Bribes paid on behalf of Royal Dutch Shell Plc’s Nigerian unit came from “a culture of corruption” that Swiss freight forwarder Panalpina World Transport Holding Ltd. admitted in a U.S. court yesterday.
Panalpina, Shell and five oil services companies agreed to pay $236.5 million to settle probes by the U.S. Justice Department and Securities and Exchange Commission. Panalpina, which admitted to bribing government officials in hundreds of ways in seven nations, will pay $81.5 million. Shell will pay $48.1 million.
Prosecutors agreed to defer prosecution of five companies, including Panalpina and Shell. Panalpina said it paid at least $49 million in bribes to government officials in Angola, Azerbaijan, Brazil, Kazakhstan, Nigeria, Russia and Turkmenistan. The bribes from 2002 to 2007 let its clients avoid the customs process, pass off phony documents or smuggle contraband including medicines and explosives, Panalpina said.
“Prior to 2007 a culture of corruption within Panalpina emanated from senior level management in Switzerland who tolerated bribery as business as usual,” the company said in a 34-page statement filed in federal court in Houston. “Dozens of employees throughout the Panalpina organization were involved in various schemes to pay bribes to foreign officials.”
The company said Shell’s Nigerian employees “specifically requested Panalpina Nigeria to provide false invoices with line items to mask the nature of the bribes.” Shell wanted to “hide the nature of the payments to avoid suspicion if anyone audited the invoices,” Panalpina said.
Panalpina, based in Basel, Switzerland, dropped 4.1 percent to 123.2 francs ($128.63) yesterday, ending an eight-day rise.
Shell separately admitted paying $2 million to Nigerian subcontractors on its deepwater Bonga Project. Shell knew some money would go as bribes to Nigerian officials to circumvent the customs process and give the company “an improper advantage,” according to its admission in federal court in Houston.
Prosecutors charged Shell’s Nigerian subsidiary with conspiring to violate the anti-bribery and books and records provisions of the FCPA. The Justice Department will defer prosecution for three years as long as the company makes required reforms.
The SEC said Shell, based in The Hague, reaped about $14 million in profit as a result of the payments related to the Bonga Project.
Panalpina helped oil and gas industry customers move rigs, ships, workboats and other equipment in Nigeria. Its workers there had 160 different terms for bribes, like “evacuations” and “export formalities,” while its Kazakh workers called them “sunshine” and “black cash,” Panalpina said.
The bribes in Nigeria were spread throughout the government for specific transactions, while some were weekly or monthly allowances to ensure “officials would provide preferential treatment to Panalpina and its customers,” the company said.
Knowledge of the bribes reached the directors, where a former chairman “actively resisted” an outside auditor’s proposal in 2001 to adopt a code of ethics with an anti-bribery provision, according to the statement.
The criminal probe of Panalpina, which had 15,000 workers in 80 countries, began in 2006, and the company’s cooperation after 2007 was “exemplary,” according to a Justice Department filing yesterday.
“Panalpina acknowledged and accepted responsibility for misconduct, investigated and identified the nature and extent of the misconduct,” and undertook a global remediation program, said a court filing by Panalpina and prosecutors.
The company replaced most of its top leaders, as well as U.S. managers implicated in improper conduct, ended its Nigerian business in 2007, and changed its operations in high-risk countries, according to the filing.
“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,” Chief Executive Officer Monika Ribar said in a statement yesterday.
Prosecutors filed a two-count criminal charge accusing Panalpina World Transport of conspiracy to violate the Foreign Corrupt Practices Act and a violation of the law’s anti-bribery provisions. Panalpina U.S. will plead guilty to conspiracy to falsify books and records and to aiding and abetting those violations of the FCPA.
The company also settled a lawsuit with the SEC.
In Nigeria, the company established Pancourier Inc., which used distinctive packaging to alert Nigerian customs officials to bribed shipments. As a result of bribes, the unit’s shipments sailed through customs without required paperwork or a pre- inspection process that “could take weeks to complete,” according to the SEC.
Bribes were paid to sidestep Angolan immigration laws, the SEC said. Angolan officials were bribed to fake employees’ exit and entrance documents, overlook visa inspections, and avoid deporting employees who overstayed visas, the agency said.
One scheme involved bribing Angolan military officers so customers could “use military cargo aircraft to transport their commercial goods,” according to the SEC.
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.
Pride International will pay $56.1 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, authorities said.
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); and SEC v. Transocean Inc., 10-cv-1891, U.S. District Court for the District of Columbia (Washington).
To contact the editor responsible for this story: David E. Rovella at email@example.com.