As the Securities and Exchange Commission announced charges against Amec Foster Wheeler Limited (Foster Wheeler) for violations of the Foreign Corrupt Practices Act (FCPA) arising out of a bribery scheme that took place in Brazil, the company has agreed to pay more than $43 million related to this scheme, including more than $10.1 million to settle the SEC‘s charges.
The SEC’s order finds that Foster Wheeler, a company that provided project, engineering, and technical services to energy and industrial markets worldwide, engaged in a scheme to obtain an oil and gas engineering and design contract from the Brazilian state-owned oil company, Petroleo Brasileiro S.A. (Petrobras), known as the UFN-IV project. According to the order, from 2012 through 2014, Foster Wheeler’s UK subsidiary, Foster Wheeler Energy Limited (FWEL), made improper payments to Brazilian officials in connection with its efforts to win the contract and establish a business presence in Brazil. The bribes were paid through third-party agents, including one agent who failed Foster Wheeler’s due diligence process, but was allowed to continue working “unofficially” on the UFN-IV project. According to the order, Foster Wheeler paid approximately $1.1 million in bribes in connection with obtaining the contract.
“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,” said Tracy Price, Deputy Chief of the SEC Enforcement Division’s FCPA Unit.
“The potential for a new market cannot be a siren’s song that overwhelms good corporate governance,” said Charles Cain, Chief of the SEC Enforcement Division’s FCPA Unit.
Foster Wheeler, which is currently owned by John Wood Group PLC, consented to the SEC’s cease-and-desist order finding that it violated the anti-bribery, books and records, and internal accounting controls provisions of the FCPA and agreed to pay $22.7 million in disgorgement and prejudgment interest. The SEC’s order provides for offsets for up to $9.1 million of any disgorgement paid to the CGU/AGU and the MPF in Brazil and up to $3.5 million of any disgorgement paid to the SFO in the United Kingdom. Therefore, the company’s minimum payment to the SEC would be approximately $10.1 million.
Have a securities law question? Call Sallah Astarita & Cox at 212-509-6544.
Mark Astarita is a nationally recognized securities attorney, who represents investors, financial professionals and firms in securities litigation, arbitration and regulatory matters, including SEC and FINRA investigations and enforcement proceedings.
He is a partner in the national securities law firm Sallah Astarita & Cox, LLC, and the founder of The Securities Law Home Page - SECLaw.com, which was one of the first legal topic sites on the Internet. It went online in 1995 and is updated daily with news, commentary and securities law related links.
