Last week, Amec Foster Wheeler Limited (Foster Wheeler) which is currently owned by John Wood Group PLC (Wood), the successor-in-interest to Amec Foster Wheeler Plc., announced that it had settled a long-standing corruption investigation which involved multiple investigative and enforcement agencies in multiple jurisdictions regarding the use of the disgraced agent Unaoil to pay bribes to secure business. In a Press Release, the Company said that it had reached agreements with the UK Serious Fraud Office (SFO), the Department of Justice (DOJ) and Securities and Exchange Commission (SEC) in the US, and the Ministério Público Federal (MPF), the Comptroller General’s Office (CGU) and the Solicitor General (AGU) in Brazil, to resolve their respective bribery and corruption investigations into the past use of third parties in the legacy Foster Wheeler business. Under the terms of these various agreements, the Company will pay compensation, disgorgement and prejudgment interest, fines and penalties totaling $177m. The payment will “be phased over the next three years with approximately $62m payable in H2 2021, and the balance to be paid in instalments in 2022, 2023 and 2024.”
According to the DOJ Press Release, Foster Wheeler entered into a three-year deferred prosecution agreement (DPA) with the US Justice Department, Criminal Division, Fraud Section and the US Attorney’s Office for the Eastern District of New York in connection with the filing of an information charging the Company with conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA). Acting Assistant Attorney General Nicholas L. McQuaid of the Justice Department’s Criminal Division said in the Press Release, “Amec Foster Wheeler has now admitted to paying bribes in Brazil to win a lucrative contract.” The Release further noted, “In the pursuit of profits, the company resorted to corruption, which distorts markets and undermines the rule of law. Today’s resolution, including the financial penalty and agreement to enhance compliance, underscores the Department of Justice’s commitment to holding companies accountable when they break the law and to rooting out criminal misconduct.”
According to the SEC Press Release, Charles Cain, Chief of the SEC Enforcement Division’s FCPA Unit, said, “The potential for a new market cannot be a siren’s song that overwhelms good corporate governance.” Tracy Price, Deputy Chief of the SEC Enforcement Division’s FCPA Unit, said, “Continuing to use an agent who presented a significant corruption risk so that Foster Wheeler could expand its business and win a contract in Brazil demonstrates a fundamental flaw in the corporate compliance program.”
According to Foster Wheeler’s admissions in the DPA, between 2011 and 2014, the Company conspired with others, including an Italian sales agent affiliated with Unaoil, to pay bribes to decision-makers at Petrobras in order to win an approximately $190 million contract design a gas-to-chemicals complex in Brazil called Complexo Gás-Químico UFN-IV. The Company, through certain of its employees and agents, took acts in furtherance of the scheme while located in New York and Texas, and earned at least $12.9 million in profits from the corruptly obtained business. Further, as part of the DPA, for a three-year period, Foster Wheeler agreed to continue to cooperate with the US government in any ongoing or future criminal investigations concerning Foster Wheeler or its executives, employees or agents. In addition, under the agreement, Foster Wheeler and its parent company, Wood, agreed to enhance their compliance programs and to report to the government on the implementation of their enhanced compliance programs.
Under the DPA, the Fraud Section and the Eastern District of New York will credit up to 25% ($4,593,750) of the criminal penalty owed to the US to payments the Company makes pursuant to the resolution with the SFO, and up to 33% ($6,125,000) of the criminal penalty owed to the US to payments the Company makes pursuant to the resolution with Brazilian authorities. The SFO released a statement noting, following the “announcement by John Wood Group PLC (Wood) today, the SFO confirms that it has agreed a Deferred Prosecution Agreement in principle with Amec Foster Wheeler Energy Limited, a subsidiary of Wood, subject to the final approval of the Court. A public hearing will be held on 1 July 2021 before Lord Justice Edis, sitting at the Royal Courts of Justice. The SFO will provide further information once this hearing has concluded.”
Foster Wheeler, in its Press Release, took great pains to distance itself from the actions of companies it purchased and were responsible for the conduct stating, “The resolutions relate to historical conduct which occurred before Amec plc acquired Foster Wheeler AG in November 2014 and prior to the combined firm’s acquisition by Wood in October 2017. Wood cooperated fully with all authorities in their investigations, which is reflected in the cooperation credit that Wood received from the authorities in their respective resolutions.” Robin Watson, Wood Chief Executive, said in the Press Release: “The investigations brought to light unacceptable, albeit historical, behaviour that I condemn in the strongest terms. Although we inherited these issues through acquisition, we took full responsibility in addressing them, as any responsible business would.” In addition to the US DPA, the Company garnered leniency agreements with a term of 18 months with the CGU, AGU and MPF.
The DOJ also stated that it had “reached this resolution with Amec Foster Wheeler based on a number of factors, including the Company’s failure to voluntarily and timely disclose the conduct that triggered the investigation; the nature and seriousness of the offense, which spanned multiple years and involved a high-level executive; and credit for the Company’s cooperation. The Company also engaged in remedial measures, including terminating an individual involved in the misconduct, and adopting heightened controls and anti-corruption procedures. Accordingly, the criminal penalty reflects a 25% reduction off the applicable U.S. Sentencing Guidelines fine for the Company’s full cooperation and remediation.”
Over the next few blog posts, I will be exploring the Foster Wheeler corruption resolution for lessons learned for the compliance professional. Stay tuned.
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