Serious Fraud Office (SFO) Enters into £103m Deferred Prosecution Agreement (DPA) With Amec Foster Wheeler Energy Ltd

In what will likely be viewed as a landmark decision, Lord Justice Edis recently gave formal approval to a Deferred Prosecution Agreement (DPA) between the Serious Fraud Office (SFO) and Amec Foster Wheeler Energy Ltd (AFWEL).  The DPA relates to the involvement of AFWEL in corruption in its dealings in the oil and gas sector.  Foster Wheeler Energy Limited (FWEL) was acquired by AMEC in 2014, changing its name to Amec Foster Wheeler PLC (AFWL). 

What was AFWEL charged with?

AFWEL was charged with [PM1] unlawful conduct in relation to their use of ‘corrupt agents’, including conspiracy to make corrupt payments (contrary to under section 1(1) of the Criminal Law Act 1977 and section 1 of the Prevention of Corruption Act 1906).   Corrupt payments occurred in Nigeria, Saudi Arabia, Malaysia, and India between 1996 and 2010.

The organisation was also found to have failed to prevent a bribery scheme [PM2] (contrary to the Bribery Act 2010) over three years in Brazil from 2011 and 2014, which led to the awarding of a contract worth approximately $190 million from Petrobras to design a gas-to-chemicals complex in Brazil called Complexo Gás-5 Químico UFN-IV (“UFN-IV”).

What is a Deferred Prosecution Agreement (DPA)?

DPAs[PM3]  in the UK were introduced in early 2014 under the Crime and Courts Act 2013 as a means of enabling prosecutors and organisations which could be prosecuted to reach an agreement with the oversight of a judge.  By entering into a DPA, the prosecution may be deferred or suspended for a set period of time.  The main aim of DPAs is to make the corporate body pay full reparations for their actions without incurring the damage of a formal criminal conviction. 

What does the DPA mean for AFWEL?

The DPA has several implications for AFWEL.  By entering into the DPA, AFWEL has accepted responsibility for their role in ten offences of corruption in its international operations.  Under the terms of the DPA, AFWEL were required to pay back profits made as a result of the corruption and a financial penalty and costs amounting to around £103 million.  In addition to the disgorgement of profits and the payment of compensation, the DPA also requires that AFWEL’s current parent company, John Wood Group PLC, must implement new checks and balances to prevent any future likelihood of corruption in its dealings with third-party intermediaries, sales agents, and national sponsors.  To facilitate this, a complete change of governance is required, including the integration of AFWEL’s management into the executive structure of the John Wood Group.

The DPA also states that the John Wood Group must keep AFWEL in existence, operational, and within its control for the life of the DPA.  AFWEL is also prohibited within the terms of the DPA from making any public statement contradicting any of the matters outlining in detail in the Statement of Facts.

What has been the response to the DPA approval?

In response to the DPA approval, Lisa Osofsky, Director of the Serious Fraud Office, stated[PM4] , “Over a period of 18 years, Foster Wheeler Energy Limited brazenly and calculatedly paid bribes to officials around the world to cut corners and secure contracts, going to great lengths to conceal its corrupt conduct. In doing so, the company subverted the rule of law and harmed the integrity of the economy in the United Kingdom. We will continue to deliver justice for the taxpayer by punishing such actions and forcing companies to change for the better.  Justice also means recovering money to compensate victims wherever possible, and I am delighted that we have been able to secure compensation for the Nigerian victims in this case”.

The co-operation of AWEL under its current management has also played a key role in allowing them to enter into a DPA and, hence, avoid criminal prosecution.  In making his ruling, Lord Justice Edis stated that the DPA and the level of compensation reflect the gravity of the conduct, but he also acknowledged the full cooperation of AFWEL and John Wood Group in assisting the SFO in their investigation and their efforts to implement an “extensive remediation and compliance programme”. 

What does this DPA mean for other companies?

The contents of the DPA between the SFO and AFWEL offer a useful guide to the types of policies and procedures that corporations and companies reliant on overseas agents and third-party intermediaries require to mitigate the potential for bribery and corruption in their operations.  By implementing clear and robust guidance which is easily accessible to all staff on the organisation’s policy towards avoiding bribery and corruption, directors and senior management may have a basis for a defence in the unlikely event that such acts are ever uncovered.  Such policies and procedures, and their regular review and improvement, should be at the heart of all organisations of this nature. 

Tanveer Qureshi specialises in white-collar crime and regulatory investigations and prosecutions.  If you require legal representation, please contact Tanveer directly at tqureshi@4-5.co.uk or via his chambers, 4-5 Gray’s Inn Square. for more about Tanveer or to subscribe to his newsletters, please go to www.tqlegal.co.uk