Lack of Sufficient Third-Party Diligence and Oversight Leads to $41 Million Penalty for Foster Wheeler

On June 25, 2021, the Department of Justice (“DOJ”) and the Securities Exchange Commission (“SEC”) simultaneously announced that the international engineering and project management firm, Amec Foster Wheeler (“Foster Wheeler” or the “Company”), a subsidiary of John Wood Group, plc, would pay over $41 million for combined criminal and civil Foreign Corrupt Practices Act (“FCPA”) violations. 

The violations stemmed from Foster Wheeler’s admission that it had participated in a scheme to pay bribes to decision-makers at Petrobras in support of its effort to win a $190 million contract to design a gas-to-chemicals complex in Brazil. The DOJ identified at least one of the Foster Wheeler employees involved in the scheme as a United States citizen based in Foster Wheeler’s Houston office and that the Company took acts in furtherance of the scheme while located in New York and Texas.

Foster Wheeler entered into a sham agency contract with a Brazilian intermediary company for the purpose of funding bribes to public officials. The bribes were paid through third party agents, including one agent who failed Foster Wheeler’s due diligence process but was allowed to continue to work on the project “unofficially.” After paying over $1 million in bribes, which were not accurately recorded in its books and records, Foster Wheeler was awarded the contract and earned at least $12.9 million in profits from the business.

With regard to the criminal violations, the DOJ charged Foster Wheeler with one count of conspiracy to violate the anti-bribery provisions of the FCPA. The Company agreed to a three year deferred prosecution agreement and a total penalty of $18,375,000.

On the civil side, Foster Wheeler consented to the SEC’s cease-and-desist order finding that the Company violated the anti-bribery, books and records, and internal accounting controls provisions of the FCPA. Foster Wheeler agreed to disgorge $17,656,302 and pay an additional $5,107,985 for prejudgment interest.

The monetary criminal penalty included a 25% reduction from the applicable Sentencing Guidelines, and the SEC’s cease-and-desist order considered the Company’s cooperation with the investigation, immediate engagement in remedial measures (including termination of certain employees), and implementing enhancements to its compliance program. We have previously written about such considerations.

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