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Extractive Industries/Mining/Oil & Gas
Schiedam, South Holland, Netherlands
Nationality of Foreign Officials: Angola, Brazil, Equatorial Guinea, Iraq, Kazakhstan
Summary of Allegations:
SBM Offshore is alleged to have made improper payments in sales commissions with tens of millions of dollars allegedly used to pay for services for government officials, including school fees and transportation.
Iraq
In 2003, upon the overthrow of Saddam Hussein, the post-occupation government started reconstructing the economy and reviving the oil industry. A part of the master plan was to sharply increase the domestic oil-producing capacity, which was assigned by the Ministry of Oil to the South Oil Company. The South Oil Company was in charge of multiple projects including offshore buoys and oil pipeline installation.
Unaoil Territory Manager for Iraq Ziad Akle and Stephen Whiteley bribed officials at the South Oil Company with more than $500,000 to secure buoys installation contracts for SBM Offshore.
Unaoil Country Manager for Iraq Basil Al Jarah and other co-conspirators bribed officials of the South Oil Company and the Ministry of Oil with US$6 million and secured contracts worth US$800 million for SBM Offshore and Leighton Offshore. These contracts brought Unaoil commission and a subcontract granted by Leighton Offshore.
Approximate Alleged Payments to Foreign Officials: tens of million of dollars
Business Advantage Allegedly Obtained: Oil and pipeline contracts from the government in Iraq; unspecified in other countries.
Nationality of Foreign Officials: Brazil
Summary of Allegations:
The SBM Offshore probe in Brazil is referenced as "Operation Black Blood." Brazilian prosecutors allege that at least USD 46 million in "undue payments" were made in Switzerland between 1998 and 2012 tied to contracts for floating oil production, storage and offloading ships. Renato Duque, former Petrobras executive, allegedly asked SBM sales agents for USD 300 million for the ruling Workers' Party to fund its 2010 election campaign.
Approximate Alleged Payments to Foreign Officials: USD 46 million
Business Advantage Allegedly Obtained: Unspecified
Agencies: Brazil: Comptroller General (CGU)
Results:
Year Resolved: 2018
Compliance Monitor:
Ongoing: No
Details:
On 17 March 2015, SBM Offshore stated that the company signed a memorandum of understanding to cooperate with Brazilian authorities investigating companies for corrupt contracts with Petrobras. It was further stated that SBM is providing information relevant to the probe and the company has been questioned since April 2014 for bribing public officials and obtaining an improper advantage in Petrobras projects.
In July 2015, compliance head of Petrobras announced, through the media, that SBM Offshore is one of 32 companies now blocked from signing new contracts with Petrobras as part of corruption investigations. This follows media reports in May 2015 that the Comptroller General was in discussions with five companies, including SBM Offshore, about possible leniency agreements that would have made the companies not ineligible from participating in public contracts in exchange for cooperating with authorities, paying fines, adopting a compliance policy and admitting wrongdoing.
On 28 September 2015, SBM Offshore announced that its Brazilian subsidiary received a written notice from Petrobras of its ability to participate in Petrobras tenders and the company continues to be in active dialogue with the relevant Brazilian authorities. On 6 October 2015, SBM Offshore confirmed that these discussions are ongoing without having reached a conclusion. On 22 October 2015, media reported that Brazil has told SBM Offshore to agree soon to a leniency deal to lift a ban on the company from bidding for new business with Petrobras. The leniency deal reportedly includes financial reparation, involving payment by SBM Offshore to Petrobras of about 1 billion reais (USD 253 million), part of which would be paid in cash and the rest in services to be provided by SBM Offshore to Petrobras, and other clauses such as cooperation with a corruption investigation.
According to a report by Reuters, the Brazilian prosecutors arrested and charged 12 people with a bribery scheme involving SBM Offshore and Petrobras on 17 December 2015 as part of an investigation known as "Operation Black Blood." Of those charged were, former Petrobras executives Pedro Barusco, Jorge Zelada and Renato Duque and former SBM sales agents Julio Faerman and Luis Eduardo Campos Barbosa da Silva. In addition, former SBM chief executive officers, Anthony Mace and Didier Keller and former senior vice president, Robert Zubiate, were charged with racketeering and corruption. In a statement released on the same day, SBM Offshore announced that it is seeking clarification on the news with the relevant authorities as it believes the allegations lack merits.
On 15 July 2016, SBM Offshore entered into a leniency agreement, signed by Brazilian authorities, Petrobras and SBM Offshore, granting the company full discharge and exemption from legal actions for all matters and investigations related to alleged corrupt actions involving Petrobras between 1996 and 2012. As part of the settlement, SBM Offshore agreed to pay a cash penalty totaling USD 162.8 million, including USD 149.2 million to be paid to Petrobras, USD 6.8 million to the Brazilian Public Prosecutor's Office, and USD 6.8 million to the Council of Control of Financial Activities for implementation of anti-corruption measures.
Although the settlement provides for the company to resume its normal business relationships with Petrobras, SMB Offshore also agreed to provide a 95 percent price reduction on bonus payments related to lease and operating contracts of two of its offshore oil-processing-and-storage vessels, FPSOs Cidade de Anchieta and Capixaba, between 2016 to 2030, to Petrobras. According SMB Offshore's press release, the reduction represents a nominal value of approximately USD 179 million over the period or a present value for SBM Offshore of approximately USD 112 million.
