The SFO’s investigation into AFWEL
In July 2017, the SFO confirmed that it had opened an investigation into the activities of Amec Foster Wheeler PLC and any predecessor companies owning or controlling the Foster Wheeler business, together with the activities of any subsidiaries, company officers, employees, agents and any other person associated with any of these companies.
The SFO’s £103 million DPA with AFWEL
The DPA brings to the end the SFO’s four-year investigation into suspected bribery and corruption within the Foster Wheeler and Amec Foster Wheeler businesses.
It is made clear that the DPA only relates to the criminal liability of AFWEL and does not encompass liability attaching to any individual, including current and former employees or current and former agents of AFWEL. There are to be charging decisions in respect of individuals within three months.
Crucial in Lord Justice Edis’ assessment of whether a DPA was in the interests of justice in this case was the fact that Wood was entirely innocent of the wrongdoing but yet would “carry the can” for it. Despite this, Lord Justice Edis sought and received confirmation that the price paid by Wood for its acquisition of AFWEL in 2017 had not been discounted to reflect contingent liabilities which might result from the then recently announced SFO investigation. If so, Wood would benefit inappropriately from any further reductions of liabilities.
Under the terms of the DPA, AFWEL will:
- Take responsibility for 10 offences of corruption relating to the use of corrupt agents in the oil and gas sector by the legacy Foster Wheeler business.
Given the ongoing investigations into individuals, the Statement of Facts has not yet been published. However, some information about the alleged wrongdoing is available, particularly in the Indictment.
There are 10 offences, spanning a period of 18 years from 1996 to 2014 and which took place across Nigeria, Saudi Arabia, Malaysia, India and Brazil.
Only one count relates to an offence under the Bribery Act 2010 (a section 7 offence). The remainder relate to offences under the Criminal Law Act 1977 and the Prevention of Corruption Act 1906.
The Indictment refers to allegations of, among other matters, corrupt payments to the Nigerian police and tax officials to settle allegations of tax evasion, corrupt payments to the Saudi Arabia Ministry of Labour Offices in connection with the granting or quick processing of visas, and corrupt payments in connection with the award of contracts for services in Malaysia.
Lord Justice Edis found that the company’s compliance policies had not been effective because “these policies were not followed. Documents were created to conceal the fact that the company had employed agents to channel money to public officials.”
It is also apparent that internal investigations were undertaken and wrongdoing uncovered and reported to the board in 2007-2009. Lord Justice Edis was critical of the fact that there was no report to the SFO at that time, making it more difficult to investigate and prosecute individual offenders now (“I accept that there was no legal requirement to report suspected crime to the authorities, but there is a moral duty on all citizens in this respect which extends at least equally to corporations.”)
AFWEL’s actions were described by the SFO as having “subverted the rule of law and harmed the integrity of the economy in the United Kingdom” and by Lord Justice Edis as amounting to “very significant and systemic corruption” in terms of scale and duration.
- Pay £103 million in the UK, forming part of the US$177 million global settlement with UK, U.S. and Brazilian authorities.
The amounts to be paid by AFWEL in the UK include payments of:
- A full disgorgement of profits of £47,815,914.14 and US$3,531,260.40;
- Financial penalties of £46,033,891.97 and US$4,593,750;
- The SFO’s costs of £3,367,088; and
- Compensation to the people of Nigeria of £210,610.
This is the second time that a DPA has included compensation for overseas victims of corruption and the compensation relates to a 2003 tax claim that the company avoided as a result of corrupt payments to Nigerian tax officials. In his judgment, Lord Justice Edis referred to the tax evasion being the only offence which had “caused direct loss”, the other nine offences having indirectly caused harm.
As regards the offence relating to Brazil, the DPA is one of multiple resolutions. Settlements have also been agreed in the United States with the Department of Justice (‘DoJ’) and the Securities and Exchange Commission (‘SEC’), and with the Brazilian authorities.
The DPA is accompanied by an undertaking by Wood. Under the terms of the undertaking, Wood:
- Assumes responsibility for the performance of obligations and payments specified under the DPA (as outlined above).
- Agrees to ongoing cooperation with the SFO and, at the request of the SFO, any other law enforcement and regulatory authorities throughout the term of the DPA.
Ongoing cooperation includes cooperation with:
- The SFO and with any and all SFO pre-investigations, investigations and prosecutions relating to any AFWEL Associated Person; and
- Any other domestic or foreign law enforcement and regulatory authorities in any investigation or prosecution of any AFWEL Associated Person in connection with the conduct which is the subject of the Indictment and described in the Statement of Facts.
- Will report throughout the term of the DPA on an annual basis to the SFO on its group-wide ethics and compliance programme.
Client Alert 2021-213
