Foreign Bribery

AFWL Charged for Foreign Bribery and Violating the Books and Record Provision.

On Jun 25, 2021, the Securities and Exchange Commission (“SEC”) charged[1] Amec Foster Wheeler Limited (AFWL) for bribing officials at a Brazilian state-owned oil company Petrobras to obtain a contract from which AFWL unjustly profited approximately $17.6 million. AFWL also violated the book and record provision when the costs of bribes were falsely recorded as legitimate expenditure for the company’s operation. AFWL agreed to pay $10.1 million to the SEC, along with penalties paid to other authorities that accumulated to more than $43 million to settle the charges. 

The SEC claimed in the complaint[2] that in 2011, AFWL learned about Petrobras’s plan of seeking a bid for a “gas-to-chemical fertilizer plant,” known as the UFN-IV project. The project requires the winning bidder to settle agreements with five pre-selected companies owning the licenses necessary to the project. A third-party agent offered his service as a consultant for AFWL on this bid. While AFWL and its subsidiaries were uncertain about the agent’s credibility initially, winning the bid became challenging, and AFWL started to work together with the agent. AFWL knew that the agent did not pass his due diligence during the relevant period, and is not supposed to work with someone who demonstrates a corruption risk. However, AFWL signed an interim agency agreement with the agent, who played a critical role in the bidding. 

AFWL provided over $1.1 million to the Agent and a company affiliated with him to bribe the Petrobras officials for confidential information. With the information and Petrobras’ corrupted officials’ help, AFWL was able to win the contract at favorable pricing. To conceal the dishonest scheme, AFWL falsely recorded the money it spent on bribery as a commission for the agent and his company’s service. In reality, neither the agent nor his company provided services commensurate to this payment. AFWL failed to maintain a system of internal accounting control and therefore was responsible for the violation of books and records provisions of the Foreign Corrupt Practices Act. AFWL’s hereby described conduct also violated Sections 30A and 12 (b) of the Exchange Act.

Tracy Price of the SEC says, “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.” 

Wilson Bradshaw LLP is a boutique securities law firm in Irvine, California, and New York City. We offer the advantage of a highly focused, experienced legal team that understands business realities. We also provide legal consultation regarding the SEC’s regulations. Our practice is dedicated to helping businesses prosper by providing cost-effective services without compromising quality. Please visit our website or contact us here: https://bradshawlawgroup.com/location/contact/

Reference:

[1]: https://www.sec.gov/news/press-release/2021-112 

[2]: https://www.sec.gov/litigation/admin/2021/34-92259.pdf 

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