Ensco FCPA investigation ends in double declination

A UK-based drill-rig operator said in an SEC filing Tuesday that a U.S. investigation into alleged corruption in Brazil has ended, with both the DOJ and SEC saying they won’t bring enforcement actions.

The investigation of Ensco plc related to the drillship DS-5 that Ensco acquired when it bought Pride International Inc. in 2011.

Ensco disclosed the investigation in October 2015. In early 2016, it said its customer Petrobras had cancelled the contract for the drillship because of alleged payments to Petrobras employees.

Petrobras is Brazil’s state-owned oil and gas giant.

The “alleged irregularities” involved a former third-party marketing consultant of Pride.

But in an SEC filing Tuesday, Ensco said it received declination letters from the SEC on August 29 and from the DOJ on August 31.

The SEC letter said the agency had “concluded its investigation into alleged irregularities related to a drilling services contract for ENSCO DS-5 and does not intend to recommend any enforcement action” against Ensco.

The DOJ said it “closed its inquiry into the matter and [acknowledged] Ensco’s full cooperation in the investigation.”

Ensco’s internal investigation had found no evidence that Pride or Ensco or any of their current or former employees knew about or were or involved in any wrongdoing,  the company said Tuesday.

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In 2010, Houston-based Pride International and a French subsidiary were charged with FCPA-related offenses for bribing government officials in Venezuela, India, and Mexico.

The bribes were paid to extend drilling contracts for three oil rigs operating offshore in Venezuela, to secure a favorable decision in a customs dispute for a rig imported into India, and to avoid customs duties and penalties for a rig operating in Mexico.

Pride International entered into a three-year deferred prosecution agreement with the DOJ in November 2010.

The French subsidiary, Pride Forasol, paid a $32.6 million criminal penalty. Pride International also agreed to disgorge $23.5 million to the SEC.

The settlement was part of the historic seven-party enforcement action growing out of a U.S. investigation of Swiss logistics firm Panalpina.

Ensco plc completed its $7.3 billion acquisition of Pride in May 2011. It agreed to be bound by the terms of Pride’s deferred prosecution agreement.

In late 2012, the DOJ ended Pride’s DPA a year early to reward the company for its enhanced compliance efforts.

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Here’s the disclosure from Ensco plc in its September 4, 2018 Form 8-K, courtesy of FCPA Tracker:

On August 29, 2018, Ensco plc (“Ensco” or the “Company”) received a letter from the Division of Enforcement of the U.S. Securities and Exchange Commission (the “SEC”) informing Ensco that the Division has concluded its investigation into alleged irregularities related to a drilling services contract for ENSCO DS-5 and does not intend to recommend any enforcement action against the Company.  On August 31, 2018, Ensco received a letter from the U.S. Department of Justice (the “DOJ”) stating that the DOJ had closed its inquiry into the matter and acknowledging Ensco’s full cooperation in the investigation.

Ensco previously disclosed an internal investigation of alleged irregularities related to a drilling services agreement between an acquired subsidiary, Pride International LLC (“Pride”), and Petrobras for ENSCO DS-5 that was executed in 2008. After becoming aware of the alleged irregularities in 2015, Ensco voluntarily contacted the SEC and the DOJ to advise them of the investigation and continued to update and cooperate with both agencies over the course of the investigation. The Company’s investigation did not identify any evidence that Pride or Ensco or any of their current or former employees were aware of or involved in any wrongdoing.

The FCPA Blog | September 4, 2018
http://www.fcpablog.com/blog/2018/9/4/ensco-fcpa-investigation-ends-in-double-declination.html