Enforcement Action

 

Docket or Case Number:    10-cr-00767

Court:    S.D. Texas

Initiation Date:    11/04/2010  Information

Prosecuting Agency:    US Department of Justice

Name of Prosecuting Attorneys:   

  • Jose Angel Moreno, United States Attorney
  • Denis J. McInerney, Chief, Fraud Section, Criminal Division
  • Stacey K. Luck, Trial Attorney, Fraud Section, Criminal Division

Assisting Agencies:    U.S. Securities and Exchange Commission , Federal Bureau of Investigation

Type of Action:    DOJ Criminal Proceeding

Origin of the Proceeding:    DOJ investigation

Whistleblower:    Unknown

Case Status:    Resolved


Summary

Royal Dutch Shell plc ("Shell"), is an oil and gas company, headquartered in the Netherlands. Shell International Exploration and Production Inc. ("SIEP") is a Delaware company with headquarters in Houston, Texas, and is a wholly owned indirect subsidiary of Shell. Shell Nigerian Exploration and Production Company Ltd. ("SNEPCO"), a wholly owned subsidiary of Shell, was a Nigerian company with headquarters in Nigeria.

Bonga was the first deepwater oil and gas field project in Nigeria. From in or around 1999 to in or around 2005, the development of the Bonga field was in the planning and construction phase and was referred to as the Bonga Project. SNEPCO oversaw the project execution, but the Bonga Project was staffed and supported by personnel from other Shell subsidiaries, including SIEP.

In order to complete construction of the field, contractors working with SNEPCO needed to transport and import numerous items, including tools and materials, into Nigeria. The contractors hired an agent to coordinate all of the necessary customs clearance activities. The agent paid bribes to Nigerian Custom Service (NCS) officials to expedite the delivery of materials by inducing the officials to circumvent the official Nigerian customs clearance process and to provide an improper advantage with respect to the importation of certain tools and materials that were imported into Nigeria. The agent invoiced the contractors for the bribes that it paid to the NCS officials and characterized the payments as, among other things, "local processing fees" or "administration/transport charges." The contractors then sought reimbursement from SNEPCO for these charges.

Between in or around March 2004, and in or around November 2006, SNEPCO and the contractors paid the agent over $2,000,000, and some or all of that money was for the purpose of bribing NCS officials. The benefit to SNEPCO resulting from the bribes exceeded $7,000,000.

On November 4, 2010, the DOJ filed a criminal information in the Southern District of Texas, charging SNEPCO with conspiracy to violate the anti-bribery and books and records provisions of the FCPA, and aiding and abetting violations of the books and records provisions of the FCPA. At the same time, the DOJ entered into a three year deferred prosecution agreement with SNEPCO. Under the DPA, SNEPCO agreed to pay a $30,000,000 criminal penalty.

In a related action, Royal Dutch Shell plc and SIEP consented to the entry of an administrative cease and desist order permanently enjoning them from future violations of the FCPA.





Country(ies) involved:    Nigeria

Sanction to Bribe Ratio:    $30,000,000 / $2,000,000 = 1500.00 %

Sanction to Revenue Ratio:    N/A

Sanction to Profit Ratio:    $30,000,000 / $7,000,000 = 428.57 %

Number of Related Enforcement Actions (Including This Enforcement Action):    2

Country(ies) involved:    Nigeria

Total $ Bribery Payments:    $3,500,000

Total $ Revenue Generated from Bribery:    N/A

Total $ Profit Earned or Expenses Avoided from Bribery:    $14,153,536

Total $ Monetary Sanctions:    $48,149,459

Sanction to Bribe Ratio:    $48,149,459 / $3,500,000 = (1375.70 %)

Sanction to Revenue Ratio:    N/A

Sanction to Profit Ratio:    $48,149,459 / $14,153,536 = (340.19 %)

Name:    Shell Nigeria Exploration and Production Company Ltd.

