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Extractive Industries/Mining/Oil & Gas
Portlethen, Aberdeenshire, United Kingdom
Nationality of Foreign Officials: Brazil
Summary of Allegations:
Ensco commenced an internal compliance review of Pride, acquired by Ensco in 2011, in early 2015 after media reports were released regarding ongoing investigations of various kickbacks and bribery schemes in Brazil involving Petrobras. During the internal review, Ensco became aware of internal audit report by Petrobras alleging that Petrobras overpaid under the 2008 drilling contract entered into with Pride for DS-5, a rig Pride had ordered from a shipyard in South Korea. Former director of Petrobras allegedly received kickbacks to restrict competition and inflate contracts.
Approximate Alleged Payments to Foreign Officials: Unspecified
Business Advantage Allegedly Obtained: Drilling contract for a rig
Nationality of Foreign Officials: Nigeria
Summary of Allegations:
Ensco described the ongoing investigation as follows in its Form 10-K filed with the U.S. Securities & Exchange Commission ("SEC") on 24 February 2011:
"As is customary for companies operating offshore Nigeria, we had engaged independent customs brokers to process customs clearance of routine shipments of equipment, materials and supplies and to process the ENSCO 100 temporary importation permits, extensions and renewals. One or more of the customs brokers that our subsidiary in Nigeria used to obtain the ENSCO 100 temporary import permits, extensions and renewals also provided this service to other offshore service companies that have undertaken Foreign Corrupt Practices Act ('FCPA') compliance internal investigations.
"The principal purpose of our investigation was to determine whether any of the payments made to or by our customs brokers were inappropriate under the anti-bribery provisions of the FCPA or whether any violations of the recordkeeping or internal accounting control provisions of the FCPA occurred. . . .
"Following notification to the Audit Committee and to KPMG LLP, our independent registered public accounting firm, in consultation with the Audit Committee's external legal counsel, we voluntarily notified the United States Department of Justice and the SEC that we had commenced an internal investigation. We expressed our intention to cooperate with both agencies, comply with their directives and fully disclose the results of the investigation."
Approximate Alleged Payments to Foreign Officials: Unspecified
Business Advantage Allegedly Obtained: Unspecified
Agencies: Brazil: Ministry of Justice
Results:
Year Resolved:
Compliance Monitor:
Ongoing: Yes
Details:
Allegations in Brazil
In Ensco's SEC Form 10-Q filed on 29 October 2015, the company disclosed that Petrobras' internal audit report and the alleged irregularities were referenced in Brazilian court documents connected to the prosecution of former Petrobras directors and employees as well as certain other third parties, including a former marketing consultant who provided services to Pride in connection with DS-5. The former marketing consultant entered into a plea agreement with the Brazil authorities.
In Ensco's SEC Form 8-K filed on 06 January 2016, the company disclosed that it received a notice from Petrobras on 04 January 2016 asserting that Petrobras believes the DS-5 drilling services contract is void effective immediately. Without specifying any supporting facts or conduct, Petrobras' notice alleges that Pride had knowledge that the shipbuilder of DS-5 made improper payments to the former third-party marketing consultant who then shared the improper payments with former employees of Petrobras and that Pride may have assisted in or facilitated these improper payments. Ensco further stated that the company disagrees with Petrobras' assertion that the DS-5 drilling services contract is void and it intends to assert its legal rights under the drilling services contract. Accordingly, Ensco has responded to Petrobras notifying them of their position.
The investigation is ongoing.
Agencies: United States: Department of Justice
Results: No Action
Year Resolved: 2011
Compliance Monitor:
Ongoing: No
Details:
Allegations in Nigeria
As reported in ENSCO's SEC Form 10-K filed on 24 February 2012, the U.S. Department of Justice ("DOJ") have notified the Company that they do not intend to take any enforcement action against it with regards to the subject of the Company's internal investigation regarding allegations in Nigeria. The DOJ's notice came in May 2011.
Agencies: United States: Department of Justice, United States: Securities and Exchange Commission
Results:
Year Resolved: 2018
Compliance Monitor:
Ongoing: No
Details:
Allegations in Brazil
In June and July 2015, Ensco voluntarily contracted the SEC and DOJ, respectively, to advise them of allegation in Brazil and independent investigation by Ensco's Audit Committee. In September 2015, update on the investigations were provided.
On 4 September 2018, Ensco announced on the latest SEC filing that the company’s internal investigation did not find evidence or knowledge of wrongdoing regarding its corruptive acts in Brazil when it acquired Pride International Inc., and the DOJ and SEC had ended the relevant investigation.
Discovery Method: Voluntary Disclosure
Details:
Ensco described the source of the investigation as follows in its SEC Form 10-K filed on 24 February 2011:
"Following disclosures by other offshore service companies announcing internal investigations involving the legality of amounts paid to and by customs brokers in connection with temporary importation of rigs and vessels into Nigeria, the Audit Committee of our Board of Directors and management commenced an internal investigation in July 2007. The investigation initially focused on our payments to customs brokers relating to the temporary importation of ENSCO 100, our only rig that operated offshore Nigeria during the pertinent period."
Country: Nigeria
Discovery Method: Voluntary Disclosure
Details:
In June and July 2015, Ensco voluntarily contracted the SEC and DOJ, respectively, to advise them of allegation in Brazil and independent investigation by Ensco's Audit Committee.
Country: Brazil