It’s been a few months since we’ve discussed the massive corruption case coming out of Brazil related to Petrobras, a state-owned enterprise that is facing allegations its employees both took and paid bribes in the company’s contract dealings. We’ve been following this issue closely because of the potential for individuals with information about bribery of “foreign officials” by publicly traded companies, which violate the FCPA, to report them to the U.S. Securities and Exchange Commission (SEC) under the whistleblower program and receive a monetary reward for the information if more than $1 million in penalties occur as a result.
Ensco, an oil and gas serves company headquartered in London which operates offshore well drilling, was the company in the news today. It disclosed to the SEC that Petrobras canceled its contract because its investigation revealed it was acquired through bribery. The rig charter was originally operated by a third company and purchased by Ensco in 2011. Ensco made an initial disclosure to the SEC earlier but I presume today’s disclosure was notifying its investors of the cancellation of a material contract.
The potential for bribery at Ensco came to light publicly over the summer when Brazilian police arrested the former director of Petrobras’ international division, Jorge Zelada. In July, Ensco announced that an internal compliance review revealed no evidence of wrongdoing by its employees or other representatives.
Zelada was also suspected of receiving bribes for a contract of Vantage Drilling as well. Vantage is also listed on the New York Stock Exchange and subject to the FCPA – so it has disclosed potential issues to the SEC as well.
In September, the world’s largest offshore rig contractor, Transocean, also was implicated by a former executive of Petrobras testifying in the corruption case that is known as Carwash. At the time, Transocean issued a statement denying any wrongdoing in the acquisition of the Petrobras 10000 contract.