers from PB [i.e., Petrobras] team . . . .” The Honeywell UOP employee further described in the same email that he would “meet with Assistant [Intermediary 1] tonight to get the numbers and receive clear guideline and [the] target number.”
Also on or about August 11, 2010, a Honeywell UOP employee sent an email to another employee, stating that “we should have [Intermediary 2] issues agreed upon internally and I will finalize [by] this afternoon . . . [t]he direct meeting with the King [Petrobras Official 1] is scheduled for breakfast tomorrow . . . .”
Later that day, on or about August 11, 2010, a Honeywell UOP employee sent an email to a number of Honeywell UOP executives and employees, providing Petrobras’s confidential internal target number for the winning bid and the amounts of the bids that Honeywell UOP’s two competitors had submitted to Petrobras.
The following day, on or about August 12, 2010, a Honeywell UOP employee sent an email to several Honeywell UOP executives that “[Intermediary 2] just signed the agreement [i.e., the Brazil Sales Company Sales Representative Agreement].” One of the Honeywell UOP executives responded, “[h]opefully this paves the way for a big win. [T]hanks[.]”
On or about August 13, 2010, a Honeywell UOP employee sent a calendar invite to a number of Honeywell UOP executives and employees, setting time for a conference call and noting that “[w]e expect to get an update from King [Petrobras Official 1] regarding his perspective regarding the ‘target number’ for our revised commercial proposal (370 or 348).” At the time, Honeywell UOP was debating whether to submit a $370 million bid or a $348 million bid to Petrobras for the Premium Refinery Contract.
Later that day, on or about August 13, 2010, a Honeywell UOP employee wrote an email to another employee, stating that Intermediary 1, who was passing messages from Petrobras Official 1 to Honeywell UOP, had conveyed that “375 would be ok 348 will be more competitive[.]” Later that day, Honeywell UOP submitted the lower $348 million bid to Petrobras.
On or about August 18, 2010, a Honeywell UOP employee sent an email to Honeywell UOP executives and employees, copying Honeywell UOP Employee 1, and stating, “[m]essage from the King [Petrobras Official 1] was to hold tight and make no further concessions at this point. He is trying to pull the numbers and decisions up to his level in order to control.”
Also on or about August 18, 2010, a Honeywell UOP employee wrote an email to a Honeywell UOP executive, stating “[w]ill you be able to sign the [Brazil Sales Company Sales Representative Agreement] when you get in today? There was [sic] also some discussions on whether you will sign or delegate to [another Honeywell UOP executive], can you let me know your plans. I want to get this back to [Intermediary 2] as soon as possible, because we are pushing for the king [Petrobras Official 1] to step up and intercede.” The Honeywell UOP executive signed the Brazil Sales Company Sales Representation Agreement later that day.
On or about October 8, 2010, Petrobras notified Honeywell UOP that it had won the Premium Refinery Contract. Honeywell UOP ultimately earned approximately $425 million in gross revenue and approximately $106 million in profits from the contract.
From in or about 2011 to 2014, Honeywell UOP paid approximately $10.4 million to Brazil Sales Company pursuant to the Brazil Sales Company Sales Representation Agreement. Honeywell UOP paid those funds to a Swiss bank account in the name of a different company that was beneficially owned by Intermediary 2. For example, on or about March 16, 2011, Honeywell UOP transferred from a bank account in the United States approximately $280,131.54 to a bank account in Switzerland controlled by Intermediary 2. Additionally, on or about November 14, 2014, Honeywell UOP transferred from a bank account in the United States approximately $43,726.53 to a bank account in Switzerland controlled by Intermediary 2.”
Based on the above allegations, the information charges Honeywell UOP with conspiracy to violate the FCPA’s anti-bribery provisions.
The criminal charge against Honeywell UOP was resolved through a three year deferred prosecution agreement. Although not a charged entity in the enforcement action, Honeywell International also agreed to certain terms and obligations in the DPA.
