That’s a dense headline, but there was much at play in this DOJ announcement from earlier this week.
First, Technip joined the ever growing list of FCPA repeat offenders (see here) as the company previously resolved a $340 million FCPA enforcement action in 2010 concerning conduct at Bonny Island, Nigeria. (See here and here for prior posts). For good measure, as highlighted in this prior post, in 2016 FMC Technologies resolved a so-called non-FCPA, FCPA enforcement action.
Second, most FCPA enforcement actions against issuers that include a DOJ and SEC component are resolved on the same day, however this week’s development was DOJ only and this company press release states “TechnipFMC has reached an agreement in principle with the SEC Staff, subject to final SEC approval.”
Third, in connection with the same core conduct alleged in the DOJ enforcement action the DOJ also criminally charged Zwi Skornicki (a citizen of Brazil).
The DOJ enforcement action against TechnipFMC (a global provider of oil and gas technology and services) involved this criminal information against Technip USA resolved via this plea agreement and this criminal information against TechnipFMC resolved via this deferred prosecution agreement concerning alleged bribery schemes in Brazil and Iraq.
Technip USA Information and Plea Agreement
As alleged in the information, between 2003 and 2014 Technip USA (described as a wholly-owned subsidiary of Technip S.A.) together with others including Technip, Joint Venture (described as a Singapore-incorporated, Brazil-based joint venture owned 25% by Technip USA and 75% by a subsidiary of Keppel Offshore & Marine (a company which resolved an FCPA enforcement action concerning conduct in Brazil in 2017 – see here and here for prior posts), Executive 1 (a French citizen), Executive 2 (a French citizen) and Consultant (a Brazilian citizen who was an agent of Technip, Keppel, Technip USA and Joint Venture) knowingly and willfully conspired to violate the FCPA by:
“causing corruption ‘commission’ payments to be made to Consultant and others, knowing that a portion of those payments would be used to pay bribes to Brazilian government officials, including Brazilian Official 1 (described as an employee of Petrobras with responsibility over, among other things, the bidding process of certain projects between 2003 and 2011) and Brazilian Official 2 (similarly described); and (ii) making corrupt payments to the Workers’ Party and to Workers’ Party political candidates; all for purposes of securing improper business advantages, and obtaining and retaining business with Petrobras, for Technip, Technip USA and Joint Venture.”
According to the information, between 2003 and 2014, Technip USA and its co-conspirators including Keppel caused more than $69 million in corrupt payments to be made to companies associated with Consultant in furtherance of the bribery scheme, of which Technip directly paid $20.9 million and caused approximately $6 million in corrupt payments to be made to the Workers’ Party and Workers party officials.” The information alleges that Technip and its subsidiaries earned approximately $135.7 million in profits from the corruptly obtained business.
The charged conduct was in connection offshore oil platform projects described as P-51, P-52 and P-56.
Based on the above, the DOJ charged Technip USA with one count of conspiring to violate the FCPA’s anti-bribery provisions.
The criminal charges against Technip USA were resolved via a plea agreement. The plea agreement sets forth a guidelines fine range of $271 million – $542 million, but given TechnipFMC’s DPA described below, the government agreed to resolve the Technip USA matter for a criminal fine amount of $500,000.
TechnipFMC Information and DPA
The TechnipFMC information concerns the same Brazil bribery scheme alleged in the Technip USA information as well as an additional bribery scheme concerning conduct in Iraq.
Regarding the Brazil bribery scheme, the TechnipFMC information contains the following additional allegations. First, that various Technip executives “knowing that Consultant was in the regular practice of making bribe payments to Petrobras officials, retained Consultant on two additional projects for which Petrobras solicited bids. Second, that in “furtherance of the conspiracy, Technip corruptly hired the children of certain Petrobras officials, including the Children of Brazilian Official 2, Brazilian Official 3 and another Petrobras official.
As to Iraq, the information alleges that between 2008 and 2013, FMC Technologies, together with others, knowingly and willfully conspired to pay, and paid, bribes in connection with seven contracts to provide metering technologies for oil and gas production measurement to the Iraqi government. Specifically, the information alleges:
“FMC Technologies, together with others, promised to pay, and paid, these bribes corruptly for the benefit of foreign officials, including Iraqi Official 1 [an employee of The South Oil Company (SOC) an Iraqi state-owned and state-controlled oil company], Iraqi Official 2 [a high-level executive of SOC], Iraqi Official 3 [an employee of SOC], Iraqi Official 4 [a high-level executive of the Iraqi Ministry of Oil (MOO)] and Iraqi Official 5 [an executive of MOO], to secure improper business advantages and to influence those foreign officials to obtain and retain business for FMC Technologies in Iraq. FMC Technologies and its related entities earned profits totaling approximately $5.3 million from business in Iraq obtained through the bribery scheme.”
