The Justice Department and the Securities and Exchange Commission today announced sweeping settlements against seven oil services and freight forwarding companies for bribing foreign officials, with total penalties of $236 million.
The companies allegedly bribed customs officials in more than 10 countries to circumvent local rules and regulations, in violation of the Foreign Corrupt Practices Act. The bribes covered everything from avoiding customs duties to expediting imports to extending drilling contracts to lowering tax assessments.
Panalpina World Transport and its U.S. subsidiary admitted in documents filed in U.S. District Court for the Southern District of Texas to bribing officials in countries including Angola, Azerbaijan, Brazil, Kazakhstan, Nigeria, Russia and Turkmenistan on behalf of customers in the oil and gas industry.
Panalpina admitted that between 2002 and 2007, it paid thousands of bribes totaling at least $27 million to foreign officials. The payments were falsely recorded as legitimate business expenses in the customers’ corporate books.
The customers including Shell Nigeria Exploration and Production, Transocean Inc., and Tidewater Marine International admitted they approved of or condoned the payments, according to the DOJ.
Panalpina agreed to pay a criminal fine of $71 million and disgorgement of $11 million. The company was represented by Richard Dean and Douglas Tween of Baker & McKenzie. Shell Nigeria will pay a criminal fine of $30 million and disgorgement of $18 million. The charges stem from about $2 million paid to subcontractors with knowledge that the money would go to bribing Nigerian officials.
Offshore driller Pride International Inc., represented by Marin Weinstein of Willkie Farr & Gallagher, also spent about $2 million on bribes between 2001 to 2006, according to the SEC. The company will pay a $33 million criminal fine and $24 million in disgorgement and interest.
Tidewater Inc. will pay a $7 million criminal penalty and $8 million in disgorgement.
Transocean’s criminal penalty is $13 million, with another $7 million in disgorgement.
Noble Corp. will pay a $3 million criminal fine and disgorgement of $6 million.
Global SantaFe Corp. did not pay a criminal fine, but did agree to an injunction, $4 million disgorgement and a civil penalty of $2 million.
The DOJ case was prosecuted by senior trial attorney Stacey Luck of the Criminal Division’s Fraud Section, with assistance from Assistant Chief Adam Safwat.
At the SEC, the investigation was conducted by Jason Rose, Michael King, Tracy Price, Denise Hansberry, Laura Josephs, Linda Moran, Amy Friedman, Mathew Hefferan, Moira Roberts, Sharan Custer, Ernesto Palacios and Chedly Dumornay.
Jenna Greene is a senior reporter with The National Law Journal, a Texas Lawyer affiliate in which this article originally appeared.