Shipyard to Pay $422 Million in Penalties in Bribery Case - Global Trade Magazine
  December 28th, 2017 | Written by

Shipyard to Pay $422 Million in Penalties in Bribery Case

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  • Corruption scheme included $50 million in bribes to Brazilian officials.
  • Defendants in bribery case disguised payments by passing funds through shell companies.
  • KOM paid bribes to win 13 contracts with Petrobras and another Brazilian entity.

A Singapore-based company that operates shipyards and its wholly-owned US subsidiary have agreed to pay a combined total penalty of over $422 million to resolve charges with United States, Brazil and Singapore authorities arising out of a decade-long scheme to pay millions of dollars in bribes to officials in Brazil.

Keppel Offshore & Marine USA Inc. (KOM USA), the subsidiary, pleaded guilty recently in connection with the agreement. A guilty plea by a former senior member of the Keppel Offshore & Marine Ltd. (KOM) legal department was also unsealed.

According to admissions and court documents, beginning by at least 2001 and continuing until at least 2014, KOM conspired to violate the FCPA by paying approximately $55 million in bribes to officials at the Brazilian state-owned oil company Petrobras and to the then-governing political party in Brazil, in order to win 13 contracts with Petrobras and another Brazilian entity. KOM effectuated and concealed the bribe payments by paying outsized commissions to an intermediary, under the guise of legitimate consulting agreements, who then made payments for the benefit of the Brazilian officials and the Brazilian political party.

“Today’s resolution once again underscores the importance of the Department of Justice’s collaboration with foreign authorities to hold corrupt companies and individuals accountable for their crimes, while ensuring the fair and appropriate allocation of fines and penalties,” said Acting Assistant Attorney General John Cronan. “This case also represents the first coordinated FCPA [Foreign Corrupt Practices Act] resolution with Singapore and the most recent of several coordinated resolutions with Brazil.”

“The resolutions with KOM and its US subsidiary are the result of a multinational effort to investigate and prosecute a corruption scheme that resulted in the payment by the defendant companies of over $50 million in bribes to Brazilian officials and in profits for the defendant companies of over $350 million from business corruptly obtained in Brazil,” said Acting US Attorney Bridget Rohde of the Eastern District of New York.  “In an attempt to conceal their crimes, the defendants used the global financial system – including the United States banking system – to disguise the source and disbursement of the bribe payments by passing funds through a series of shell companies.”

“The FBI and our law enforcement partners are dedicated to work together to bring justice to companies who play outside the rule of law,” said FBI Assistant Director Stephen Richardson.

KOM entered into a deferred prosecution agreement with the Department of Justics in connection with a criminal information filed in the Eastern District of New York charging the company with conspiracy to violate the anti-bribery provisions of the FCPA. Pursuant to the agreement, KOM will pay a total criminal fine of $422,216,980, with a criminal penalty due to the United States of $105,554,245, including a $4,725,000 criminal fine paid by KOM USA.  As part of the deferred prosecution agreement, KOM also committed to implement rigorous internal controls and to cooperate fully with the department’s ongoing investigation.

In related proceedings, the company settled with the Ministério Público Federal (MPF) in Brazil and the Attorney General’s Chambers (AGC) in Singapore.  The United States will credit the amount the company pays to Brazil and Singapore under their respective agreements, with Brazil receiving $211,108,490 and Singapore receiving up to $105,554,245.

The department also unsealed charges against a former senior member of KOM’s legal department, who pleaded guilty to one count of conspiracy to violate the FCPA on August 29, 2017 in the Eastern District of New York.  He is awaiting sentencing.

In reaching the resolutions, KOM and KOM USA received credit for their substantial cooperation with the investigation and for taking extensive remedial measures. KOM has terminated and otherwise disciplined employees involved in the criminal conduct, and it has implemented an enhanced system of compliance and internal controls to address and mitigate corruption risks.

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