According to the information between 2008 and 2013:
“FMC Technologies executives created and executed agency agreements on behalf of FMC Technologies with Intermediary Company [a Monaco-based oil and gas services intermediary believed to be Unaoil] that were intended to facilitate bribe payments to obtain business from the Iraqi government and to conceal their purpose. Under these agency agreements, Intermediary Company effectuated bribes in two ways. First, Intermediary Company made direct corrupt payments to Iraqi Official 1 and Iraqi Official 2 to further the scheme. Second, Intermediary Company made corrupt payments to sub-agents who in turn made payments to Iraqi government officials. […] Intermediary Company made the bribe payments before receiving any commission payments from FMC Technologies under the agency agreements between Intermediary Company and FMC Technologies. The parties agreed that, after FMC Technologies received payments from the Iraqi government under the contracts that FMC had won as a result of the bribery scheme, FMC Technologies would then pay Intermediary Company the commissions that were due under the agency agreements between Intermediary Company and FMC Technologies.”
The information further alleges that in 2010:
“FMC Technlogies authorized Intermediary Company to pay bribes to Iraqi government officials in connection with securing two contracts from the Iraqi government to provide metering technologies for oil and gas production in Iraq. In connection with one of these contracts, FMC Technologies subcontracted with Intermediary Company to provide site installation services.”
Based on the Brazil and Iraq conduct, the information charges two counts of conspiracy to violate the FCPA’s anti-bribery provisions.
The criminal charges against TechnipFMC were resolved via a three year deferred prosecution agreement. The DPA sets forth the following “relevant considerations.”
“a. the Company did not receive voluntary disclosure credit because it did not voluntarily and timely disclose the DOJ the conduct at issue;
b. the Company received full credit for its cooperation including: conducting a thorough internal investigation, meeting the DOJ’s requests promptly, proactively identifying issues and facts that would likely be of interest to the DOJ, making regular factual presentations to the DOJ, voluntarily making foreign-based employees available for interviews in the U.S., producing documents to the DOJ from foreign countries in ways that did not implicate foreign data privacy laws, and collecting, analyzing and organizing voluminous evidence and information for the DOJ;
c. the Company provided to the DOJ all relevant facts know to it, including information about the individuals involved in the misconduct;
d. the Company engaged in remedial measures, including separating or taking disciplinary action against former employees, ceasing to retain the intermediaries involved in the conduct, banning the use of all commercial consultants in Brazil, suspending all payments to commercial consultants in Brazil, providing additional compliance training to employees and certain third parties, and making specific enhancements to the Company’s internal controls and compliance program;
e. the Company has enhanced and has committed to continuing to enhance its compliance program and internal controls, including by implementing heightened controls and additional procedures and policies relating to third parties, conducting ongoing reviews of its compliance program, increasing the resources the Company dedicates to compliance, and ensuring that its compliance program satisfies the minimum elements set forth in Attachment C of the DPA;
f. based on the Company’s remediation and the state of its compliance program, and the company’s agreement to report to the DOJ, the DOJ determined that an independent compliance monitor is unnecessary;
g. the Company is entering into a resolution with authorities in Brazil relating to the same conduct which the DOJ are crediting in connection with the penalty;
h. the nature and seriousness of the offense conduct, including the long duration of the bribery schemes, the amount of bribe payments made to government officials, and the fact that the company is the product of a merger between two companies, Technip S.A. and FMC Technologies Inc. both of which were involved in conduct that violated the FCPA;
i. Technip S.A.’s prior criminal conduct and resolution with the DOJ and the fact that some of the offense conduct occurred during and after the term of the DPA between the DOJ and Technip that was filed on June 28, 2010;
j. the Company has agreed to continue to cooperate with the DOJ; and
k. the Company received full cooperation and remediation credit, but because Technip is a recidivist, the 25% reduction for cooperation and remediation was deducted from a point near the midpoint of the sentencing guidelines fine range.”
The DPA sets forth an advisory guidelines range of $282 million – $564 million and the DPA stated that the appropriate fine is $296.1 million. The DPA further states that the parties agreed that the company will pay a criminal fine of approximately $81.8 million to the U.S. Treasury, of which $500,000 will be paid as a criminal fine on behalf of Technip USA.
According to the DPA, the DOJ “will credit towards satisfaction of payment of the Total Criminal Fine the amount the Company pays to Brazilian authorities, pursuant to the Company’s resolution in Brazil, up to a maximum of $214.3 million.” As stated in the DPA, “the Company’s payment obligations to the United States will be complete upon the Company’s payment of $81.8 million so long as the Company pays the remaining amount of the Total Criminal Fine to authorities in Brazil.”
