John Wood Group earmarks $197M for global bribery settlement

“Discussions have progressed to a point where we believe it is likely we will be able to reach a settlement,” Wood CFO David Kemp said on an earnings call. Kemp said as part of its global resolution, Wood has set aside a total of $197 million—including an additional $151 million it tacked on in 2020. The total is more than four times the $46 million Wood originally reserved in 2019 for a potential settlement.

During the investor call, Kemp said the additional $151 million progresses further an investigation with the U.K. Serious Fraud Office (SFO), allowing Wood to reach a global settlement with all enforcement authorities involved. Kemp added Wood expects to reach a settlement with Scottish authorities “shortly” and that a resolution with the U.S. Department of Justice and Securities and Exchange Commission, the SFO, and Brazilian authorities is anticipated to follow in the second quarter.

The global settlement mostly has to do with the historical use of agents, primarily in the Middle East, involving Amec Foster Wheeler. The misconduct occurred over a period dating back several decades, prior to Foster Wheeler merging with Amec in 2014 and prior to Wood’s acquisition of Amec Foster Wheeler in 2017.

A small portion of the penalty amount concerns a £6.46 million (U.S. $9 million) civil settlement Wood reached with Scotland’s Civil Recovery Unit on Tuesday relating to the historical engagement of Unaoil by a joint venture in Wood’s legacy PSN business acquired in 2011 and potential unlawful conduct in Kazakhstan between 2008-10.

According to the allegations, Unaoil was paid a total of 1,358 million Kazakhstan Tenge (then approximately U.S. $8.74 million) in fees. “Payments were on a commission basis and continued until 2015, although there is limited evidence of what services Unaoil provided for these fees,” Wood explained.

“Having self-reported on the issue, we conducted a thorough investigation into the matter,” said Wood Chairman Roy Franklin in a press release.

The company further noted its full cooperation in the investigation.

“The investigation shone a light on behavior that was quite simply unacceptable,” stated Wood Chief Executive Robin Watson. “While we didn’t own the business until 2011, we take responsibility for dealing with the consequences and have taken steps to further strengthen our culture and processes to ensure it does not happen again.”

Compliance enhancements

During the earnings call, Watson talked about the company’s continued improvement approach to ethics and compliance. “Let me make one thing very clear: This is a legacy issue concerning cases which are historic and individuals who are no longer involved in the business,” he said. “From Wood’s perspective, ethics and compliance is part of our DNA, and that type of behavior will never be tolerated within the company. The executive team at Wood regard ethics and compliance as a fundamental cornerstone of who we are and how we run.”

Over the last four years, Watson said, the company’s focus has been “to strengthen even further a very robust approach to ethics and compliance, including a clear and unambiguous code of conduct; culture where corruption is not tolerated at any level; and a strong tone from the top, with board, executive leadership team, and all the senior leaders communicating regularly on Woods’ ethical program and culture.”

Additionally, Watson shared Wood’s safety assurance and business ethics committee is made up of three independent board directors. “We also have a blanket ban on the use of sales agents, unless required by the law, and strict due diligence on any entity engaging on our behalf with any government employee,” he said.

“Integrity is our license to operate and, therefore, of paramount importance to the business,” Watson concluded. “I’m pleased to put these legacy items behind us and move forward with a focus on the future.”