Panalpina, Shell Settle Bribe Probe for $236 Million

Panalpina World Transport Holding Ltd., a Swiss freight forwarding company, Royal Dutch Shell Plc, and five oil services companies will pay $236.5 million to resolve a U.S. probe of overseas bribery.

Panalpina admitted today it paid thousands of bribes to African, Asian and South American officials on behalf of its customers in the oil and gas industry, according to a U.S. Justice Department statement. A U.S. subsidiary, Panalpina Inc., agreed to plead guilty. The payments resolve investigations by prosecutors and the U.S. Securities and Exchange Commission.

The U.S. will collect $156.5 million in criminal penalties and $80 million in civil sanctions for violations of the Foreign Corrupt Practices Act. The payments follow the first U.S. “sweep” of public companies and third parties in an industrial sector for bribes paid abroad, according to the SEC.

“These companies resorted to lucrative arrangements behind the scenes to obtain phony paperwork and special favors, and they landed themselves squarely in investigators’ crosshairs,” Robert Khuzami, the SEC director of enforcement, said in a statement.

The other companies that settled with the U.S. were Transocean Ltd., Tidewater Marine International Inc., Pride International Inc., GlobalSantaFe Corp. and Noble Corp. GlobalSantaFe merged with Transocean in 2007. Transocean is the world’s largest offshore drilling contractor. Tidewater is the world’s largest offshore energy support-services company.

‘Steep Cost’

The Justice Department’s head of the criminal division, Lanny Breuer, said companies have agreed to pay more than $1 billion to resolve foreign bribery allegations.

“As these fines show, foreign bribery has a steep cost -- a cost that can be avoided through full compliance with the law,” Breuer said.

To resolve the probes, Panalpina agreed to pay a total of $81.9 million; Pride will pay $56.1 million; Shell will pay $48.1 million; Transocean will pay $20.6 million; Tidewater will pay $15.7 million; Noble will pay $8.1 million; and GlobalSantaFe will pay $5.9 million, according to the Justice Department.

Prosecutors filed criminal FCPA charges against units of Panalpina, Pride, Shell, Tidewater, and Transocean, which they will defer if the companies make required reforms during a probationary period. The Justice Department entered a non- prosecution agreement with Noble.

‘Burdensome Chapter’

“The settlement of these claims marks the closing of an extremely burdensome chapter in Panalpina’s history and the end of a very demanding three-year effort to address and eliminate serious concerns,” said Chief Executive Officer Monika Ribar in a statement. The company, Ribar said, must “build on the strong and sustainable compliance culture we have put in place.”

The bribes were paid to expedite imports of goods and equipment, avoid customs duties on imported goods, extend drilling contracts, and lower tax assessments, according to the SEC.

Panalpina Inc. admitted that between 2002 and 2007, it paid thousands of bribes totaling at least $27 million to officials in Angola, Azerbaijan, Brazil, Kazakhstan, Nigeria, Russia and Turkmenistan, according to the Justice Department.

‘Fully Cooperated’

Shell spokeswoman Kirsten Smart said in a statement: “Shell fully cooperated with the U.S. Department of Justice and the SEC throughout this investigation. Shell has enhanced its compliance program and internal controls. Staff found to have been in violation of policy were either disciplined or dismissed from Shell.”

Pride spokeswoman Kate Perez said by phone that neither of the company’s agreements requires a compliance monitor.

In a suit filed today in federal court in Washington, the SEC claims Transocean Inc, a Cayman Island unit of Transocean Ltd., made payments to extend the temporary importation status of its drilling rigs, obtain false paperwork associated with the rigs and obtain clearances.

“We’re glad we’ve reached an agreement, and we’re moving forward with our robust legal and ethics compliance program,” Transocean spokesman Guy Cantwell said in an interview.

GlobalSantaFe’s merger with Transocean created the world’s largest offshore contract drilling fleet, according to the company’s website.

Tidewater spokesman Joe Bennett had no comment on today’s agreement with the government, and he referred to a statement by the company’s chief executive, who announced the bribery settlement yesterday on an investors’ call.

‘Better Company’

“While this has been a difficult period for Tidewater, we’re glad to have the investigation completed and now behind us,” Dean Taylor, Tidewater Inc.’s chairman, president and CEO told analysts and investors yesterday. “We’ve learned from it, and we are a better company.”

Noble’s Chief Executive Officer David Williams said in a statement that “ethical business conduct and strict compliance with the law remain central to Noble’s operating philosophy. We consistently and openly cooperated with the DOJ and SEC since self-reporting in 2007 and have shared the results of our own independent investigation.”

The cases are: SEC v. Noble Corp., 10-cv-4336; SEC v. Panalpina Inc., 10-cv-4334; SEC v. Pride International, 10-cv- 4335, U.S. District Court, Southern District of Texas (Houston); SEC v. Transocean Inc., 10-cv-1891, U.S. District Court for the District of Columbia (Washington).

To contact the reporters on this story: David Voreacos in Newark, New Jersey, at dvoreacos@bloomberg.net; Laurel Brubaker Calkins in Houston at laurel@calkins.us.com.

To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net.

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