Samsung Heavy Industries, a South Korea-based engineering company, will pay total criminal penalties of $75.5 million to enforcement authorities in the United States and Brazil to resolve violations arising out of a scheme to pay millions of dollars in bribes to officials in Brazil.
On Nov. 22, Samsung Heavy Industries (SHI) entered a three-year deferred prosecution agreement (DPA) with the Department of Justice for violations of the anti-bribery provisions of the Foreign Corrupt Practices Act. In related proceedings in Brazil, SHI entered into a memorandum of understanding with Brazilian authorities, the Controladoria-Geral da União (CGU) and the Advogado-Geral da União (AGU), and a complementary agreement for the negotiation of a leniency agreement with the Ministério Público Federal (MPF).
According to the company’s own admissions, from 2007 until 2013, SHI conspired with others to violate the Foreign Corrupt Practices Act by providing approximately $20 million in commission payments to a Brazilian intermediary, knowing portions of the money would be paid as bribes to officials at Brazil’s state-owned oil company Petrobras to obtain a lucrative shipbuilding contract. Specifically, the investigation concerned commission payments related to the company’s 2007 contract to build a drillship for a subsidiary of Pride International. The contract was premised on Pride (now part of Valaris) winning a contract to charter the drillship to a subsidiary of Petrobras. The investigation revealed part of the commission payment for the transaction was improperly provided to Petrobras officials.
As part of the DPA, SHI has agreed to continue to cooperate with the Justice Department in any ongoing investigations and prosecutions relating to the conduct, including of individuals; to enhance its compliance program; and to report to the Department on the implementation of its enhanced compliance program.
SHI received credit for its cooperation with the Justice Department’s investigation and for taking remedial measures, including:
- Making significant enhancements to its compliance program, including hiring additional compliance staff;
- Implementing enhanced anti-corruption policies and improved whistleblower policies and procedures;
- Instituting mandatory anti-corruption training for all employees; and
- Implementing heightened due diligence controls over third-party vendors, including review by compliance officers.
Based on its remediation efforts and the state of its compliance program, the Fraud Section said it has “determined that an independent compliance monitor was unnecessary in this case.” SHI will, instead, provide the agency with annual reports on its compliance program efforts.
The company did not receive full credit for its cooperation, however, “due to its failure to meet reasonable deadlines” imposed by the Justice Department and “delays it caused in reaching a resolution,” the agency said. The total criminal penalty reflects a 20 percent reduction off the bottom of the applicable U.S. Sentencing Guidelines fine range.
“We deeply regret the company’s involvement in these events, which is contrary to our values and ethical standards,” stated SHI CEO Joon Ou Nam. “Many of the events described in our agreement happened more than a decade ago, and the individuals involved are no longer with the company. Over the past years, we have taken extensive steps, at our own initiative, to strengthen our anti-corruption compliance program to meet the highest standards of compliance and ethics.”