While we may have reached a tipping point on enforcement of anti-corruption laws such as the Foreign Corrupt Practices Act over the past 30 days, some huge ongoing anti-corruption enforcement actions are still out there. One only need to consider Walmart, GlaxoSmithKline, or Petrobras to realize some of the biggest settlements of all time are still coming down the pike sooner or later.
About this time last year, I thought that Petrobras would be the world’s largest corruption scandal—not only for the role the company played in Brazil, but also as one of the world’s giant oil and gas companies. Petrobras had operations or contracts with companies across the globe, and the reach of endemic corruption through these contractual relationships appeared to be simply stunning. Of course it turned out that Petrobras’ direct contractors and its approved sub-contractors were often in on the bribery scheme as well.
U.S.- based companies that conducted business in Brazil or with Petrobras certainly needed to review their operations to determine what corruption or compliance risks might exist; some companies admitted that they were engaged in corrupt activity; others announced they are going through internal investigations or are under investigation in Brazil or in their home country.
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. Interestingly it was reported that “SBM will pay at least US$166 million in cash to Petrobras, while the remaining amount may be paid in services to be provided by the platform leasing company.” Perhaps even more significantly it was further reported that shares of SBM jumped more than 4 percent on the report, “since, by entering into this settlement, the company will no longer be banned to participate in Petrobras tenders.”
If SBM Offshore does settle with the Brazilian authorities for this amount, it will be a significant first step in resolving the morass of the Petrobras scandal. Not only would it send a strong message that the days of “business as usual” are over in Brazil. It would also demonstrate the Brazilian government’s willingness to fight the tough battle against corruption. Watch this space.