For the first time in its history of bringing FCPA enforcement actions, the SEC has entered into a deferred-prosecution agreement with a corporate defendant, potentially signaling the start of a trend of tougher SEC action against alleged violators of the FCPA.
- Tenaris, a Luxembourg-based global steel pipe supplier and manufacturer, entered into a two-year deferred prosecution agreement with the SEC and non-prosecution agreement with the DOJ, agreeing to pay fines to the SEC and DOJ in connection with its alleged violations of the FCPA.
- In 2006 and 2007, Tenaris bid on and ultimately won several contracts to supply pipelines for transporting oil and natural gas for OJSC O’ztashqineftgaz (OAO), an Uzbekistan state-controlled oil and gas production company.
- Tenaris allegedly retained an agent who, in exchange for 3.5% of the value of four contracts, bribed OAO officials to gain access to competitors’ confidential bids. The company used the confidential information to revise its own bids and, as a result, was ultimately awarded the contracts.
- Tenaris allegedly made approximately $5 million in profits from the contracts it obtained through this alleged bribery scheme. Tenaris also failed to accurately record the payments made to the agent and OAO officials in its books and records.
- Pursuant to the two-year deferred prosecution agreement into which it entered with the SEC, Tenaris must disgorge approximately $5.4 million to the SEC and enhance its policies and procedures relating to the FCPA; the company must implement a detailed FCPA training program, review and update its code of conduct, require certifications of compliance with its anticorruption policies, and notify the SEC of future complaints, charges, or convictions of the antibribery or securities laws.
- Under its non-prosecution agreement with the DOJ, Tenaris also agreed to pay a $3.5 million criminal penalty to settle pending FCPA charges with the DOJ.
- This case marks the first time the SEC has entered into a deferred-prosecution agreement in an FCPA case, signaling what could represent the start of a more gloves-off approach to FCPA prosecutions reminiscent of the DOJ’s current aggressive approach to such cases.
- Press releases from the SEC and DOJ emphasize that Tenaris’s timely and substantial cooperation with and voluntary disclosures to the government resulted in reduced financial penalties.