Willbros Group, Inc.’s third quarter 2007 earnings release reported on October 31, 2007 that the company will pay $32.3 million to resolve U.S. Foreign Corrupt Practices Act problems related to former operations in Bolivia, Ecuador and Nigeria. The company and a subsidiary will also enter into three-year deferred prosecution agreements with the U.S. Department of Justice. Willbros is headquartered in Panama City, Panama and has its administrative offices in Houston, Texas. It provides construction and engineering services to industry and government entities worldwide, specializing in pipelines and associated facilities in onshore, coastal and offshore locations.
On July 23, 2007, the DOJ announced the indictment in Houston of a former executive of a Willbros subsidiary. Jason Edward Steph, 37, an American living in Kazakhstan, was charged with conspiring to make over $6 million in bribe payments to Nigerian officials in order to obtain and retain gas pipeline construction business from a joint venture majority-owned and controlled by the Nigerian state oil company in violation of the FCPA. He was also charged with money laundering based upon the international transfer of some of the bribe money.
In its November 1, 2007 Form 10-Q, Willbros says the DOJ will file a twelve-count criminal information against it and its subsidiary, Willbros International, Inc., as part of the execution of the deferred prosecution agreements. “The twelve counts,” it says, “include substantive violations of the anti-bribery provisions of the FCPA, and violations of the FCPA’s books-and-records provisions. All twelve counts relate to operations in Nigeria, Ecuador and Bolivia during the period from1996 to 2005.” Willbros also says it will consent to the filing in federal district court of a complaint by the SEC and to imposition of a permanent injunction. “The SEC’s complaint, ” according to the Form 10-Q, “will allege civil violations of the antifraud provisions of the Securities Act and the Securities Exchange Act, the FCPA’s anti-bribery provisions, and the reporting, books and records and internal controls provisions of the Securities Exchange Act.”
Willbros full statement in its earnings release about the FCPA is as follows:
“AGREEMENTS IN PRINCIPLE TO SETTLE DOJ/SEC MATTERS
“Willbros and its subsidiary, Willbros International, Inc. (“WII”), have reached an agreement in principle with representatives of the United States Department of Justice (the “DOJ”), subject to approval by the DOJ, to settle its previously disclosed investigation into possible violations of the Foreign Corrupt Practices Act (the “FCPA”). In addition, the Company has reached an agreement in principle with the staff of the United States Securities and Exchange Commission (the “SEC”) to resolve its previously disclosed investigation of possible violations of the FCPA and possible violations of the Securities Act of 1933 and the Securities Exchange Act of 1934. These investigations stem primarily from its former operations in Bolivia, Ecuador and Nigeria. As described more fully in the Company’s third quarter 2007 10-Q filed with the SEC, if accepted by the DOJ and the SEC and approved by the court, the settlements together will require Willbros to pay over approximately three years, a total of $32.3 million in penalties and disgorgement. In addition, WGI and WII will, for a period of approximately three years, each be subject to Deferred Prosecution Agreements (“DPAs”) with the DOJ. Finally, the Company will be subject to a permanent injunction barring future violations of certain provisions of the federal securities laws.
“As a result of the settlements in principle, Willbros has increased its reserves related to these investigations by $8.3 million, bringing the aggregate reserves for these matters to $32.3 million. The increase to the reserve is comprised of: (i) a $2 million reduction in the Company’s 2007 second quarter estimate of $24 million in fines resulting from the DOJ actions that was recorded as a charge to continuing operations, and (ii) an additional charge to discontinued operations of $10.3 million of profit disgorgement, inclusive of accrued interest on the disgorgement profit, resulting for the SEC actions. The aggregate reserves reflect the Company’s estimate of the expected probable loss with respect to these matters, assuming the settlements are finalized. If the settlements are not finalized, the amount reserved may not reflect eventual losses.”
Willbros Group, Inc. trades on the New York Stock Exchange under the symbol WG.
View Willbros Third Quarter 2007 Earnings Press Release Here.
View Willbros Third Quarter 2007 Form 10-Q Here.