SBM Offshore Corruption Case Remains Unresolved

FPSO

By MarEx 2017-11-06 19:01:06

SBM Offshore has said that a Brazilian investigation into its role in corruption cases has not yet been resolved, saying it is a complex process requiring coordination and agreement among the multiple parties involved. The company also announced that it has set aside an additional $238 million to cover costs from an unexpected U.S. inquiry.

SBM paid $240 million to Dutch authorities in 2014 to settle a Latin American bribery case and set aside another $280 million last year to settle related issues in Brazil. The additional $238 million provision announced this week has been made ahead of a settlement with U.S. authorities, both for the Brazil investigation and an separate investigation into its dealings with Unaoil.

SBM Offshore primarily provides FPSOs to the offshore energy industry. In 2012, the company became aware of potential improper sales practices. An internal investigation was conducted, and the company self-reported the matter to the Dutch public prosecutor and the U.S. Department of Justice. In 2014, the company entered into a settlement agreement with the Dutch public prosecutor regarding its legacy issues in Equatorial Guinea, Angola and Brazil. 

At that time, the Department of Justice informed the company that it had closed its inquiry into the matter based upon a lack of U.S. jurisdiction, but reserved the right to reopen the investigation if new facts came to light. Subsequently, SBM Offshore has been in discussions with the Brazilian authorities. At the end of 2015, various individuals were charged by the Brazilian public prosecutor. This included one of the company’s former employees who worked on projects in relation to Brazil from the United States and is a U.S. citizen. Following the release of these charges, the Department of Justice reopened its investigation. The Department of JusticeJ also initiated an investigation into the company’s relationship with Unaoil.

Chief Compliance Officer Erik Lagendijk said in a statement that, since 2012, SBM Offshore had completely changed its business model and ways of working. “Although it appears that the company can likely reach a resolution with the U.S. Department of Justice and thus make an important step towards closure of the past ... no global solution to bring finality is currently available,” he said.

Chief Financial Officer Douglas Wood said the company has enough cash on hand to pay U.S. authorities once a settlement deal is finalized.

The company has suspended any tendering with Petrobras. Brazil previously represented 60 percent of SBM Offshore's business.