The DPA sets forth the following relevant considerations:
“a. the nature and seriousness of the offense conduct … including the Company’s participation in a corrupt bribery scheme to obtain a contract from the government of Brazil;
b. the Company did not receive voluntary disclosure credit pursuant to the FCPA Corporate Enforcement Policy in the Department of Justice Manual 9-47.120, or pursuant to the Sentencing Guidelines, because it did not voluntarily and timely disclose to the Fraud Section and the Office …;
c. the Company received full credit for its cooperation with the Fraud Section’s and the Office’s investigation pursuant to U.S.S.G § 8C2.5(g)(2) and the FCPA Corporate Enforcement Policy, JM § 9-4.120, by, among other things, (i) proactively disclosing certain evidence of which the Fraud Section and the Office were previously unaware; (ii) providing information obtained through its internal investigation, which allowed the government to preserve and obtain evidence as part of its own independent investigation; (iii) making detailed presentations to the Fraud Section and the Office; (iv) voluntarily facilitating interviews of employees; (v) collecting and producing voluminous relevant documents and translations to the Fraud Section and the Office, including documents located outside the United States;
d. the Company and Honeywell provided to the Fraud Section and the Office all relevant facts known to it, including information about the individuals involved in the conduct … and conduct disclosed to the Fraud Section and the Office prior to the Agreement; e. Honeywell and its affiliates, including the Company, engaged in extensive remedial measures, including: (i) commencing remedial measures based on internal investigations of the misconduct prior to the commencement of the Fraud Section’s and the Office’s investigation; (ii) disciplining certain employees involved in the relevant misconduct, including terminating one employee; (iii) strengthening its anti-corruption compliance program by investing in compliance resources, expanding its compliance function with experienced and qualified personnel, and taking steps to embed compliance and ethical values at all levels of its business organization; (iv) substantially reducing its anti-corruption risk profile by taking steps to eliminate the Company’s use of sales intermediaries and, in the interim, rolling out a single, automated sales intermediary due diligence tool that requires responsible managers to provide quarterly compliance certifications for all existing sales intermediaries; (v) establishing monitor and audit processes to regularly review and update the compliance program; and (vi) enhancing its internal reporting, investigations, and risk assessment processes.
f. Honeywell has enhanced and has committed to continuing to enhance its compliance program and internal controls (which apply to all Honeywell companies, including the Company), including ensuring that its compliance program satisfies the minimum elements set forth in Attachment C to this Agreement (Corporate Compliance Program);
g. the Company has no prior criminal, civil, or regulatory history; Honeywell has one prior criminal resolution from 2011 relating to the storage of hazardous waste without a permit; Honeywell and other of its subsidiaries have had additional prior civil and administrative settlements;
h. Honeywell’s agreement to concurrently resolve an investigation by the U.S. Securities and Exchange Commission (“SEC”) relating to the conduct described in the Statement of Facts through a cease-and-desist proceeding, and agreeing to pay $81,158,193 in disgorgement and prejudgment interest;
i. The Company’s agreement to concurrently resolve with authorities in Brazil relating to the same conduct described in the Statement of Facts, which the Fraud Section and the Offices are crediting in connection with the penalty in this Agreement;
j. the Company and Honeywell have agreed to continue to cooperate with the Office and the Fraud Section …
k. accordingly, after considering (a) through (j) above, the Fraud Section and the Office believe that the appropriate resolution in this case is a Deferred Prosecution Agreement with the Company; a criminal monetary penalty in the amount of $79,242,750 which reflects a discount of 25 percent off of the bottom of the otherwise-applicable U.S. Sentencing Guidelines fine range; and forfeiture of $105,657,000, which will be credited against disgorgement of ill-gotten profits that the Company pays to the SEC and Brazilian authorities in concurrent resolutions.”
The advisory guidelines range sets forth a fine range of $105.6 million to $211.3 million and the DPA states:
“The Company agrees to pay a monetary penalty in the amount of $79,242,750 to the United States Treasury (the “Total Criminal Penalty”). This reflects a 25 percent discount off the bottom of the Sentencing Guidelines fine range. The Company and the Fraud Section and the Office agree that the Company will pay the United States Treasury $39,621,375, equal to one-half of the Total Criminal Penalty, within ten business days of the execution of the Agreement. The Fraud Section and the Office agree to credit toward satisfaction of the Total Criminal Penalty the amount the Company pays to authorities in Brazil, up to a maximum of $39,621,375, so long as the Company pays the remaining amount to Brazil pursuant to the Company’s separate resolution with Brazilian authorities related to the same underlying conduct described in the Statement of Facts.”
Pursuant to the DPA, the Honeywell entities agreed that “they will report to the Fraud Section and the Office annually during the [three year] Term [of the DPA] regarding remediation and implementation of the compliance measures” required by the DPA. As a further condition of settlement, 30 days prior to the expiration of the three year DPA, Honeywell’s CEO and CCO will be required to certify that the company’s compliance programs “are reasonably designed to detect and prevent violations of the anti-corruption laws throughout the Companies’ operations.”
