Samsung Heavy Industries to pay $75 million to settle bribery case

Company executives were accused of paying bribes to officials in Brazil.

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Samsung Heavy Industries has agreed to pay $75 million to settle a case filed by US prosecutors accusing the company of bribery and FCPA violations.

The South-Korean firm, Samsung's shipbuilding arm, entered into a deferred prosecution agreement after charges were filed claiming that Samsung Heavy Industries paid bribes reaching millions of dollars to Brazilian officials, the US Department of Justice (DoJ) said on Friday.

According to US prosecutors, Samsung Heavy Industries, one of the largest shipbuilders in South Korea that also constructions offshore platforms, paid roughly $20 million to a Brazilian intermediary in the knowledge that some of the cash would end up in the pockets of officials. 

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The bribes were allegedly paid between 2007 and 2013 in order to make sure Samsung Heavy Industries received lucrative contracts and a competitive business advantage. 

In particular, officials connected to Petrobras, the Brazilian state-owned oil and energy company, would receive funds, leading to Samsung's business securing a contract for a chartered drillship.

The DoJ says that during this timeframe the company violated the Foreign Corrupt Practices Act (FCPA), a law designed to prevent "payments [made] to foreign government officials to assist in obtaining or retaining business" and bribes. 

Samsung Heavy Industries will pay a criminal penalty of $75,481,600, 50 percent of which is to be paid to the US, with the remainder to go to Brazilian authorities subject to agreements with the Controladoria-Geral da União (CGU), Advogado-Geral da União (AGU) and Ministério Público Federal (MPF). 

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However, if the company has not paid up in Brazil by November 25, 2020, the full sum will be paid to the United States. 

"Samsung Heavy Industries paid millions of dollars to a Brazilian intermediary, knowing that some of that money would be used to bribe high-level executives at Petrobras and obtain a lucrative shipbuilding contract," said Assistant Attorney General Brian Benczkowski of the DoJ's Criminal Division. "Today's resolution is yet one more example of the department's continued commitment to root out bribery and to work with our foreign counterparts to investigate schemes spanning multiple international jurisdictions."

Samsung Heavy Industries has also agreed to improve its compliance program and has heightened due diligence controls over third-party vendors. 

The case was filed in the Eastern District of Virginia and was investigated by the FBI. 

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In July, the DoJ and US Securities Exchange Commission (SEC) settled with Microsoft to resolve bribery claims. Microsoft will pay two fines reaching over $25 million to resolve allegations that the Redmond giant's Hungarian executives lied to the main firm over the need to offer local resellers heavy discounts -- but the discounts were not passed on. Instead, funds were used for bribes and "corrupt purposes."

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