Houston-Based Company Disgorges $5 Million to Settle SEC Enforcement Action

In an SEC cease and desist order filed on August 11, Key Energy Services, Inc., a Houston-based provider of rig-based oil well services, agreed to disgorge $5 million to settle charges that the company violated the books and records and internal control provisions of the FCPA. According to the order, from August 2010 through at least April 2013, Key Energy’s Mexican subsidiary paid bribes of at least $229,000 to a contract employee at Petroleos Mexicanos (Pemex), the Mexican state-owned oil and gas company. In exchange, the subsidiary received Pemex non-public information, advice and assistance on contracts with Pemex, and lucrative amplifications or amendments to those contracts. The funds were allegedly funneled through an entity purporting to provide consulting services, but for which there was no evidence of appropriate authorization of the relationship, and no supporting documentation regarding the purported consulting work performed. According to the SEC, the subsidiary improperly recorded the transfers to the consulting firm as legitimate business expenses, which were consolidated into Key Energy’s books and records. Key Energy allegedly failed to implement and maintain sufficient internal controls, including within the subsidiary relating to interactions with Pemex officials, and failed to respond to indications that the subsidiary was improperly using consultants. Read more…

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Medical Device Manufacturer Sets Aside Reserves for DPA Breaches

On August 8, a medical device manufacturer announced in an SEC filing that it is “probable” that the company will incur additional liabilities in connection with the company’s 2012 deferred prosecution agreement (DPA) related to FCPA violations in Mexico and Brazil. The company stated that it had set aside funds for this purpose, but did not specify the amount. The company’s SEC filing stated that the company “expects to continue discussions with the SEC and DOJ but the terms of a potential resolution were not certain.” Two months ago, DOJ stated in a court filing that the company had breached the DPA by failing to implement and maintain a compliance program.

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Chile-Based Airline Company Settles FCPA Charges

On July 25, a Chile-based airline company agreed to settle parallel criminal and civil FCPA matters relating to alleged bribery of Argentine labor union officials through a sham consulting contract with a third party in exchange for the union accepting lower wages and other concessions. The airline company agreed to pay a total of more than $22 million, including a $12.75 million penalty as part of a three-year Deferred Prosecution Agreement (DPA) with DOJ.

As part of the DPA, the company agreed to continue cooperating with DOJ’s investigation, to make improvements to its compliance program, and to retain a compliance monitor for a period of more than two years. In the DPA and in its press release regarding the settlement, DOJ noted that it took into account certain factors that weighed against the company, including that it did not voluntarily disclose the alleged misconduct (which came to light through Argentinian press reports) or discipline the responsible employees. However, DOJ did note that the company cooperated with DOJ’s investigation once the press reports became public, and “provided all relevant facts known to it, including about individuals involved in the misconduct.” Read more…

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SBM Offshore Enters Into Settlement Agreement With Brazilian Authorities

On July 15, Petrobras announced that SBM Offshore NV had entered into a settlement agreement with Brazilian authorities to resolve allegations stemming from the Petrobras bribery probe. Under the terms of the agreement, the Dutch drilling company, which had been accused of paying bribes to Brazilian state-owned oil company Petrobras, will be immune to new legal actions stemming from the probe. In exchange, SBM Offshore agreed to pay approximately $342 million in fines, comprising  $13.2 million to the Brazilian government and $328.2 million to Petrobras, of which $179 million “represents the nominal value to be deducted from future payments owed by Petrobras to SBM based on prevailing contracts.”

According to Petrobras, the leniency agreement is the outcome of negotiations that began in March 2015. Petrobras further stated that it will resume its normal business relationship with SBM Offshore.

The agreement is the latest settlement for SBM Offshore in connection with the Petrobras bribery probe. In 2014, SBM Offshore settled with Dutch authorities. In February 2016, SBM Offshore announced that the U.S. DOJ had re-opened its investigation into the company.

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Global Technology Company Settles FCPA Charges with SEC; DOJ Issues Third Declination Letter

On July 11, a Wisconsin-based global technology company agreed, pursuant to an administrative cease and desist order and without admitting or denying the SEC’s findings, to pay $14.3 million to settle the SEC’s allegations that it violated the books and records and internal controls provisions of the FCPA. The charges related to actions taken by managers and employees of the company’s wholly-owned Chinese subsidiary, between 2007 and 2013, to make payments to sham vendors to effect bribes and improper payments to employees of Chinese government owned shipyards, ship-owners, and others, as well as to obtain and retain business and personally enrich the subsidiary’s employees. The company’s settlement includes a disgorgement of $11,800,000, prejudgment interest of $1,382,561, as well as a civil penalty of $1,180,000. The company also agreed to a one-year period of self-reporting to the SEC on the status of its FCPA and anti-corruption related remediation and compliance enhancements. Read more…

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