One of the world’s biggest shipbuilding companies agreed to pay $75.5 million to settle an investigation into a bribery scheme involving the sale of a $640 million offshore drilling ship to a Houston-based ship chartering company.
The shipbuilder, South Korea-based Samsung Heavy Industries, admitted to conspiring with others by providing approximately $20 million in commissions to a Brazilian intermediary, knowing that some of the money would be used to bribe officials at Brazil’s state-owned energy company Petrobras, according to the U.S. Department of Justice (DOJ).
The Petrobras officials then used the money to “secure improper business advantages” and cause the energy company to enter into a contract to charter Samsung Heavy’s ship from the Houston charterer (Pride International, now part of London-based Valaris PLC, NYSE: VAL), which helped Samsung Heavy execute the sale of the ship, known as the Ensco DS 5.
The bribery and conspiracy, which violated the Foreign Corrupt Practices Act, occurred between 2007 and continued until 2013, and involved payments made through banks in Switzerland and Monaco.
“Samsung Heavy Industries caused millions of dollars in corrupt bribe payments to be paid to foreign officials to win business, upsetting what should have been a level playing field for other companies that followed the rules,” commented U.S. Attorney Zachary Terwilliger of the Eastern District of Virginia on Nov. 22. “Effective corporate policies and procedures are necessary to ensure that corporations do not engage in foreign bribery. We will continue to hold corporations accountable.”
Taking part in such a scheme is “contrary to our values and ethical standards,” commented Samsung Heavy 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.”
The DOJ acknowledged that the company cooperated with the investigation and took remedial measures, making “significant enhancements to its compliance program, including hiring additional compliance staff, implementing enhanced anti-corruption policies and heightened due diligence controls over third party vendors, instituting mandatory anti-corruption training and improving whistleblower policies and procedures.”
The agency also noted, however, that the company failed to meet certain deadlines and caused delays during the investigation and settlement process, which led to a higher final settlement.