DOJ and SEC Announce First Corporate FCPA Settlement for 2021: Amec Foster Wheeler, a Wood Group Subsidiary, Agrees to Pay over $18 Million to Settle Bribery Charges in Brazil (Part I of III)
Fasten Your Seat Belts, Its Going to Be a Bumpy Ride” – Bette Davis (as Margo Channing), in All About Eve (1950)
The Justice Department and the Securities Exchange Commission are back in business.
The first corporate FCPA enforcement action in 2021 came after a six-month hiatus in 2021. While many commentators sought to read the tea leaves of some tactical change in FCPA enforcement, the reality is that the “delay” in 2021 FCPA enforcement reflects the natural turnover in Justice Department and SEC leadership. In fact, there was a delay when the prior Administration took over in 2016. In the recent case, the delay in the transition and the confirmation of various DOJ and the SEC Chairman typically slows down the processing of DOJ and SEC enforcement actions.
Apart from the impact of a transition, the ebbs and flows of FCPA enforcement are influenced more by the time needed to process an enforcement action through the review and approval process. The pipeline of cases is fairly steady while there are minor ups and downs occurring more in the order of cases.
From this point forward, we will start to see a steady flow of cases, eventually reflecting the new Administration’s stamp of policy. In this respect, the interesting question will be what changes, if any, will occur in FCPA enforcement in response to the Administration’s announcement of its Anti-Corruption initiative.
My prediction – thank you Bette Davis, FCPA enforcement is about to become even more aggressive and costly for companies and individuals tagged with FCPA violations.
The first case against a corporate entity in 2021 is an interesting one because it reflects a coordinated settlement not only between DOJ and the SEC but the U.K.’s Serious Fraud Office and Brazil’s Ministério Público Federal (MPF), the Controladoría-Geral da União (CGU) and the Advogado-Geral da União (AGU) in Brazil.
Amec Foster Wheeler Energy, a subsidiary of the U.K. global engineering company, Wood Group, agreed to pay the United States $18.375 million to resolve criminal charges for bribery payments made in Brazil to win a $190 million contract to design a gas-to-chemicals facility. Amec Foster entered into a three-year deferred prosecution agreement (DPA) in exchange for its payment of $18.375 million.
The Wood Group acquired Amec Foster in 2017, after the bribery conduct occurred in Brazil.
In related settlements, Amec Foster agreed to pay the SEC approximately $22.7 million in disgorgement and prejudgment interest to the SEC to resolve FCPA charges. The SEC agreed to offset up to $9.1 million paid to Brazil and $3.5 million to the SFO in the United Kingdom, leaving a minimum payment of approximately $10 million to the SEC.
From 2012 to 2014, Amec Foster engaged in a scheme to obtain an oil and gas engineering and design contract from Petroleo Brasileiro S.A. (Petrobras), referred to as the UFH-IV project. Amec Foster made illegal payments to Brazilian officials to secure the contract, which was worth approximately $190 million. AMec Foster used an Italian sales agent associated with Unaoil to pay bribes to Petrobras officials to win the contract.
Under DOJ’s Corporate Enforcement Policy, Amec Foster did not receive credit for voluntary disclosure because it failed to notify DOJ of the conduct that triggered the enforcement action; Amec Foster received cooperation credit and engaged in remedial measures, including termination of an individual involved in the misconduct. Amec Foster implemented enhance compliance procedures and controls. Amec Foster agreed to submit annual reports to the Justice Department on its implementation of enhanced compliance program controls.
Given the seriousness of the offense and weighing of the above-referenced factors, the Justice Department awarded Ameec Foster a 25 percent reduction from the bottom of the sentencing guidelines range.
Under the three-year DPA, DOJ agreed to offset/credit up to 25 percent (approximately $4.5 million) of the criminal penalty for payments Amec makes to the UK’s SFO, and up to 33 percent (approximately $6.125 million) of the criminal penalty for payments made to the Brazil authorities as part of its settlement for the same conduct.