ENI and Snamprogetti Settle Criminal and Civil Charges Related to the Bonny Island Project in Nigeria; JGC Corporation Discloses Settlement Discussions

ENI and Snamprogetti Settle Criminal and Civil Charges Related to the Bonny Island Project in Nigeria; JGC Corporation Discloses Settlement Discussions

The U.S. Department of Justice and the Securities and Exchange Commission settled FCPA-charges against a third of the four joint venture partners, and its parent, related to the construction of seven LNG trains for Nigeria's Bonny Island Project.  To-date, Kellogg, Brown and Root, Inc. (KBR), then a division of Halliburton, Technip S.A. of France and Snamprogetti Netherlands BV, a subsidiary of ENI S.p.A. of Italy, have been charged with paying over $100 million in bribes to Nigerian government officials during the course of a decade in order to secure more than $6 billion of work.1

In 2009, Halliburton and KBR resolved FCPA charges with the Department and the SEC.  KBR pleaded guilty to an Information charging it with one count of conspiracy to violate and four counts of violating the FCPA.  KBR also entered into a deferred prosecution agreement and was fined $402 million, placed on three years organizational probation, and required to retain an independent monitor for the same time period to review and evaluate its compliance policies and procedures related to the FCPA and other relevant anti-corruption laws.2

Additionally, the SEC filed separate Complaints charging KBR Inc. with violations of the anti-bribery provisions, and both KBR Inc. and Halliburton with breaching the books and records and internal controls provisions of the FCPA.  To settle these charges, KBR Inc. and Halliburton, without admitting or denying the Complaint's allegations, agreed to: (1) disgorge an additional $177 million; (2) a permanent injunction against future violations of the books and records and internal controls provisions of the FCPA, and, in the case of KBR Inc., also against violations of the anti-bribery provisions; and (3) for KBR Inc. to retain an independent monitor for a period of three years, and, for Halliburton, to retain an independent consultant to review its FCPA policies and procedures.3

In June 2010, Technip settled FCPA-related charges by agreeing to pay a $240 million criminal penalty.  The Paris-based company also entered into a deferred prosecution agreement requiring it to engage a monitor.  A criminal Information, filed in the United States District Court for the Southern District of Texas, charged Technip with one count of conspiracy to violate the FCPA and one substantive count of violating the FCPA's anti-bribery provision.  Additionally, the SEC charged Technip with violating the books and records and internal controls provisions of the Act. In settling the civil SEC complaint, Technip agreed to pay an additional $98 million in disgorgement of profits.4

On July 7, 2010, the Department charged Snamprogetti in a two-count criminal Information, filed in the United States District Court for the Southern District of Texas, that is nearly identical to the one filed against Technip, with one count of conspiracy to violate the FCPA and one count of aiding and abetting violations of the FCPA.5  Simultaneously, Snamprogetti and its current parent company Saipem S.p.A., and its former parent company ENI, S.p.A. of Italy, entered into a two year deferred prosecution agreement with the Department, and Snamprogetti agreed to pay a $240 million criminal fine.6  The DPA requires all three companies to cooperate with the Department's ongoing investigations and to ensure that their compliance programs met certain standards, but did not require the appointment of a monitor.7

The SEC also filed a complaint against Snamprogetti and ENI charging Snamprogetti with violating the anti-bribery, books and records and internal controls provisions of the FCPA, and ENI with violations of the books and records and internal controls provisions.8  Snamprogetti and ENI consented to the entry of a judgment against them, without admitting or denying the Commission's charges, prohibiting them from committing similar violations in future.  They both agreed to be jointly and severally liable to pay $125 million in disgorgement and pre-judgment interest.9  The total fines and disgorgement of $365 million are among the highest imposed for violations of the FCPA.

With the fines and disgorgement imposed on Snamprogetti and ENI, the Department and the SEC have imposed an aggregate $1.28 billion in penalties on three of the four participants in the Bonny Island project.10  This sum, the largest FCPA-related aggregate settlement in history,11 does not include a potential settlement with JGC Corporation.

Recently, the fourth member of the TSKJ consortium, the Japanese engineering company JGC  Corporation, once known as Japan Gasoline Co., Ltd, whose shares are traded on the Tokyo Stock Exchange, disclosed that it was discussing with the Department a potential resolution of the government's investigation.12  JGC Corporation is not an issuer under the Securities Exchange Act of 1934 and thus is not subject to the books and records and internal controls provisions of the FCPA.13  Applicability of the FCPA to the activities of JGC Corporation presumably would arise under 15 USC 78dd-3, the anti-bribery provision that was made applicable to foreign companies in the 1998 amendments to the Act, following the U.S. ratification of the OECD Convention on Combating Bribery in International Business Transactions.

The editors would like to thank Margaret Ryznar, associate at Cadwalader, for her contribution to this FCPA Alert.
1 Information, United States v. Snamprogetti Netherlands B.V., Criminal No. H-10-460 (S.D. Tex. July 7, 2010).
2 FCPA Advisor, Cadwalader, Wickersham & Taft LLP, February 2009, available at http://www.cadwalader.com/assets/newsletter/FCPA_Feb_2009.pdf#page=1.
3 Id.
4 FCPA Advisor, Cadwalader, Wickersham & Taft LLP, July 2010, available at http://www.cadwalader.com/list_newsletters.php?newsletter_type_id=8.
5 Information, supra note 2.
6 Press Release, Snamprogetti Netherlands B.V. Resolves Foreign Corrupt Practices Act Investigation and Agrees to Pay $240 Million Criminal Penalty, Department of Justice, July 7, 2010, available at http://www.justice.gov/opa/pr/2010/July/10-crm-780.html.
7 Deferred Prosecution Agreement, United States v. Snamprogetti Netherlands B.V., Criminal No. H-10-460 (S.D. Tex. July 7, 2010).
8 Id.
9
Press Release, supra note 7.
10 The Billion Dollar Man, FCPA Blog, July 13, 2010, available at http://www.fcpablog.com/blog/2010/7/13/the-billion-dollar-man.html.
11 See SEC Charges Technip with FCPA Violations, U.S. Securities and Exchange Commission, June 28, 2010, available at http://www.sec.gov/news/press/2010/2010-110.htm.
12 JGC Confirms DOJ Investigation, FCPA Blog, July 12, 2010, available at http://www.sec.gov/news/press/2010/2010-110.htm.
13 Id.

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