Uncertainty for SBM Offshore Continues as Prosecutors Reject Leniency Deal Again
Dutch company SBM Offshore, supplying offshore oil production facilities, has yet to resolve its situation in Brazil, after its agreement to settle allegations linking it to a bribery case there, have been rejected by the country’s prosecutors.
Namely, Brazilian prosecutors on Thursday upheld the previously announced decision to reject the leniency agreement signed between SBM, Petrobras, and Brazilian authorities, which would clear SBM free from further investigation.
To remind, the Dutch firm, one of the world’s largest suppliers of floating production storage and offloading units for the offshore oil and gas industry, had been accused of bribing its way to Petrobras’ FPSO contracts. This then moved Petrobras to freeze SBM out of future FPSO bidding projects, until the matter is resolved.
In July, SBM Offshore, Petrobras, and the Brazilian authorities including the Ministry of Transparency, Oversight and Control, the Public Prosecutor’s Office (MPF), and the General Counsel for the Republic (AGU) signed a leniency agreement to close “the payment of undue advantages to employees of Petrobras.”
Under the deal, SBM Offshore would obtain the full discharge and exemption from legal actions for all matters related to or arising from any acts relating to its then main Brazilian agent and his companies over the period 1996 – 2012 and all related investigations conducted by Petrobras, the MPF, and the MTFC.
In exchange, SBM Offshore agreed to pay $162.8 million in total, of which $149.2 million would go to Petrobras, $6.8 million to the Public Prosecutor’s Office and $6.8 million to the Council of Control of Financial Activities for the implementation of units for massive electronic process of information and other instruments to be used in the prevention and fight against corruption.
However, the agreement was subject to the approval of the Fifth Chamber for Coordination and Review and Anti-Corruption of the Federal Prosecutor Service.
The Fifth Chamber in September refused to give the approval for the leniency agreement signed with Petrobras and the Brazilian authorities. Following the announcement, MPF and AGU filed appeals.
Decision upheld
In a statement on Thursday afternoon, October 6, SBM Offshore said that the Fifth Chamber had convened earlier during the day to review its decision on the basis of the appeals filed by the AGU and MPF, and subsequently decided to uphold the previous decision, and forward the matter for review to the Higher Council.
“The Company learned that the Fifth Chamber has confirmed its decision of September 1, 2016 in which the Leniency Agreement as per the current terms was not approved, and referred the matter, including review of the appeals filed by the AGU and the MPF, to the Higher Council of the MPF (Conselho Institutional) for further consideration and decision,” SBM Offshore said.
The Higher Council is an institutional body within the MPF, in which prosecutors from all seven Chambers of the MPF are represented.”
SBM Offshore said it remained committed to engage with all relevant authorities until the leniency agreement is approved by the Fifth Chamber.
“Until then, the Company is not under any obligation to make payments under the Leniency Agreement… It is currently not possible to predict the timing or final outcome of these developments, and the Company will update the market accordingly,” SBM Offshore said.
SBM Offshore operates eleven FPSO units, ten of which are company-owned and one third party contract for the client’s own vessel, making it one of the world’s largest FPSO operators. In 2015, Brazil accounted for the largest share of the company’s fleet operations with a cumulated 129 million barrels of oil in 2015.
