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Samsung Heavy Industries pays $75 million to resolve FCPA offenses

One of the world’s biggest shipbuilders agreed Friday to pay $75 million in total penalties to resolve criminal FCPA offenses in Brazil.

The DOJ charged South Korea’s Samsung Heavy Industries Company Limited in a one-count criminal information filed in federal court in Alexandria, Virginia.

The information charged the company with conspiracy to violate the FCPA’s anti-bribery provisions.

Samsung Heavy Industries has shipbuilding and drydock facilities in Korea and China. One of its specialties is building  storage vessels and offshore platforms for customers in the oil and gas industry.

In Friday’s deal with the DOJ, SHI entered into a three-year deferred prosecution agreement. The DPA requires the company to pay a total criminal penalty of  $75.5 million.

SHI will pay fifty percent ($37.75 million) of the total penalty “to the United States within 10 business days of the deferred prosecution agreement,” according to the DPA.

The remaining 50 percent must be paid either to Brazilian authorities or, if not paid to them by November 25, 2020, to the DOJ.

The DOJ said SHI has entered into a memorandum of understanding with three Brazil enforcement agencies — the Controladoria-Geral da União, the Advogado-Geral da União, and the Ministério Público Federal.

The company also entered into “a complementary agreement” for the negotiation of a leniency agreement (roughly equivalent to a DPA) with the Ministério Público Federal.

Samsung Heavy Industries admitted paying $20 million in commissions to a Brazilian intermediary, the DOJ said. The company knew “portions of the money would be paid as bribes” to officials at Petrobras, Brazil’s state-owned energy firm.

The bribes were intended to make sure Petrobras chartered a drill ship that Samsung Heavy Industries was building for a Houston-based offshore oil drilling company.

SHI “took actions in furtherance of the bribery conspiracy from its branch office located in the United States,” the DOJ said.

In early 2015, Nestor Cerveró, the former head of international operations at Petrobras, was sentenced to 12 years in prison for sharing up to $15 million in kickbacks from Samsung Heavy Industries.

Prosecutors in Brazil said the kickbacks related to construction of a drill ship built by SHI that cost Petrobras $586 million.

Samsung was named in press reports three years ago as one of the clients of Unaoil, the Monaco-based intermediary accused of bribing officials in multiple countries on behalf of oil and gas services companies. Unaoil wasn’t mentioned in Friday’s FCPA enforcement action. A representative of SHI said in a statement to the FCPA Blog, “We are not aware of any link between Samsung Heavy Industries and Unaoil.”

The DOJ said Samsung Heavy Industries didn’t receive full cooperation credit because of its failures to meet “reasonable deadlines imposed by the department and delays it caused in reaching a resolution.”

SHI did receive some credit for taking remedial measures, the DOJ said. The company enhanced its compliance program, hired additional compliance staff, and implemented “heightened due diligence controls  over third party vendors.” It also started mandatory anti-corruption training and improved its whistleblower policies.

The DOJ said the three federal enforcement agencies in Brazil “provided significant assistance” in the case, as did law enforcement authorities in Monaco and Switzerland.

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