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$238 Million Penalty for Bribery of Foreign Officials

Monday, December 04, 2017
Sandler, Travis & Rosenberg Trade Report

The Department of Justice reports that a company based in the Netherlands and its wholly owned U.S. subsidiary have agreed to pay a criminal penalty of $238 million in connection with schemes involving the bribery of foreign officials in Brazil, Angola, Equatorial Guinea, Kazakhstan, and Iraq in violation of the Foreign Corrupt Practices Act. This amount includes a $500,000 criminal fine and $13.2 million in criminal forfeiture. In 2014 the company paid the Netherlands $200 million in disgorged profits and a $40 million fine for related conduct.

According to the companies’ admissions and court documents, beginning by at least 1996 and continuing until at least 2012 the parent company conspired to violate the FCPA by paying more than $180 million in commissions to intermediaries knowing that a portion would be used to bribe foreign officials for the purpose of securing improper advantages and obtaining or retaining business with state-owned oil companies. The company acknowledged that it gained at least $2.8 billion from projects it obtained from these companies.

The DOJ states that this resolution is based on a number of factors. For example, the company brought the conduct to the attention of U.S. and Dutch authorities but did not provide a complete disclosure for approximately one year. The company also cooperated with the DOJ investigation, including an accelerated investigation into bribery conduct related to Kazakhstan and Iraq, and undertook significant remedial measures, including terminating and demoting employees involved in the criminal conduct, terminating longstanding agency agreements, and implementing a new and enhanced system of internal controls to address and mitigate corruption and compliance risks. DOJ states that these actions entitled the company to a 25 percent reduction off of the bottom of the U.S. Sentencing Guidelines range. The department also considered the company’s inability to pay a fine and credited penalties paid to the Netherlands as well as the likely payment of penalties to Brazil.

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