Three Swiss-based subsidiaries of Dutch group SBM Offshore, which sells systems and services to the offshore oil and gas industry, were ordered to pay CHF7 million ($7.5M) by the Office of the Attorney General of Switzerland (OAG)  including a fine of CHF4.2 million ($4.5M) for failing to prevent corruption.

In a press release, the OAG said the three companies failed to take all the reasonable organizational measures required to prevent the bribery, of foreign public officials in Angola, Equatorial Guinea and Nigeria.

The Swiss companies SBM Holding Inc. SA, Single Buoy Moorings Inc. and SBM Production Contractors Inc. SA were sentenced by the OAG and ordered them to pay an amount of over CHF 7 million, including a fine of CHF 4.2 million.

The Misconduct

Between 2006 and 2012, as a result of multiple and serious deficiencies in their internal organization, the three companies failed to prevent the bribery of public officials in Angola, Equatorial Guinea and Nigeria (Art. 102 para. 2 Swiss Criminal Code [SCC] in conjunction with Art. 322septies SCC).

Systemic corruption  
Bribes of over more than USD 22 million and close to EUR 1 million were paid to public officials between 2006-2012 in Angola, Equatorial Guinea and, to a lesser extent, Nigeria. The money originated from bank accounts held by SBM Holding Inc. SA and were channeled via intermediaries acting through shell companies, under the cover of sham contracts concluded with the three Swiss companies now convicted.

These corrupt practices were part of a system specifically set up to pay substantial bribes to foreign public officials with the aim of securing contracts for the SBM Offshore group.

Failure to prevent

During this time period, the corruption risk assessment, the measures and procedures for preventing corruption and the related controls, in particular in relation to the activities of intermediaries, were either non-existent, or wholly inadequate.

The OAG determined that the failure to prevent corruption is all the more serious in that the intermediaries used by the three companies were hired to provide services in relation to the oil and gas industry, which is notoriously high risk in terms of corruption, and involved companies in countries prone to endemic corruption.

The OAG found that lack of organization extended to all three of the companies, as they shared the same offices and, in part, the same staff and managers, and therefore were found jointly liable.

The Penalty

The Fine

The Swiss authorities assessed the level of fines imposed the companies based primarily on the seriousness of the offence, the lack of organization, the damage caused and the financial capacity of the offender.

The maximum fine under Swiss law is CHF 5 million (Art. 102 para. 1 in fine SCC). The 3 companies have been ordered to pay a fine of CHF 4.2 million, which takes into account the lapse of time since the bribes were paid ( a decade ago), and the measures that the SBM Offshore group has taken since 2012 to bring an end to corrupt practices.

The Compensatory Claim

The 3 companies have been ordered to pay a compensatory claim of CHF 2.8 million in connection with the bribes paid to officials in Nigeria. Under Article 71 paragraph 1 SCC, a compensatory claim may be ordered if the assets liable to forfeiture are no longer directly available.

It was not possible to order compensatory claims in connection with the bribes paid in Angola and Equatorial Guinea, because the related profits made by the SBM Offshore group were already included in the amounts paid within the frame of the settlements reached in the Netherlands and the United States in 2014 and in 2017 respectively.

According to the relevant legal principles, it is not possible to order twice the forfeiture of assets stemming from the same bribes.

Individuals Prosecuted

On 6 July 2020 the Swiss Criminal Chamber of the Federal Criminal Court convicted a former executive of the SBM Offshore group and of SBM Holding Inc. SA under a simplified procedure of bribing foreign public officials in Angola.

Double Jeopardy?

Firstly the Swiss Authorities are certainly showing an appetite for prosecuting companies that engage in cross-border corruption out of Switzerland, even when part of the allegations concerned has already been the subject of settlements abroad.

SBM Offshore went through a 3 year monitoring requirement imposed in 2017 as part of the deferred prosecution agreement (DPA) that it reached with the US DOJ, concerning its corrupt activities on three continents. It agreed to pay then a $238 million penalty.

In 2014, it agreed to pay $200M in disgorged profits to the Dutch authorities on related bribery allegations with Dutch authorities, and a $40 million penalty.

Four years later, it entered an out-of-court settlement with Brazilian authorities. The Brazil case was against SBM Offshore’s CEO Bruno Chabas and a member of the company’s supervisory board, Sietze Hepkema. Under the terms of the settlement Chabas and Hepkema paid approximately $60,000 each.

This case is a sore reminder that resolutions concluded in one country are far from the end of a long and treacherous road for multinationals that engage in cross-border bribery.

Multinational companies are faced with several legal challenges and hefty costs associated with cross-border bribery investigations. By definition, cross-border bribery involves bribery in multiple jurisdictions. So each country in which the bribery took place may claim the right to prosecute, resulting in the “piling on” of penalties.

Whilst some relief may provided, as it was the case in this Swiss compensatory claim, relief is never a guarantee, meaning that multinational companies must deal with multiple laws and address the risk of double jeopardy.

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