Furthermore, SBM Offshore will continue to remain under obligation to cooperate with the authorities in any related investigation against third parties and report, implement improvements to its compliance program, and report regularly to the authorities for the next three years.
On 2 September 2016, SBM disclosed that the Fifth Chamber of the Brazilian Federal Prosecutor Service did not approve the leniency agreement signed by the parties on 15 July 2016. SBM Offshore sought further clarification on the decision. The company has set aside USD 280 million to settle the Brazilian issues, though there has as yet been no resolution. On 6 November 2017, SBM stated that it would not be participating in tenders for Petrobras.
On 27 July 2018, SBM Offshore settled with Brazilian authorities with a payment of $189 million of fines and damages in return for ending current anti-corruption probe in Brazil and regaining eligibility to bid for Petrobras tenders.
Agencies: Netherlands: Public Prosecution Service
Results: Criminal Fine
Year Resolved: 2014
Compliance Monitor:
Ongoing: No
Details:
On 6 August 2014, SBM Offshore included a USD 240 million provision in its financial statement for the first half of 2014 in anticipation of a settlement related to the bribery investigations, the resolutions of which the company described as likely to have a financial component.
On 12 November 2014, SBM Offshore agreed disgorge USD 200 million in profits and pay a USD 40 million fine to the Dutch Public Prosecutor's Office (Openbaar Ministerie) to resolve allegations relating to bribes allegedly paid in Angola, Brazil, and Equatorial Guinea. The company will not face criminal charges in the Netherlands.
Agencies: Switzerland: Office of the Attorney General
Results:
Year Resolved:
Compliance Monitor:
Ongoing: Yes
Details:
On 30 November 2020, the Office of the Attorney General of Switzerland confirmed that it was probing SBM for potential bribery misconducts that occurred between 2005 and 2012.
Agencies: United Kingdom: Serious Fraud Office
Results: Prosecution of Individuals
Year Resolved:
Compliance Monitor:
Ongoing: Yes
Details:
In November 2017, the SFO prosecuted four individuals for allegedly using Unaoil as a third party to bribe Iraq officers between 2005 and 2011 as an attempt to secure contracts - Paul Bond and Stephen Whiteley are both former executives SBM Offshore NV in Iraq, Ziad Akle as Unaoil’s territory manager for Iraq, and Basil Al Jarah as Unaoil’s "Iraq partner."
Basil Al Jarah pleaded guilty to five counts of conspiracy to give corrupt payments.
On 13 July 2020, a UK court convicted Ziad Akle and Stephen Whiteley, respectively on two counts and one count of conspiracy to give corrupt payments.
On 12 November 2020, the SFO secured Julio Faerman's London property partly financed by his bribery proceeds.
On 24 March 2022, the London appeals court overturned the conviction of Paul Bond, former sales manager of SBM Offshore. This the second individual to have his conviction quashed after an appeals court in December found that the U.K.’s Serious Fraud Office had made serious missteps in its case involving Monaco-based Unaoil.
Agencies: United States: Department of Justice
Results: Criminal Fine, Deferred Prosecution Agreement
Year Resolved: 2017
Compliance Monitor: DOJ deemed unnecessary
Ongoing: No
Details:
On 12 November 2014, when the company settled with the Dutch authorities, the DOJ informed SBM Offshore that it declined to prosecute the company and was closing its inquiry.
On 20 February 2016, SBM Offshore confirmed in a press release that the DOJ has re-opened its past investigation into the alleged bribery in Angola, Brazil, and Equatorial Guinea between 2007 and 2011 and made related information requests.
On 6 November 2017, SBM announced that it has set aside USD 238 million to settle a U.S. investigation into the Brazilian issues and separate issues relating to investigations into Unaoil. On 9 November, DOJ announced that Anthony Mace and Robert Zubiate pleaded guilty to conspiracy to violate the Foreign Corrupt Practices Act for agreeing to pay bribes to foreign officials at Petrobras, Sonangol, and GEPetrol. Their sentencings are scheduling for Feb. 2 and Jan. 31, 2018, respectively.
On 29 November 2017, SBM Offshore entered into a deferred prosecution agreement with the DOJ, agreeing to pay total monetary penalties of USD 238 million. USD 500,000 of this amount is to be paid as a criminal fine, and USD 13.2 million is forfeited by SBM Offshore on behalf of its U.S. subsidiary, SBM Offshore USA. The subsidiary pleaded guilty the same day to FCPA violations. In determining the penalty, DOJ credited SBM's disgorgement of profits and fine totaling USD 240 million to the Netherlands as well as the amount SBM has set aside to settle the matter in Brazil.
On 1 October 2018, a U.S. court sentenced Anthony Mace and Robert Zubiate to prison for bribing public officers. Mace receive 36-month term with a $150,000 fine. Zubiate received 30-month term and a penalty of $50,000.
Discovery Method: Voluntary Disclosure
Details:
The Company's 28 March 2013 press release says that its Management Board learned of the allegations "after a review of SBM Offshore's compliance procedures in late 2011."
On 2 April 2014, SBM Offshore announced that a two-year internal investigation had found evidence that the company paid USD 18.8 million in commissions to Equatorial Guinea and USD 22.7 million in commissions to Angola between 2007 and 2011. But the company said it found no evidence of such practices in Brazil, where it conducts much of its business. The company brought in outside counsel and forensic accountants to investigate and disclosed its investigation to Dutch authorities and the U.S. Department of Justice ("DOJ").
Country: