SBM Offshore, world’s largest provider of floating production storage and offloading units, has reached an out-of-court settlement with the Dutch Public Prosecutor’s Office (Openbaar Ministerie) over the inquiry into alleged improper payments.
This settlement relates to improper payments to sales agents and foreign government officials in Equatorial Guinea, Angola and Brazil in the period from 2007 through 2011 as identified by the Openbaar Ministerie and the Dutch Fiscal Intelligence and Investigation Service According to the Openbaar Ministerie’s those payments constitute the indictable offences of bribery in the public and the private sector as well as forgery.
Furthermore, the United States Department of Justice has informed SBM Offshore that it is not prosecuting the Company and has closed its inquiry into the matter.
According to Openbaar Ministerie, from 2007 through 2011, SBM Offshore paid approximately $200 million in commissions to foreign sales agents for services. The largest part of these commissions, totaling US$ 180.6 million, relate to Equatorial Guinea, Angola, and Brazil.
Bruno Chabas, CEO of SBM Offshore commented: “SBM welcomes the conclusion of all discussions with the Dutch and U.S. authorities. We have been open, transparent and accountable throughout this difficult process which has addressed issues from a past era. We can now focus on the future, secure in the knowledge that we have put in place an enhanced compliance culture which embeds our core values.”
The out-of-court settlement consists of payment by SBM Offshore to the Openbaar Ministerie of $240 million. SBM Offshore will pay this amount out of its own funds and has already provided for it in the first half 2014 results. Payment will be made in three installments, the first of which ($100 million) has been paid. The two further installments of US$70 million each will be due respectively on 1 December 2015 and 1 December of 2016.
“The settlement allows SBM Offshore to shift its focus to the future, a future in which SBM Offshore will demonstrate its commitment to the highest standards of professionalism, integrity, quality and ethics…”
Brazil still uncertain
SBM Offshore has also said that while it is not yet certain how the various investigations in Brazil will affect SBM Offshore, the Company will soon reinstate its dialogue with Petrobras about the future of their relationship.
“Although the current Management Board and the Supervisory Board regret that in the past, SBM Offshore’s processes relating to the monitoring of its sales agents appeared to not have been of a standard that allowed SBM Offshore to ensure the integrity of the actions taken by its sales agents, SBM Offshore believes that with these measures it offers a transparent and open Company to its clients and other stakeholders,” SBM Offshore said in a statement.
“SBM Offshore is confident that it established an enhanced compliance culture which embeds the core values of the Company. The settlement allows SBM Offshore to shift its focus to the future, a future in which SBM Offshore will demonstrate its commitment to the highest standards of professionalism, integrity, quality and ethics put at work together with its leadership in technology at the service of its clients,” the company said in a press release.
“…the company itself brought the facts to the attention of the authorities…”
Openbaar Ministerie offer
In a statement on its website, Openbaar Ministerie said that the reason why it offered an out-of-court settlement to SBM Offshore is that the company itself brought the facts to the attention of the authorities, and “including the Openbaar Ministerie, SBM Offshore itself investigated the matter and agreed to fully cooperate with subsequent criminal investigations by the Openbaar Ministerie and the FIOD.”
The Openbaar Ministerie further said it also appreciated the fact that there has been a new Management Board in SBM Offshore since 2012, which, after it became aware of the facts, “at its own initiative, has taken significant measures to improve the company’s compliance.”
“The Management Board of SBM Offshore, newly put together in the first half of 2012, at its own initiative took an extensive set of measures in order to enhance the company’s compliance. The Openbaar Ministerie values this, in the expectation that criminal offences as mentioned above do not occur again in the future. In addition, if it so wishes the Openbaar Ministerie will receive access to the continued implementation of SBM Offshore’s compliance policies,” the Openbaar Ministerie said.
Agents buy building, cars
As previously stated, the Dutch Public Prosecutor’s office investigated SBM Offshore’s payments in commissions to foreign sales agents for services. The largest part of these commissions, totalling US$ 180.6 million, related to Equatorial Guinea, Angola and Brazil. Below are the findings, as presented by the Dutch Public Prosecutor’s office:
In early 2012, it came to SBM Offshore’s attention that one of its former sales agents might have given certain items of value to government officials in Equatorial Guinea. This reportedly involved one or more cars and a building. In the opinion of the Openbaar Ministerie and the FIOD, SBM Offshore’s former sales agent paid a significant portion of the commissions paid to him by SBM Offshore on to third parties, who in turn would have forwarded parts of these payments to one or more government officials in Equatorial Guinea. There also are other payments, such as education and health insurance costs. In the opinion of the Openbaar Ministerie and the FIOD, such (forwarded) payments took place with the knowledge of people who at the time were SBM Offshore employees, including someone who at the time was a member of the Management Board. From 2007 through 2011, SBM Offshore paid that particular sales agent USD 18.8 million in total in relation to Equatorial Guinea.
In the period from 2007 through 2011, SBM Offshore also used several sales agents in Angola. These sales agents received commissions for services regarding certain projects in Angola. In the opinion of the Openbaar Ministerie and the FIOD, Angolan government officials, or persons associated with Angolan government officials, who are associated with at least one of these sales agents, received funds. In addition, there are payments for travel and study costs to one or more Angolan government officials or their relatives. Also with respect to Angola, the Openbaar Ministerie and the FIOD are of the opinion that such payments took place with the knowledge of people who at the time were SBM Offshore employees. In the period from 2007 through 2011, SBM Offshore paid USD 22.7 million in commissions to its sales agents in connection with Angola.
With regard to Brazil, certain “red flags” relating to the main sales agent used in Brazil were found during the internal investigation commissioned by SBM Offshore. These red flags included:
- the high amounts (in absolute terms) of commission that were paid to the sales agent and its companies;
- a split between commissions paid to the sales agent between its Brazilian and its offshore entities; and
- documents indicating the sales agent had knowledge of confidential information about a Brazilian client.
The internal investigation conducted by SBM Offshore did not yield any concrete evidence that payments may have been made to one or more government officials in Brazil. In the period from 2007 through 2011, SBM Offshore paid USD 139.1 million in commissions to its sales agents in connection with Brazil.
A mutual legal assistance request in the context of the investigation conducted by the FIOD, under instruction of the Openbaar Ministerie, established that payments were made from the Brazilian sales agent’s offshore entities to Brazilian government officials. These findings resulted from means of investigation inaccessible to SBM Offshore.
“With this matter, the Netherlands shows that it takes action against foreign corruption. The Openbaar Ministerie considers corruption and related criminal offences severe because of the undermining and corrupting character they impose on society. In the eyes of the Openbaar Ministerie, out-of-court settlements involve punishment, restoration, and prevention. In that context, the Openbaar Ministerie also takes into account the positioning of the suspected company and the measures the company has taken at its own initiative,” the Openbaar Ministerie said in the conclusion.
Offshore Energy Today Staff