Nov 17, 2019 News
By Kiana Wilburg
The Liza Destiny is Guyana’s first Floating Production Storage and Offloading (FPSO) vessel which will hold the oil extracted from the Stabroek Block. The maker of this oil storage vessel that is almost the size of the national stadium is SBM Offshore.
This Dutch firm is already making significant progress with the construction of a second vessel for the Stabroek Block. And once the necessary Government approvals are granted, it could be well on its way to completing works for a third vessel, all of which will most likely cost over US$3B.
But is it likely that these costs— which Guyana will have to pay—could be inflated?
Is it practical to think that SBM would even risk being associated with such activities?
A due diligence check on the company’s track record provides much food for thought in this regard. Kaieteur News, during extensive research, found that SBM Offshore has a history of bribing officials to win inflated contracts.
In fact, the offshore drilling equipment manufacturer was caught red handed doing so in not one, but five countries; namely Brazil, Angola, Equatorial Guinea, Kazakhstan and Iraq.
SBM executives bribed officials with over US$180M. These bribes resulted in approximately US$2.8B in profits. Subsequent lawsuit actions led by the Public Prosecutor of its home country, the Netherlands; the US Department of Justice; and the Brazilian Federal Prosecutor resulted in millions of dollars in fines being paid.
When SBM’s US subsidiary was hauled before the courts for breach of the Foreign Corrupt Practices Act (FCPA), it pleaded guilty and agreed to settle criminal charges of bribing officials in the five countries. It paid a US$238 million penalty.
In Brazil, the company agreed to enter a settlement so that it could end all anti-corruption investigations against its subsidiary there. The US$189M settlement was done so that it could not only kill the probe into the company’s role, but also allow it to participate again in future tenders.
The investigation in Brazil was centered on allegations that SBM was one of several companies that paid massive bribes in exchange for inflated contracts to service Petrobras, Brazil’s National Oil Company.
In the case of its home country, the Netherland authorities launched its own investigations and got SBM to pay a US$40M fine as well as a US$200M disgorgement (having to do with repayment of ill-gotten gains) via an out-of-court settlement.
Following this, SBM said it enhanced its anti-corruption compliance programme and related internal controls to prevent a reoccurrence of any kind.
Owing to the fact that the Netherlands is considered one of the least corrupt within the European Union (EU), the authorities which settled with SBM were highly criticized by transparency bodies there for not going forward with the prosecution of such a high-profile corruption case, among others.
It was believed that settlement lends to the perception of backroom politics while providing the opportunity for the authorities to abuse its power to allow settlements in cases where the suspect has more to gain by settling quickly.
(Links for all research material used can be located here: https://www.reuters.com/article/us-sbm-offshore-corruption/sbm-offshore-settles-u-s-bribery-case-to-pay-238-million-idUSKBN1DT3JV, http://www.diariorombe.es/wp-content/uploads/2016/05/SBM-Offshore.pdf, https://star.worldbank.org/corruption-cases/node/20454, https://www.oecd.org/daf/anti-bribery/Netherlands-Phase-3-Written-Follow-Up-Report-ENG.pdf, https://www.reuters.com/article/us-sbm-offshore-corruption/sbm-offshore-reaches-settlement-in-brazil-corruption-probe-idUSKBN1KH0Q0, http://www.allenovery.com/SiteCollectionDocuments/Anti-Bribery%20and%20Corruption%20Year%20in%20Review%202018.pdf)
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