In the DOJ release, Assistant Attorney General Kenneth Polite stated:
“Honeywell UOP offered to pay millions of dollars in bribes to a high-ranking executive at Brazil’s state-owned oil company to win a lucrative contract. [This] resolution once again demonstrates that in our relentless fight against corruption, the Department of Justice will work together with our partners, both domestic and foreign, to hold companies accountable for their criminal conduct.”
U.S. Attorney Alamdar Hamdani for the Southern District of Texas stated:
“This case exemplifies corporate misconduct on a global level. Prosecuting and investigating this type of crime is an important role our office takes seriously in order to ensure fair and equal playing fields for U.S. companies and consumers. We will continue our efforts to aggressively investigate and prosecute those who violate the FCPA and combat corrupt practices in order to preserve the integrity of our nation’s business dealings here and abroad.”
Acting Assistant Director in Charge Michael Glasheen of the FBI Washington Field Office stated:
“Honeywell UOP conspired to bribe a high-ranking official at Petrobras to win a contract from the company, effectively stifling competition. Bribery schemes like this one transcend borders, and collaboration with our foreign partners is crucial to the fight against international corruption. The resolution … demonstrates the FBI’s commitment to leveling the playing field across the global marketplace.”
Special Agent in Charge Ramsey Covington of the IRS Criminal Investigation (CI) Houston Field Office stated:
“Money is the center of the criminal world, and this company became a part of that world when it failed to adhere to national and international laws. It did not live up to the trust placed on it by both the public and its shareholders. In situations like this, IRS-CI will pursue criminal enterprises, regardless of where they operate. Our investigation in this case remains open and we are working with our law enforcement and prosecutorial partners to ensure that crime doesn’t pay.”
SEC
The SEC enforcement action was based on the same core Brazil conduct alleged in the DOJ enforcement action.
In summary fashion, the SEC’s order finds:
“This matter concerns violations of the anti-bribery, books and records, and internal accounting controls provisions of the FCPA by Honeywell International Inc. (“Honeywell”), in connection with bribery schemes in Brazil and Algeria. In Brazil, Honeywell’s U.S. wholly-owned subsidiary, Honeywell UOP (“UOP”), which, with the assistance of an intermediary, offered as much as $4 million to a Brazilian official to win a contract with the Brazilian state-owned oil company, Petróleo Brasileiro S.A. – Petrobras (“Petrobras”). In Algeria, employees of the Honeywell Process Solutions (“HPS”) business unit, with the assistance of an intermediary, paid money to an Algerian government official to secure a contract amendment with La Société Nationale pour la Recherche, La Production, Le Transport, la Transformation, et la Commercialisation des Hydrocarbures (“Sonatrach”), the Algerian state-owned oil company. Honeywell’s books and records were not accurately maintained in connection with the schemes and it failed to have sufficient internal accounting controls in place to detect or prevent the misconduct.”
Under the heading “The Monaco Agent and the Sonatrach Scheme in Algeria,” the order finds:
“In November 2004, Honeywell Belgium contracted with Algeria’s state-owned downstream oil company, La Société Nationale de Raffinage de Pétrole (“NAFTEC”), to use HPS products to modernize the instrumentation and control systems at NAFTEC’s Arzew refinery in Oran, Algeria. In 2008, Honeywell Belgium and NAFTEC renegotiated the technical specifications for upgrading Zone 4 of the Arzew refinery.
In July 2009, Sonatrach absorbed NAFTEC in a restructuring of the state oil industry. By at least late 2009, Sonatrach and Honeywell Belgium were at a standstill on Zone 4. The parties could not reach agreement concerning the construction schedule and the amount of liquidated damages that Sonatrach believed Honeywell Belgium should pay for the delay. Sonatrach’s downstream development director (“the Sonatrach official”) was a key decision maker in the resolution of the disputed issues.
Beginning in early 2009, HPS’s regional general manager for Southern Europe and North Africa (“the HPS Regional GM”) discussed retaining the Monaco Agent to develop business opportunities for HPS in Algeria. On behalf of Honeywell Belgium, the HPS Regional GM signed a memorandum of understanding with the Monaco Agent on November 26, 2010. A representative of the Monaco Agent signed the memorandum of understanding on January 4, 2011. On February 6, 2011 Honeywell initiated a due diligence review of the Monaco Agent, which was completed and approved on March 4, 2011.”
