TechnipFMC, a global oil and gas services provider, and its wholly owned U.S. subsidiary Technip USA will pay a combined $301.3 million settlement to resolve foreign bribery charges with authorities in the United States and Brazil.
The settlement includes criminal penalties of more than $296 million. TechnipFMC (TFMC) also entered into a three-year deferred prosecution agreement (DPA) with the Justice Department in connection with a criminal information filed June 25 in the Eastern District of New York charging the company with two counts of conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act.
As part of the DPA, TechnipFMC said it has “committed to implementing rigorous internal controls and to cooperate fully with the Justice Department’s ongoing investigation.” The company said it will also provide the Justice Department with reports on its anti-corruption program during the term of the DPA.
Additionally, TechnipFMC said it has “reached an agreement in principle” with the Securities and Exchange Commission, subject to final SEC approval. Technip USA, too, pleaded guilty and was sentenced on a one-count criminal information charging it with conspiracy to violate the anti-bribery provisions of the FCPA. It will pay a $500,000 criminal fine as part of the overall settlement.
In related proceedings, the company settled with the Advocacia-Geral da União (AGU); the Controladoria-Geral da União (CGU); and the Ministério Público Federal (MPF) in Brazil over bribes paid in Brazil. According to the company, leniency agreements have been reached with both the MPF and the CGU/AGU. 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.
“TechnipFMC fully cooperated with these authorities, and this is the first simultaneous resolution to include all U.S. and Brazilian authorities,” the company announced. “TechnipFMC will not be required to have a monitor and will, instead, provide reports on its anti-corruption program to the Brazilian and U.S. authorities for two and three years, respectively.”
Also, in connection with the scheme to bribe Brazilian officials, Technip’s former consultant in Brazil, Zwi Skornicki, pleaded guilty in the Eastern District of New York to a one-count criminal information charging him with conspiracy to violate the FCPA. He is awaiting sentencing. All three cases are assigned to U.S. District Judge Kiyo Matsumoto of the Eastern District of New York.
Case facts
TFMC is the product of a 2017 merger between two predecessor companies, Technip and FMC Technologies. The charges arose out of two independent bribery schemes: a scheme by Technip to pay bribes to Brazilian officials and a scheme by FMC to pay bribes to officials in Iraq.
According to admissions and court documents, beginning in at least 2003 and continuing until at least 2013, Technip conspired with others—including Singapore-based Keppel Offshore & Marine (KOM) and its former consultant—to violate the FCPA by making more than $69 million in corrupt payments and “commission payments” to the consultant, companies associated with the consultant, and others.
Portions of these payments were then passed along as bribes to employees at the Brazilian state-owned oil company, Petrobras, to secure improper business advantages. In addition, Technip made more than $6 million in corrupt payments to the Workers’ Party in Brazil and party officials in furtherance of the bribery scheme.
The admissions and court documents also establish that beginning by at least 2008 and continuing until at least 2013, FMC conspired to violate the FCPA by paying bribes to at least seven government officials in Iraq, including officials at the Ministry of Oil, the South Oil Company, and the Missan Oil Company, through a Monaco-based intermediary company in order to win secure improper business advantages and to influence those foreign officials to obtain and retain business for FMC Technologies in Iraq.
“This conduct, dating back over a decade ago by former employees, does not reflect the core values of our company today,” said TechnipFMC Chairman and CEO Doug Pferdehirt. “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,” Pferdehirt added.
In a related enforcement action, KOM and its U.S. subsidiary, Keppel Offshore & Marine USA, in December 2017 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.
Compliance lessons
In the resolutions with the Justice Department, TFMC received credit for its substantial cooperation with the Department’s investigation and for taking extensive remedial measures, including the following:
- TFMC separated from or took disciplinary action against former and current employees in relation to the misconduct described in the statement of facts to which it admitted as part of the resolution;
- Made changes to its business operations in Brazil to no longer participate in the type of work where the misconduct at issue arose;
- Required that certain employees and third parties undergo additional compliance training; and
- Made specific enhancements to the company’s internal controls and compliance program.
Accordingly, the criminal fine reflects a 25 percent reduction off the applicable U.S. Sentencing Guidelines fine for the company’s full cooperation and remediation.
This is not Technip’s first run-in with the law. In 2010, Technip entered a $338 million resolution with the Justice Department and SEC over bribes paid in Nigeria as part of a multinational joint venture to develop a liquefied natural gas plant in the country.
One ongoing trend is the multijurisdictional nature of FCPA investigations today. In this case, particularly, the governments of Australia, Brazil, France, Guernsey, Italy, Monaco, and the United Kingdom provided significant assistance in this matter, as did the Criminal Division’s Office of International Affairs.
“As previously disclosed, TechnipFMC has also been cooperating with an investigation by the French Parquet National Financier related to historical projects in Equatorial Guinea and Ghana,” the company added. “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.”
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