Brazilian authorities appear to have settled on the sum SBM Offshore must pay to conclude a long-running bribery investigation, but remain divided on the non-financial terms of the agreement.
Sources close to the negotiations told Latin Lawyer's sister publication GIR that Dutch oil services company SBM Offshore and Brazilian prosecutors should resolve allegations that the company's executives bribed officials at Brazil's state-controlled oil company Petrobras with a US$340 million settlement – the same amount that was agreed in a 2016 settlement but ultimately rejected by a board of senior prosecutors.
It is understood the money will be split across two settlements that the company is negotiating with three Brazilian authorities. One agreement is being brokered with Brazil's Public Prosecutors Office (MPF) and the other is a joint settlement between Brazil's Attorney General's Office (AGU) and Ministry of Transparency (CGU).
However, it is understood that while all parties are comfortable with the total settlement figure, the protracted negotiations remain hindered by Brazilian authorities' inability to coordinate other aspects of the resolutions.
Poor coordination between Brazilian authorities is a common complaint among lawyers in the country, and has been identified by a senior Brazilian prosecutor as an area that needs further legal clarification.
The slow-moving talks in Brazil are set against the backdrop of major developments in the SBM Offshore case in the US and the UK. On 29 November, the company agreed a US$238 million settlement with the US Department of Justice (DOJ) to resolve allegations SBM executives bribed officials in Brazil, Angola, Equatorial Guinea, Kazakhstan and Iraq. Two SBM executives pleaded guilty to conspiring to violate the FCPA earlier that month.
In the UK, the Serious Fraud Office (SFO) charged two of the company's executives on 30 November with conspiracy to make corrupt payments. The pair found themselves in the SFO's crosshairs for their alleged role in bribes paid to Iraqi officials between 2005 and 2011 by Monaco-based oil consultancy firm Unaoil, which is being investigated by the SFO for paying bribes to secure oil contracts in numerous countries.
The Brazilian element of the SBM Offshore investigation concerns allegations that the company's executives bribed Petrobras officials between 1996 and 2012. The DOJ appears confident of the value of SBM Offshore's resolutions in Brazil, as it said in its press release announcing the US settlement that the value of the three-year deferred prosecution agreement was calculated taking into account "payment of penalties likely to be paid" to the Brazilian authorities.
SBM Offshore signed its first leniency agreement in this matter in 2014, when it agreed a US$240 million settlement with the Dutch Public Prosecutor's Office. With the announcement of the US agreement, SBM Offshore has spent US$475 million to cover settlements. That figure could exceed US$800 million if SBM Offshore signs a leniency agreement in Brazil for the current proposed figure.
The current deal appears to mirror a failed 2016 settlement that was agreed between the company and prosecutors, but rejected by a review board of senior MPF prosecutors.
SBM Offshore struck the deal in July 2016 with the MPF, AGU and CGU, after a two-year investigation by Brazilian authorities. At the time, the company announced it had secured the first in-principle leniency agreement with the three agencies and the settlement was widely hailed as a landmark in Brazilian anti-corruption enforcement.
However, the agreement hit a wall when Brazil's Fifth Chamber for Coordination and Review and Anti-Corruption refused to approve it in September 2016 – a decision that was reinforced by the Higher Council of the MPF in December that year.
The 2016 deal was worth the same amount as is currently being discussed by the parties, and it also would have seen US$328 million of the agreement handed to Petrobras. It is not known whether the current deal features the same agreement.
Counsel to SBM Offshore
Pinheiro Neto Advogados
Partner José Alexandre Buaiz Neto in Brasília
Paul Hastings LLP
Partner Robert Luskin and of counsel Jennifer Riddle in Washington, DC
Cravath, Swaine & Moore LLP
Partner John Buretta in New York
Forensic Risk Alliance
Toby Duthie and Rob Mason and Gordon Macleod in London
De Brauw Blackstone Westbroek
Partners Jaap de Keijzer and Marnix Somsen