In May 2008, the DOJ and SEC announced resolution of an FCPA enforcement action against Willbros Group, Inc. ("WGI"), Willbros International Inc., ("WII"), and certain of its employees in connection with improper payments made to Nigerian and Ecuadorian officials. WGI, a Panama company traded on the NYSE with a principal place of business in the U.S., provides construction and engineering services to the oil and gas industry and operates internationally through WII, a wholly-owned subsidiary also based in Panama with a principal place of business in the U.S.
Pursuant to a three-year DOJ deferred prosecution agreement and underlying six count criminal information which charges substantive FCPA anti-bribery and books and records and internal control violations, WGI and WII admitted, accepted and acknowledged its responsibility for the acts of its officers, employees and agents in connection with the improper payments and agreed to pay a $22 million criminal fine, enhance its FCPA compliance policies and procedures, and engage an independent compliance monitor for a period of three years.
The companies admitted that from late 2003 to March 2005 its employees agreed to make improper payments totaling over $6 million to Nigerian officials to assist in obtaining and retaining lucrative gas pipeline projects in Nigeria. Recipients of the improper payments included officials of Nigerian National Petroleum Corporation (the state-owned oil company), a senior official in the executive branch of the Nigerian federal government, and individuals associated with the dominant political party in Nigeria. In order to fund the improper payments, the companies' employees entered into sham consulting agreements by which various consulting companies invoiced the companies for 3% of the contract revenue and directed payment to a bank account in Lebanon. The sham invoices ultimately were paid from company funds in U.S. bank accounts. The companies acknowledged that certain of its employees knew that the consultants were engaged in corrupt negotiations with the Nigerian officials who had influence over the projects and that the consultants intended to use some or all of the funds paid by the companies to influence the officials. The companies also acknowledged that even after an internal investigation uncovered the improper conduct its employees sought alternative funding sources (such as loans and petty cash funds) necessary to continue the outstanding commitments made to the foreign officials. According to the plea agreement, petty cash funds were also abused by company employees to make improper payments to Nigerian revenue officials in order to lower taxes that the revenue officials would have otherwise assessed against the companies and to Nigerian court officials in order to secure an improper advantage in pending litigation.
The companies also admitted that certain of its employees based in South America agreed to make approximately $300,000 in improper payments to PetroEcuador (the state-owned oil company) and its subsidiary to assist the companies in obtaining a gas pipeline project. The companies also acknowledged that employees at an indirect WGI subsidiary in Bolivia devised a scheme in which it secured false invoices from fictitious vendors in order to fraudulently claim value added tax credits which resulted in lower tax liability.
WII's books and records were consolidated with WGI's for purposes of financial reporting, and the companies acknowledged that the numerous improper payments were recorded in the companies' books and records as contract costs incurred for legitimate consulting services or under other false descriptions.
In agreeing to enter into the three year deferred prosecution agreement, the DOJ noted the companies' thorough review of the improper payments, its "exemplary cooperation," and its implementation of enhanced compliance policies and procedures.
In a parallel enforcement action based on the same above conduct, the SEC filed a settled civil action against WGI and four former employees alleging violations of, among other things, the FCPA's antibribery provisions and its books and records and internal control provisions. Without admitting or denying the allegations, WGI agreed to consent to entry of a final judgment by which it will pay disgorgement of $8.9 million (which represents all net profits associated with the tainted Nigerian contracts) plus prejudgment interest of $1.4 million. Four company employees involved in the improper payment schemes also consented to entry of final judgments and agreed to pay fines ranging up to $35,000. One of these employees, Jason Steph, previously pleaded guilty in 2007 to conspiring to bribe Nigerian officials in violation of the FCPA.