TechnipFMC to pay $5M in FCPA case

From at least 2008 through 2013, FMC Technologies (the predecessor company of TechnipFMC) “made over $794,000 in payments to a third-party consultant, which used at least some of those funds to pay bribes to Iraqi government officials to procure business with Iraq state-owned oil companies,” the SEC said in a Sept. 23 administrative order. “The bribes were paid in connection with FMC Technologies obtaining contracts to provide metering technologies for oil and gas production measurement to the Iraqi government.”

FMC Technologies, directly and through its wholly owned subsidiaries, “failed to make and keep books, records, and accounts that accurately and fairly reflected FMC Technologies’ transactions with the intermediary company,” the SEC order stated. “The transactions, intended as conduits for the bribe payments, were inaccurately characterized as legitimate transactions and thereby concealed within FMC Technologies’ books and records.”

FMC Technologies further “failed to devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances that illicit payments were not being made by the intermediary company to foreign officials,” the SEC said. “FMC Technologies failed to require adequate supporting documentation and adequate due diligence prior to making payments to the intermediary company.”

Further, FMC Technologies made payments to the intermediary company based upon contracts covering periods prior to the execution date, purchase orders with inaccurate scopes of work, and invoices with documentation that predated purchase orders. While FMC Technologies’ internal accounting controls required due diligence on third parties, inadequate due diligence was conducted concerning the intermediary company, “despite entering into numerous vague contracts with intermediary company that were renewed over multiple years,” the SEC said.

Despite these red flags, FMC Technologies, nonetheless, paid the intermediary company $794,000, some of which was used for illicit purposes, the SEC said.

Cooperation and compliance efforts

The SEC said although TechnipFMC did not self-report to the SEC until after being contacted by the Department of Justice, it did cooperate during the investigation. It provided the staff with the results of its investigation into its relationship with the intermediary company, including retaining accounting experts to identify payments to the intermediary company, and provided supporting documentation requested. It also provided summary charts and downloads of employee interviews.

TechnipFMC’s remedial actions included:

• Separating employees who were primarily responsible for the conduct;
• Implementing certain third-party controls, including new financial controls, enhanced due diligence, and prohibiting the use of certain third parties; and
• Making improvements to its compliance program, including by increasing its headcount and adding experienced personnel in key positions, enhancing its ethics and compliance policies, and providing additional training for certain third parties and employees.

The SEC said it will not be imposing a civil penalty based upon the imposition of a $296 million criminal fine as part of its resolution with the Department of Justice. TechnipFMC also entered a three-year deferred prosecution agreement with the Justice Department acknowledging responsibility for criminal conduct relating to findings in the order. As part of the SEC’s settlement, TechnipFMC will pay disgorgement of $4.3 million and prejudgment interest of $735,000.

TechnipFMC is the product of a 2017 merger between two predecessor companies, Technip and FMC Technologies. Although Technip announced the settlement with U.S. and Brazilian authorities in June, the SEC had not published the enforcement action until late September.