Last week closed out one of the most interesting half-years in the Foreign Corrupt Practices Act (FCPA) realm. We have had the Cognizant Technology Solutions Corporation declination, Fresenius Medical Care AG & Co. KGaA Non-Prosecution Agreement (NPA) and Mobile TeleSystems PJSC (MTS) Deferred Prosecution Agreement (DPA) to get us through Q1. In April there was the Department of Justice’s (DOJ) Evaluation of Corporate Compliance Programs, 2019 Guidance. In June we had the big one finally resolved, that of course being Walmart Inc.
Last week there was the TechnipFMC plc (TechnipFMC) enforcement action, which was settled via a DPA and a guilty plea from the company’s US subsidiary, Technip USA Inc. (Technip USA). There were other settlement documents include an Information for Technip USA and an Information for TechnipFMC as well. While the total fine and penalty is $296 million, TechnipFMC will pay about $82 million in the US, with the remainder of its penalties going to authorities in Brazil. $500,000 of this amount will be paid by Technip USA as a criminal penalty under its guilty plea.
The enforcement action had some unusual facts and characteristics which are worth noting. The first item is that Technip is now a FCPA recidivist, having previously been a part of the first Halliburton FCPA enforcement action involving its then subsidiary KBR and its bribery to gain contracts in Nigeria. Technip was one of four joint venture (JV) partners who, along with KBR ran afoul of the FCPA. The second interesting item is that TechnipFMC is a merger of Technip plc and FMC Corp which took place in January 2017. It is one of the first times two companies under FCPA investigation, for unrelated FCPA allegations, agreed to merge prior to resolving the outstanding FCPA issues.
Like so many other companies, Technip ran afoul of the FCPA in conjunction with the obtaining of contracts from the Brazilian national oil company Petróleo Brasileiro S.A. (Petrobras). In the DOJ Press Releaseit stated, “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 Ltd. (KOM) and their 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, who passed along portions of these payments as bribes to Brazilian government officials who were employees at the Brazilian state-owned oil company, Petrobras, in order to secure improper business advantages and obtaining and retaining business with Petrobras for Technip, Technip USA and Joint Venture. In addition, Technip made more than $6 million in corrupt payments to the Workers’ Party in Brazil and Workers’ party officials in furtherance of the bribery scheme.”
As a part of the Technip portion of the resolution, Technip’s former consultant Zwi Skornicki also pleaded guilty in the Eastern District of New York to a one-count criminal information charging him with conspiracy to violate the FCPA for his role in the bribery scheme. Skornicki also served as a consultant to KOM and is awaiting sentencing by the judge overseeing the entire matter, US District Judge Kiyo A. Matsumoto of the Eastern District of New York.
The Press Release also noted, “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.”
FMC got into FCPA hot water for its work in Iraq after the US invasion. FMC managed to get caught in a never-ending request for illegal gratuities from certain Iraqi oil ministry officials and state-owned oil company employees. FMC paid monies to get on bid lists, get bids submitted, get bids reviewed with favorable ratings and, finally, to get bids actually approved at the highest levels in Iraq so a contract could be awarded to the company. It demonstrates a prime example of once you go down the road of paying bribes to secure contracts, you are just as likely to be sucked dry. The Press Release further noted, “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.”
The mention of a “Monaco-based intermediary company” is certainly intriguing. It is believed that the company so mentioned is Unaoil. Rumors have long swirled around Unaoil and the FCPA. Unaoil has consistently denied that it did anything wrong and has fought the UK Serious Fraud Office (SFO) tooth and nail over its attempts to investigate the company. The Press Release did note the cooperation of the Principality of Monaco.
TechnipFMC received a 25% off the US Sentencing Guidelines for its cooperation. It did not receive credit for self-disclosure. However, it did not sustain the requirement for a monitorship as did Walmart. Over the next few blog posts, I will be exploring the TechnipFMC FCPA settlement action for lessons learned for the compliance professional.
This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at firstname.lastname@example.org.
© Thomas R. Fox, 2019