US-based Honeywell to pay over $160 million for bribery scandal in Brazil

Rick Steves

Honeywell UOP has agreed to pay more than $160 million to resolve parallel bribery investigations by criminal and civil authorities in the United States and Brazil stemming from bribe payments offered to a high-ranking official at Brazil’s state-owned oil company.

The U.S.-based subsidiary of Honeywell International Inc. entered into a three-year deferred prosecution agreement (DPA) with the department in connection with a criminal information filed in the Southern District of Texas charging the company with conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA).

The U.S. Department of Justice’s resolution is coordinated with prosecutorial authorities in Brazil, as well as the U.S. Securities and Exchange Commission (SEC).

According to court documents, between 2010 and 2014, the company conspired to offer an approximately $4 million bribe to a then-high-ranking executive of Petróleo Brasileiro S.A (Petrobras) in Brazil in order to win an approximately $425 million contract from Petrobras to design and build an oil refinery called Premium.

In exchange for the bribe, and after obtaining business advantages, including inside information and secret assistance, from the Petrobras executive, Honeywell UOP won the contract. Honeywell UOP earned approximately $105.5 million in profits from the corruptly obtained business.

Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division, said: “Honeywell UOP offered to pay millions of dollars in bribes to a high-ranking executive at Brazil’s state-owned oil company to win a lucrative contract. Today’s resolution once again demonstrates that in our relentless fight against corruption, the Department of Justice will work together with our partners, both domestic and foreign, to hold companies accountable for their criminal conduct.”

U.S. Attorney Alamdar S. Hamdani for the Southern District of Texas, said: “This case exemplifies corporate misconduct on a global level. Prosecuting and investigating this type of crime is an important role our office takes seriously in order to ensure fair and equal playing fields for U.S. companies and consumers. We will continue our efforts to aggressively investigate and prosecute those who violate the FCPA and combat corrupt practices in order to preserve the integrity of our nation’s business dealings here and abroad.”

$79 million to settle criminal charges brought by DoJ

Honeywell UOP will pay a criminal penalty of approximately $79 million. The department has agreed to credit up to approximately $39.6 million of that criminal penalty against amounts the company has agreed to pay to authorities in Brazil in connection with related proceedings to resolve an investigation by the Controladoria-Geral da União (CGU), the Ministério Público Federal (MPF), and the Advocacia-Geral de União (Attorney General’s Office).

Acting Assistant Director in Charge Michael H. Glasheen of the FBI Washington Field Office, said: “Honeywell UOP conspired to bribe a high-ranking official at Petrobras to win a contract from the company, effectively stifling competition. Bribery schemes like this one transcend borders, and collaboration with our foreign partners is crucial to the fight against international corruption. The resolution announced today demonstrates the FBI’s commitment to leveling the playing field across the global marketplace.”

Special Agent in Charge Ramsey E. Covington of the IRS Criminal Investigation (CI) Houston Field Office, commented: “Money is the center of the criminal world, and this company became a part of that world when it failed to adhere to national and international laws. It did not live up to the trust placed on it by both the public and its shareholders. In situations like this, IRS-CI will pursue criminal enterprises, regardless of where they operate. Our investigation, in this case, remains open and we are working with our law enforcement and prosecutorial partners to ensure that crime doesn’t pay.”

$81 million to settle SEC charges

The civil complaint has been filed by the Securities and Exchange Commission, charging Honeywell for bribery schemes in Brazil and Algeria. The company has agreed to pay more than $81 million to settle the SEC’s charges.

Charles Cain, Chief of the SEC Enforcement Division’s FCPA Unit, said: “For years, Honeywell neglected to implement sufficient internal accounting controls to mitigate against known corruption risks in countries like Brazil and Algeria. This failure created an environment in which Honeywell employees and agents could and did facilitate bribes.”

The SEC’s order provides for an offset of up to approximately $38.7 million of any payments made to Brazilian authorities. Therefore, the company’s minimum payment to the SEC would be approximately $42.4 million.

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