Under the heading “A Honeywell Subsidiary Used the Monaco Agent to Further the Scheme,” the order finds:
“On February 22, 2011, the HPS Regional GM and Sonatrach reached an oral agreement on the liquidated damages and Zone 4 scheduling issues. The Monaco Agent was not involved in the resolution of the Zone 4 issues or on any other aspect of the Arzew refinery contract. That same day, the HPS Regional GM falsely informed Honeywell Belgium’s Arzew refinery project manager by email that HPS had a new agreement with the Monaco Agent to work on Zone 4 and other sales projects in Algeria.
Around this time, an executive of the Monaco Agent received a panicked phone call from the HPS Regional GM asking him to make a pass-through payment to a group of people in Europe who purportedly had helped Honeywell Belgium secure a contract with Sonatrach. The Monaco Agent executive understood this to mean that the payment was possibly a bribe.
The HPS Regional GM delegated the details of negotiating the pass-through payment with the Monaco Agent to his subordinate, a regional sales manager at HPS. According to the Monaco Agent, the HPS regional sales manager told him that the Monaco Agent needed only to make the pass-through payment and it would receive a lump sum payment from Honeywell. The HPS regional sales manager also explained that the Sonatrach official was the source of Honeywell’s problems with Sonatrach. On March 22, 2011, an email internal to the Monaco Agent provided contact details of a shell entity that Honeywell Belgium “wants us to sign with” for purposes of the pass-through payment.
Sometime before April 19, 2011, the HPS regional sales manager engaged an individual to work unofficially to help resolve the company’s problems with Sonatrach (the “Consultant”). On April 19, 2011, the Consultant, on behalf of Honeywell Belgium, paid the Sonatrach official $50,000 from a Swiss bank account and an additional $25,000 from the same Swiss bank account on December 28, 2011.
During much of the spring of 2011, Sonatrach and Honeywell Belgium continued to dispute the Zone 4 construction schedule, which Honeywell thought was too aggressive. Sonatrach also threatened to transfer the work on Zone 4 to a competitor if Honeywell Belgium did not agree to Sonatrach’s scheduling demands. On June 19, 2011, after the first $50,000 payment to the Sonatrach official, Honeywell Belgium and Sonatrach executed an amendment to the Arzew refinery contract memorializing the parties’ oral agreement on the Zone 4 construction schedule and liquidated damages amount.
Two weeks later, the Monaco Agent and a Honeywell wholly-owned subsidiary entered into a fictitious sales consultancy agreement whereby the Monaco Agent would purportedly promote sales in Algeria for a 2% to 4.5% commission without exceeding $500,000 per year. The agreement made no mention of Zone 4. Although the Monaco Agent never achieved certain milestones required for payments over $50,000 or obtained any new business for HPS as contemplated under the consulting agreement, the Monaco Agent was nevertheless paid $300,000.”
Under the heading “The Monaco Agent Repaid the Consultant Who Provided Funds to a Sonatrach Official Through a Series of Transactions,” the order finds:
“On December 19, 2011, the Monaco Agent sent an invoice to the HPS Regional GM requesting a “Lump Sum Fee of $300,000” in connection with “Sonatrach Arzew Refinery – Change Order / Zone 4.” Thereafter, the HPS Regional GM sent a copy of the invoice to Honeywell’s Arzew project manager, who had previously questioned the basis for the $300,000 lump sum payment and thought it was higher than previously mentioned. The HPS Regional GM reiterated that $300,000 was the agreed upon amount, and the project manager did not question him further or raise the issue to anyone else at Honeywell. Shortly thereafter, the HPS Regional GM forwarded the invoice to finance for their review and approval.
Honeywell Belgium approved the Monaco Agent’s invoice in late January 2012 and, on February 22, 2012, Honeywell Belgium paid a lump sum of $300,000 to the Monaco Agent, which was falsely recorded as a sales commission. Through a series of intermediary transfers, the Monaco Agent used a portion of the money from Honeywell Belgium to repay the Consultant who had paid the $75,000 in bribe payments to the Sonatrach official. The series of intermediary transfers involved multiple U.S. correspondent banks located in New York. The Monaco Agent admitted that it recorded the payments with internal codes the Monaco Agent sometimes used for bribe payments.
In connection with the Algeria Conduct above, Honeywell obtained $3,118,350 in profits to be disgorged to the Commission.”
Based on the above conduct involving Brazil and Algeria, the SEC found that Honeywell violated the FCPA’s anti-bribery, books and records, and internal controls provisions.
