The Department of Justice finished 2017 with two significant FCPA enforcement actions, and fittingly, one was a corporate settlement and another was an individual criminal guilty plea. The Justice Department’s final FCPA enforcement actions for 2017 included an interesting settlement with Keppel Offshore and Marine Ltd. (KOM), a Singapore based, global shipyard and repair company, and a criminal guilty plea from a sales executive involved in the Embraer case.
Keppel Offshore & Marine Ltd. (KOM) and its wholly-owned US subsidiary agreed to pay a combined penalty of $422 million to US, Brazil and Singapore authorities in connection with a bribery scheme involving Brazil foreign officials. US authorities will earn approximately $106 million of the $422 million since Brazil and Singapore authorities earned $211 million and $105 million, respectively. As part of this same enforcement action, a Keppel in-house attorney plead guilty to FCPA conspiracy.
KOM’s conduct involved a long-running bribery scheme to bribe Brazilian officials involved in the award of offshore drilling projects by Petrobas, Brazil’s state-owned oil and gas company. Interestingly, KOM’s bribery scheme involved payments made to an influential political party in Brazil, the Worker’s Party, and eventually extended to use of a private asset management company in Brazil. Nonetheless, at the heart of the scheme was reliance on third-party intermediaries, consultants, to funnel illegal money to Brazil officials. The US nexus to the enforcement action involved use of US-based bank accounts to finance bribe payments.
In one project, a KOM executive directed KOM’s financial controller in explicit emails to make five separate installment payments as bribes to a Brazilian official. KOM paid bribes in a total of 13 projects, most of which involved payments equal to a pre-negotiated percentage of the value of the contract.
KOM did not earn credit for voluntary disclosure of the conduct because when KOM notified the Justice Department, the staff already was aware of the publicly-reported bribery allegations. However, KOM earned credit for full cooperation and timely and appropriate remediation. In particular, KOM took disciplinary action against 17 existing and former employees; causing the separation of 7 employees involved in the misconduct; demoting or issuing warnings to 7 employees; and imposing $8.9 million in financial penalties against 12 former or current employees.
Under the new FCPA Corporate Enforcement Policy, KOM earned a 25 percent reduction from the bottom of the US Sentencing Guidelines range.
Embraer Sales Executive Criminal Guilty Plea – A former sales executive pleaded guilty in federal court in New York City for his involvement in a bribery scheme where Embraer sold jets to Saudi Aramco. Colin Steven, a UK citizen residing in the UAW pleaded guilty to one count of FCPA violation and one count of FCPA conspiracy.
In October 2016, Embraer settled an FCPA enforcement action with the US Department of Justice, and agreed to pay a fine of $205 million. Eleven individuals involved in the Embraer bribery scandal were charged in Brazil for bribery payments in the Dominican Republic. Two other individuals were charged for involvement in bribery involving Saudi Aramco.
Colin Steven arranged bribes of $1.5 million to Saudi Aramco officials. Steven disguised the bribe as a payment to a South African company owned by his friends, and then lied to FBI agents when asked about the payment. The South African company transferred the money to the Saudi officials and returned some of it to Steven as a kickback.