In the DOJ release, Assistant Attorney General Brian Benczkowski stated:
“Today’s resolution takes aim at the scourge of bribery, but does so in a fair and evenhanded way. It is a testament to the strength and effectiveness of international coordination in the fight against corruption, but also an acknowledgement that the Department is fully committed to reaching fair and just resolutions with companies that fully cooperate and remediate.”
U.S. Attorney Richard Donoghue of the Eastern District of New York stated:
“Today’s resolutions are the result of a continuing multinational effort to hold accountable corporations and individuals who seek to win business through corrupt payments to foreign officials, and who attempt to use the U.S. financial system to carry out those crimes. We will continue to prioritize identifying and bringing to justice those who would corrupt the legitimate functions of government for personal financial gain.”
Assistant Director Robert Johnson of the FBI’s Criminal Investigative Division stated:
“Today’s charges demonstrate not only the capabilities of the FBI personnel who investigate international corruption, but the successful results of strong partnerships in the international community. In attempting to cheat the system, Technip violated the FCPA. Through the collaboration and dedicated efforts of the FBI and our foreign partners, Technip is being held accountable for perpetrating illegal schemes and justice is served.”
Acting Special Agent in Charge Charles Dayoub of the FBI’s Washington Field Office Criminal Division stated:
“This case shows the FBI will continue to work tirelessly to hold those accountable who treat corruption and bribery as a common business practice. Today’s agreement is the culmination of the hard work of the FBI and Department of Justice and our international partners.”
As stated in the DOJ release:
“In related proceedings, the company settled with the Advogado-Geral da União (AGU), the Controladoria-Geral da União (CGU) and the Ministério Público Federal (MPF) in Brazil over bribes paid in Brazil. The United States will credit the amount the company pays to the Brazilian authorities under their respective agreements, with TechnipFMC paying Brazil approximately $214 million in penalties.
In a related enforcement action, in December of 2017, KOM and its U.S. subsidiary, Keppel Offshore & Marine USA, Inc., agreed to pay a combined total criminal fine of more than $422 million to resolve charges with authorities in the United States, Brazil and Singapore on related conduct. A former senior member of KOM’s legal department also pleaded guilty and is awaiting sentencing.
In the TechnipFMC release, Doug Pferdehirt (Chairman and CEO of TechnipFMC) stated:
“Today we announce the resolution of these investigations. This conduct dating back over a decade ago, taken by former employees, does not reflect the core values of our Company today. We are committed to doing business the right way, and that means operating with integrity everywhere. Our strong compliance program supports this commitment, and we will continue to enhance our program to ensure that our employees have the practical tools and resources to do business the right way. We will remain focused on rewarding the trust that our clients have put in TechnipFMC by delivering industry-leading innovation, superior client service, and exceptional project execution.”
As further stated in the release:
“In Brazil, TechnipFMC subsidiaries Technip Brasil – Engenharia, Instalações E Apoio Marítimo Ltda. and Flexibrás Tubos Flexíveis Ltda. entered into leniency agreements with both the MPF and the CGU/AGU related to conduct in Brazil dating back over a decade ago. The Company has committed, as part of those agreements, to make certain enhancements to their compliance programs in Brazil during a two-year self-reporting period, which aligns with its commitment to cooperation and transparency with the compliance community in Brazil and globally.
Additionally, TechnipFMC has reached an agreement in principle with the SEC Staff, subject to final SEC approval.
As previously disclosed, TechnipFMC has also been cooperating with an investigation by the French Parquet National Financier (PNF) related to historical projects in Equatorial Guinea and Ghana. To date, this investigation has not reached resolution. TechnipFMC remains committed to finding a resolution with the PNF and will maintain a $70 million provision related to this investigation.”
Robert Luskin, Jay Darden, Jennifer Riddle and Chris Wegner (all of Paul Hastings) represented Technip entities.
In connection with the Brazil bribery scheme, the DOJ also charged Zwi Skornicki in this criminal information with conspiracy to violate the FCPA’s anti-bribery provisions. According to the DOJ, Skornicki and others “knowingly and willfully conspired to pay, and paid, approximately $55 million in bribes in connection with at least 13 projects in Brazil tendered by Petrobras and, later, a company that employed several former Petrobras officials.” According to the information, the KOM entities and the Energy Company Entities “earned profits totaling more than $500 million from business in Brazil obtained through the bribery scheme.”
As alleged in the information:
“To facilitate the payment of those bribes and to conceal the true nature and purpose of the payments, Skornicki and employees at the KOM Entities and the Energy Company Entities created and executed false agreements with consulting companies controlled in whole or in part by Skornicki. The agreements falsely represented that payments were being made to Skornicki’s companies for Skornicki’s assistance and support in discussions and negotiations with prospective customers when, in fact, portions of those payments were being paid as bribes.”
According to the information, payments made to the consulting companies controlled by Skornicki were made to and through bank accounts located in the U.S. and elsewhere.
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