Enforcement Action

 

Docket or Case Number:    17-cr-698

Court:    E.D. New York

Initiation Date:    12/22/2017  Information

Prosecuting Agency:    US Department of Justice

Name of Prosecuting Attorneys:   

  • Bridget M. Rohde, Acting U.S. Attorney
  • Patrick T. Hein, Assistant United States Attorney
  • Sandra L. Moser, Acting Chief, Fraud Section, Criminal Division
  • Derek J. Ettinger, Trial Attorney, Fraud Section, Criminal Division
  • David M. Fuhr, Trial Attorney, Fraud Section, Criminal Division
  • Christopher J. Cestaro, Assistant Chief, Fraud Section, Criminal Division
  • Alixandra Smith, Assistant United States Attorney

Assisting Agencies:    Federal Bureau of Investigation , Brazilian Federal Prosecution Office (Ministerio Publico Federal) , Singaporean Attorney General's Chambers

Type of Action:    DOJ Criminal Proceeding

Origin of the Proceeding:    N/A

Whistleblower:    Unknown

Case Status:    Resolved


Summary  Information

Keppel Offshore & Marine Ltd. ("KOM") was a Singaporean corporation that operated shipyards in Asia, North and South America, and Europe. The company primarily built mobile offshore drilling rigs and handled reparis, conversions, and upgrades of shipping vessels. Though not mentioned in the court documents, KOM was a wholly-owned subsidiary if Keppel Corporation, a Singapore corporation publicly traded on the Singaporean stock exchange.

Keppel Offshore & Marine, USA Inc. ("KOM USA") was a wholly-owned subsidiary of KOM based in Houston, Texas, which supervised operations of KOM facilities in Brazil and other locations.

For many years, executives and employess at Brazil state oil company, Petroleo Brasileiro S.A., commonly known as Petrobras, used the bidding process for large projects at the company to solicit bribes from companies awarded contracts with Petrobras. From about 2007 and 2014, executives at KOM USA participated in these corrupt schemes at Petrobras by agreeing to pay bribes totalling approximately $8.8 million to secure a tension leg platform project with Petrobras. Multiple payments were made over the years to an employee at Petrobras as well as a party official with the Workers' Party of Brazil, a Brazilian political party. In all, KOM and KOM USA obtained approximately $159.9 million in profits (approximately $3.2 million of the profits were directly attributable to KOM USA) through the contract it secured with the bribes to Petrobras.

On December 22, 2017, the DOJ filed a single count information in the Eastern District of New York against KOM USA alleging conspiracy to violate the anti-bribery provisions of the FCPA. On the same date, the company entered into a plea agreement with the DOJ. Under the terms of the agreement, KOM USA pled guilty to the conspiracy charge and agreed to a criminal fine of $4,725,000, which would be paid by KOM as part of its global settlement with the DOJ as well as the Brazilian and Singaporean authorities.

In a related proceeding on December 22, 2017, the DOJ filed a single count information in the Eastern District of New York against KOM alleging conspiracy to violate the anti-bribery provisions of the FCPA. On the same date, the company entered into a three year deferred prosecution agreement with the DOJ. Under the terms of the agreement, KOM agreed to pay a total monetary penalty of $422,216,980, which represented a 25% departure below the minimum U.S. Sentencing Guidelines recommended fine, and to self-report on the status of the company's improved compliance policies for three years. Of the total criminal penalty, $105,554,245 would be paid to the U.S. government and included a $4,725,000 criminal fine that KOM agreed to pay on behalf of KOM USA. The remainder of the total fine was split between Brazil and Singapore, with $211,108,490 going to Brazilian authorities and $105,554,245 to Singaporean authorities. In agreeing to defer prosecution, the DOJ noted KOM's substantial cooperation and remediation, but the DOJ did not give KOM credit for self-reporting because the DOJ already knew of the alleged misconduct by the time the company reported it to the agency.