Place of Incorporation:    Nigeria

HQ Country(ies):    Nigeria

Entity Type:    Subsidiary

FCPA Claims:    Anti-Bribery, Conspiracy (18 U.S.C. 371) ; Books & Records, Conspiracy (18 U.S.C. 371) ; Books & Records , Aiding and Abetting/Causing (18 U.S.C. § 2, 15 U.S.C. § 78m (b)(2)(A), and/or 15 U.S.C. § 78m(b)(5))

Related Claims:    N/A

Statutory Basis for FCPA Jurisdiction:    Conspirator ; Aider & Abettor/Cause/Control Person ; Person (Books & Records, Internal Controls)

Period of Bribery:   2004 - 2006

Total Bribery Payments:    $2,000,000

Total Revenue Generated from Bribery:    N/A

Total Profit Earned or Expenses Avoided from Bribery:    $7,000,000

Country(ies) involved:    Nigeria

Officials Potentially Influenced (Name; Title; Organization): 

  • Name N/A, Officials; Nigerian Customs Service ("NCS")

Defendant-Related Entities Involved in the Misconduct:    Shell International Exploration and Production Inc. - Subsidiary

Third-Party Intermediary:   

  • Freight Forwarding Agent , Agent/Consultant/Broker
  • Subsea EPIC Contractor , Contractor/Sub-Contractor
  • Topsides EPIC Contractor , Contractor/Sub-Contractor

Type of Bribe:   Money

Cash, Wire or Check:    N/A

Purpose of Bribe:    Evade/reduce taxes or penalties, Facilitate import/export/delivery of products

TRANSACTION OVERVIEW
Bribes to NCS officials that expedited the delivery of goods and equipment into Nigeria.

Period of Bribery:   2004 – 2006

Total Bribery Payments:    $2,000,000

Total Revenue Generated from Bribery:    N/A

Total Profit Earned or Expenses Avoided from Bribery:    $7,000,000

Country(ies) involved:    Nigeria

Officials Potentially Influenced (Name; Title; Organization):  

  • Name N/A, Officials; Nigerian Customs Service ("NCS");

Defendant-Related Entities Involved in the Misconduct:    Shell International Exploration and Production Inc. - Subsidiary

Third Party Intermediary:    Freight Forwarding Agent - Agent/Consultant/Broker
Subsea EPIC Contractor - Contractor/Sub-Contractor
Topsides EPIC Contractor - Contractor/Sub-Contractor

Type of Bribe:   Money

Cash, Wire or Check:    N/A

Purpose of Bribe:    Evade/reduce taxes or penalties, Facilitate import/export/delivery of products

Misconduct by Subsidiary?  Yes


Parent(s):   Royal Dutch Shell plc.

Subsidiary:  Shell Nigeria Exploration and Production Company Ltd.

  • Percentage of Ownership:    100.00 %
  • Direct or Indirect Ownership:    Unknown
  • Parent Had Knowledge of Sub’s Bribery?:    No
  • Subsidiary Expressly Alleged to Be Parent's Agent:    No
  • Parent Liable for Sub Misconduct?:    No

Subsidiary:  Shell International Exploration and Production Inc.

  • Percentage of Ownership:    100.00 %
  • Direct or Indirect Ownership:    Unknown
  • Parent Had Knowledge of Sub’s Bribery?:    No
  • Subsidiary Expressly Alleged to Be Parent's Agent:    No
  • Parent Liable for Sub Misconduct?:    No

M&A Negotiated or Completed During Misconduct, Investigation, or Resolution?     No

N/A

Mitigating Factors Referenced by the Government (Company Defendants):

Defendant Self-Report Cooperation Voluntary Remedial Measures Misconduct Limited to Low Level Individuals Other factors
Shell Nigeria Exploration and Production Company Ltd.    

Aggravating Factors Referenced by the Government (Company Defendants):

Defendant Insufficient Cooperation Insufficient Remedial Measures
Shell Nigeria Exploration and Production Company Ltd.    

Total Monetary Sanctions for the Action:    $30,000,000

Case Status:    Resolved


Disposition:    Deferred Prosecution Agreement

Date of Disposition:    11/04/2010

Shell Nigeria Exploration and Production Company Ltd.

—  Total Monetary Sanctions for Defendant:    $30,000,000

—  Organizational Probation:    None

—  Compliance Obligation:    Yes

—  Reporting Obligation:    Self-reporting

—  Admission of Guilt/Acceptance of Responsibility:    Yes

No Document Title Date Category