Under the heading “Honeywell’s Remedial Actions and Cooperation,” the order states:
“In determining to accept the Offer, the Commission considered remedial acts undertaken by Honeywell and cooperation afforded the Commission staff. Honeywell cooperated in the Commission’s investigation by identifying and timely producing key documents identified in the course of its own internal investigation, providing the facts developed in its internal investigation, and making current or former employees available to the Commission staff, including those who needed to travel to the United States.
Honeywell’s remediation included: (i) strengthening its ethics and compliance organization; (ii) terminating sales directors involved in the misconduct in Brazil and demoting an employee with significant supervisory responsibilities over the misconduct in Brazil; (iii) implementing a program to eliminate UOP’s use of sales agents altogether (as of 3Q 2021, UOP had reduced its sales agent force by two-thirds); (iv) enhancing Honeywell’s policies and procedures including with respect to due diligence of third parties (including consolidating the due diligence process into one automated system and requiring third parties to submit quarterly reports and FCPA certifications); (v) improving Honeywell’s financial controls over third parties (including implementing digital end-to-end controls over payments to third party sales agents and ensuring that payments to sales intermediaries are made by wire transfer to an account belonging to the same party and to a bank account where the sales intermediary resides); and (vi) enhancing training provided to Honeywell employees and sales intermediaries regarding anti-corruption, controls, and other compliance issues.
UOP has entered into a three-year deferred-prosecution agreement with the United States Department of Justice in which it acknowledges criminal responsibility for criminal conduct relating to the findings in the Order concerning Brazil.”
To resolve the matter, Honeywell agreed to pay pay disgorgement of $33,895,456 and prejudgment interest of $8,550,521 for a total payment of $42,445,977 to the SEC. The order states:
“[Honeywell] is liable to the U.S. Securities and Exchange Commission for disgorgement of $64,672,563 and prejudgment interest of $16,485,630, for a total of $81,158,193. [Honeywell] shall receive a disgorgement and prejudgment interest offset of up to $38,717,216 based on the U.S. dollar value (based on the exchange rate on the date of the payment) of any disgorgement paid to the Controladoria-Geral de União (“CGU”)/AdvocaciaGeral de União (“AGU”) and the Ministério Publico Federal (“MPF”) reflected by evidence acceptable to the Commission staff in its sole discretion, in a parallel proceeding against [Honeywell] in Federal Court in Brazil. Such evidence of payment shall include a copy of the wire transfer or other evidence of the amount of the payment, the date of the payment, and the name of the government agency to which payment was made. To receive this offset, [Honeywell] must make the above-identified payments within 90 days from the date of this Order. Any amounts not paid as an offset within the specific time shall be immediately due to the U.S. Securities and Exchange Commission. [Honeywell] shall, within 30 days of the entry of this Order, pay disgorgement of $33,895,456 and prejudgment interest of $8,550,521 for a total payment of $42,445,977 to the Securities and Exchange Commission …”.
The order further states:
“Honeywell acknowledges that the Commission is not imposing a civil penalty based upon the imposition of a $39,621,375 million criminal fine (after providing a 50% offset for payments made to Brazilian authorities) as part of UOP’s resolution with the United States Department of Justice concerning the conduct in Brazil.”
In the SEC release, Charles Cain (Chief of the SEC’s FCPA Unit) stated:
“For years, Honeywell neglected to implement sufficient internal accounting controls to mitigate against known corruption risks in countries like Brazil and Algeria. This failure created an environment in which Honeywell employees and agents could and did facilitate bribes.”
In this Honeywell release, Darius Adamczyk (Chairman and Chief Executive Officer of Honeywell) states:
“We are pleased to have this legacy matter behind us, as these events in no way reflect the current leadership, culture and values that Honeywell has come to establish over a decade since this activity occurred. We stand behind our recognized world-class ethics and compliance program and all Honeywell employees are expected to abide by all laws in the countries in which we operate and conduct themselves with the highest levels of integrity at all times.”
The release notes:
“Honeywell has been publicly recognized as Honeywell is a seven-time honoree of Ethisphere’s World’s Most Ethical Companies award, including in every year since 2019. Honeywell was also named #3 of America’s Top 10 Most Transparent Companies overall and #1 in the Industrials segment in Labrador’s 2022 U.S. Transparency Awards for its public disclosures.”
Latham & Watkins attorneys Alice Fisher, Douglas Greenburg, and Joseph Bargnesi as well as Kirkland & Ellis attorneys William Stuckwisch and Christopher Maner represented Honeywell.
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