Country(ies) involved:    Brazil

Sanction to Bribe Ratio:    $0,400 / $8,800,000 = 0.00 %

Sanction to Revenue Ratio:    N/A

Sanction to Profit Ratio:    $0,400 / $159,900,000 = 0.00 %

Number of Related Enforcement Actions (Including This Enforcement Action):    3

Country(ies) involved:    Brazil

Total $ Bribery Payments:    $55,000,000

Total $ Revenue Generated from Bribery:    N/A

Total $ Profit Earned or Expenses Avoided from Bribery:    $351,800,000

Total $ Monetary Sanctions:    $105,554,645

Sanction to Bribe Ratio:    $105,554,645 / $55,000,000 = (191.92 %)

Sanction to Revenue Ratio:    N/A

Sanction to Profit Ratio:    $105,554,645 / $351,800,000 = (30.00 %)

Name:    Keppel Offshore & Marine USA Inc.

Place of Incorporation:    United States

HQ Country(ies):    United States

Entity Type:    Private Company

FCPA Claims:    Anti-Bribery, Conspiracy (18 U.S.C. 371)

Related Claims:    N/A

Statutory Basis for FCPA Jurisdiction:    Domestic Concern ; Conspirator

Period of Bribery:   2007 - 2014

Total Bribery Payments:    $8,800,000

Total Revenue Generated from Bribery:    N/A

Total Profit Earned or Expenses Avoided from Bribery:    $159,900,000

Country(ies) involved:    Brazil

Officials Potentially Influenced (Name; Title; Organization): 

  • Name N/A, Employee; Petroleo Brasileiro S.A. - Petrobras
  • Name N/A, Party Official; Workers' Party of Brazil

Defendant-Related Entities Involved in the Misconduct:    N/A

Third-Party Intermediary:   

  • Local Brazilian agent , Agent/Consultant/Broker

Type of Bribe:   Money

Cash, Wire or Check:    Wire Transfer

Purpose of Bribe:    Obtain/retain business

TRANSACTION OVERVIEW
Payments in Brazil

Period of Bribery:   2007 – 2014

Total Bribery Payments:    $8,800,000

Total Revenue Generated from Bribery:    N/A

Total Profit Earned or Expenses Avoided from Bribery:    $159,900,000

Country(ies) involved:    Brazil

Officials Potentially Influenced (Name; Title; Organization):  

  • Name N/A, Employee; Petroleo Brasileiro S.A. - Petrobras;
  • Name N/A, Party Official; Workers' Party of Brazil;

Defendant-Related Entities Involved in the Misconduct:    N/A

Third Party Intermediary:    Local Brazilian agent - Agent/Consultant/Broker

Type of Bribe:   Money

Cash, Wire or Check:    Wire Transfer

Purpose of Bribe:    Obtain/retain business

Misconduct by Subsidiary?  Yes


Parent(s):   Keppel Corporation; Keppel Offshore & Marine Ltd.

Subsidiary:  Keppel Offshore & Marine Ltd.

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

Subsidiary:  Keppel Offshore & Marine USA 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?:    Yes

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
Keppel Offshore & Marine USA Inc.    

Aggravating Factors Referenced by the Government (Company Defendants):

Defendant Insufficient Cooperation Insufficient Remedial Measures
Keppel Offshore & Marine USA Inc.  

Total Monetary Sanctions for the Action:    $0,400

Case Status:    Resolved


Disposition:    Plea Agreement

Date of Disposition:    12/22/2017

Keppel Offshore & Marine USA Inc.

—  Total Monetary Sanctions for Defendant:    $4,725,400

—  Organizational Probation:    None

—  Compliance Obligation:    Yes

—  Reporting Obligation:    No reporting

—  Admission of Guilt/Acceptance of Responsibility:    Yes

    Note: This sanction may have been imposed jointly and severally on multiple defendants, or it may resolve claims against more than one defendant in this proceeding or related proceedings. You should review the case summaries and resolution documents for all related cases to better understand how sanctions were levied against the defendants.

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