Following the conclusion of a two-year internal investigation, Dutch oil and gas company SBM Offshore announced this week that it has uncovered evidence that some of its agents may have made bribery payments to government officials in Angola and Equatorial Guinea.

The investigation, which SMB Offshore initiated in April 2012, was carried out by independent external counsel (Paul Hastings and De Brauw Blackstone Westbroek) and forensic accountants (PwC Forensics), and focused on the use of agents from 2007 through 2011. According to the findings, SBM Offshore paid approximately $200 million in commissions to agents during that period, the majority of which were made to three countries: Equatorial Guinea ($18.8 million); Angola ($22.7 million); and Brazil ($139.1 million).

With respect to Angola and Equatorial Guinea, “there is some evidence that payments may have been made directly or indirectly to government officials,” the company stated. With respect to Brazil, despite some red flags, the investigation “did not find any credible evidence” that the company or its agent made improper payments to government officials, including to employees of state-owned companies. “Rather, the agent provided substantial and legitimate services in a market, which is by far the largest for the company,” SBM Offshore stated.

At the outset of the investigation, SBM Offshore said it froze all payments to agents and conducted a review and due diligence on sales agents in all other countries. “As a result of that review, the company decided to discontinue certain agents."

Also, it has decided to no longer use agents in countries where it has a presence. “The investigation team also specifically looked at other countries covered by the agreements with the agent used in Equatorial Guinea and Angola, but in its evidence-based approach did not perform a further detailed investigation into these countries.”

The company said it voluntarily reported its internal investigation to the Dutch Openbaar Ministerie and the U.S. Department of Justice in April 2012. These discussions remain ongoing.

“New information could surface in the context of the review by these authorities or otherwise which has not come up in the internal investigation to date,” SBM Offshore stated. “At this time, the company is still not in a position to estimate the ultimate consequences, financial or otherwise, if any, of that review.”

Remedial Measures

In order to prevent any potential violations of anti-corruption laws and regulations in the future, SBM Offshore said it has taken remedial action to enhance its compliance program by introducing new policies, processes and systems, and established a compliance department.

For example, the company has enhanced its due diligence and sales agent approval procedures by establishing a validation committee, resulting in the termination of a number of agents. It also implemented a due diligence process for all other third parties providing services to the company, based on a risk assessment approach.

In addition, it implemented a new template sales agency agreement, along with a new payment system for sales agent payments that require “thorough bank account and invoicing checks,” as well as the written approval of four executives. It's also working with PwC forensics to enhance its internal financial controls and internal audit function. The company further implemented a hotline—the SBM Offshore Integrity Line—and increased the annual training courses for employees.

SBM Offshore said that updates on the progress of its discussions with the relevant authorities will be forthcoming, and that its supervisory and management boards “remain committed to the company conducting its business activities in an honest, ethical, respectful, and professional manner.”

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