NOVEMBER 29, 2017 — The U.S, Department of Justice says that SBM Offshore N.V. (SBM), a Netherlands-based company specializing in the manufacture and design of offshore oil drilling equipment, and its wholly owned U.S. subsidiary, SBM Offshore USA Inc., have agreed to resolve criminal charges and pay a criminal penalty of $238 million in connection with schemes involving the bribery of foreign officials in Brazil, Angola, Equatorial Guinea, Kazakhstan and Iraq in violation of the Foreign Corrupt Practices Act (FCPA).
SBM USA pleaded guilty today in connection with the resolution.
SBM entered into a deferred prosecution agreement in connection with a criminal information filed today in the Southern District of Texas charging the company with conspiracy to violate the anti-bribery provisions of the FCPA. The case is assigned to U.S. District Judge David Hittner.
In addition, SBM USA pleaded guilty and was sentenced by Judge Hittner on a one-count criminal information charging the company with conspiracy to violate the anti-bribery provisions of the FCPA. Pursuant to its agreement with the Department, SBM agreed to pay a total criminal penalty of $238 million to the United States, including a $500,000 criminal fine and $13.2 million in criminal forfeiture that SBM agreed to pay on behalf of SBM USA.
According to the companies’ admissions and court documents, beginning by at least 1996 and continuing until at least 2012, SBM conspired to violate the FCPA by paying more than $180 million in commissions to intermediaries, knowing that a portion of those commissions would be used to bribe foreign officials in Brazil, Angola, Equatorial Guinea, Kazakhstan and Iraq.
SBM made these payments in order to influence those officials, for the purpose of securing improper advantages and obtaining or retaining business with state-owned oil companies in the five named countries. SBM acknowledged that it gained at least $2.8 billion from projects it obtained from these state-owned oil companies.
The Justice Department resolution follows guilty pleas by two former SBM executives. On Nov. 9, Anthony Mace, the former CEO of SBM and a former member of the board of directors of SBM USA, pleaded guilty to one count of conspiracy to violate the FCPA. On Nov. 6, Robert Zubiate, a former SBM USA executive, pleaded guilty to one count of conspiracy to violate the FCPA. Mace and Zubiate are awaiting sentencing.
In 2014, SBM settled with the Dutch Public Prosecutor’s Office (Openbaar Ministerie) over related conduct and paid the Netherlands a total $200 million in disgorged profits and a $40 million fine. SBM has paid a combined worldwide total in criminal penalties in excess of $475 million.
The Department reached this resolution based on a number of factors, including the fact that while SBM brought the conduct to the attention of the Criminal Division’s Fraud Section and Dutch authorities, it did not provide a complete disclosure for approximately one year; that SBM did cooperate with the Department’s investigation, including an accelerated investigation into bribery conduct related to Kazakhstan and Iraq; and that SBM has undertaken significant remedial measures, including terminating and demoting employees who were involved in the criminal conduct, terminating longstanding agency agreements and implementing a new and enhanced system of internal controls to address and mitigate corruption and compliance risks. Therefore, says the Department, SBM was entitled to a 25 percent reduction off of the bottom of the U.S. Sentencing Guidelines range. In addition, the Department considered SBM’s inability to pay a fine.
In calculating its fine, the Department credited SBM’s payment of penalties to the Dutch Public Prosecutor’s Office (Openbaar Ministerie) and the payment of penalties likely to be paid to the Brazilian Ministério Público Federal (MPF).
Download the Deferred Prosecution agreement HERE