The Man From FCPA

A legal battle between Vantage Drilling and Petrobras, Brazil’s state-owned oil company, has put a new twist on contract challenges and FCPA violations

Petrobras (of Operation Car Wash fame) will soon consider offers to sell a refinery located in Pasadena, bringing the effects of the FCPA home to the United States.

In a stunning capitulation, Petrobras settled with U.S. investors for nearly $3bn in a class-action lawsuit as follow-on litigation to the long-standing corruption allegations against the company.

Two recent corruption scandals emanating from Brazil highlight the direct impact corruption can have on U.S. citizens and serve as telltale examples of why a robust FCPA enforcement regime is in the interest of the United States. 

Petrobras is attempting to sell a petrochemical plant that is “notorious for its multiple accidents, fires, and emissions releases,” according to reports. At issue? No environmentally responsible company would be interested in the doomed facility.

In a very interesting development from the Odebrecht corruption scandal, federal prosecutors in Brazil and ten other countries recently announced they had agreed to cooperate in ongoing investigations surrounding the company, writes The Man From FCPA Tom Fox.

Fiat, which was recently flagged by the EPA for pollution violations, could be a reminder to companies to scour the news for details on any regulatory investigations of their peers and perhaps to begin scrutinizing their own books and records, says The Man From FCPA Tom Fox.

A 19-year prison sentence handed down in connection with Brazil’s widening “Car Wash” scandal is a wake-up call for any company that has done business with Odebrecht SA, the largest construction company in Brazil and, indeed, South America. The scandal, which began with energy firm Petrobras, should enforce that it’s time to begin reviewing the whole of your contractual relationships to see if there are any FCPA, U.K. Bribery Act, or other anti-corruption issues you need to address.

What is the cost of corruption? How much due diligence must you perform with those entities that are your customers? Does doing business with companies that have a propensity for corruption put your company at risk? In light of the scandals at Petrobras and Houston-based ENSCO, companies might want to consider if they have the right answers.

When corruption-plagued Brazilian energy giant Petrobras overpaid for a Houston-area refinery by some $950 million, it raised more than a few eyebrows. And when that refinery suffered a large explosion and fire recently, it showed that failure to practice good safety and failure to practice good business ethics go hand-in-hand. 

As the Petrobras corruption scandal moves to the investigation of international companies that did business with the Brazilian national energy company, Europeans companies now face some challenging decisions around the issue of self disclosure. Our Man From FCPA, Tom Fox, has more inside about the considerations you need to make.

The scope of the Petrobras corruption scandal is literally worldwide. Now, reports the Financial Times,  Rolls Royce has become embroiled in the Brazilian national energy company’s “Operation Car Wash” snafu (dubbed so because the investigation literally started with a car wash), and is currently under investigation by the British Serious Fraud Office for bribery. Now is the time for European chief compliance officers doing business in Brazil to learn from the scandal and, hopefully, come out ahead, says CW FCPA blogger Tom Fox. More of his thoughts inside.

This week one commentator reported that the Netherlands-based SBM Offshore would pay $255 million in fines and penalties for its role in the Petrobras scandal. If SBM Offshore does settle with Brazilian authorities for this amount, it will be a first step in resolving the morass businesses sucked into that scandal.

Last week PetroBras said in an SEC filing that it is not working with U.S. regulators to end the long list of corruption charges leveled against the company. That statement is merely the latest in a long list of unusual events in the compliance spectacle that PetroBras has become, but it does underline risks that even U.S. businesses should watch for as the PetroBras drama continues. Details inside.