By Joseph Palazzolo
Of DOW JONES NEWSLETTERS
The Justice Department and the Securities and Exchange Commission are close to announcing settlements in several foreign-bribery cases linked to Swiss logistics company Panalpina Group, with civil and criminal penalties likely reaching hundreds of millions of dollars, people familiar with the matter said.
The Wall Street Journal reported on Friday that Panalpina and one of its customers, Royal Dutch Shell PLC (RDSA, RDSA.LN), were on the brink of settling the three-year-old probe. Investigators have been looking at whether the logistics company paid officials in Nigeria and other countries to gain customs clearance and permits for a raft of oilfield services companies.
Along with Panalpina and Royal Dutch Shell, the Justice Department and the SEC will likely announce settlements with oilfield services companies Nabors Industries Ltd. (NBR), Noble Corp. (NE), Pride International Inc. (PDE), Tidewater Inc. (TDW) and Transocean Ltd. (RIG), the people familiar with the situation said.
Officials plan to announce all the settlements at once, possibly by the end of the month, one person said, adding that negotiations with some of the parties are ongoing. Officials have been organizing the group settlement for months, and some of the companies involved have expressed pique at having to wait for others, the people said.
A spokesman for Panalpina said that negotiations were ongoing and that the company was "confident" a settlement would be reached by the year's end. The other companies involved either declined to comment or didn't respond to requests for comment.
The companies have all said in their corporate filings that they are cooperating with the Justice Department and the SEC.
The investigation surrounding Panalpina, which withdrew from the custom clearance and freight-forwarding markets in Nigeria in 2008, is driven by the Foreign Corrupt Practices Act, which bans companies from paying bribes to foreign officials to obtain or keep business.
Individually, the settlement amounts in the Panalpina investigation are likely to be smaller than in some other high-dollar FCPA cases this year. Engineering company Technip SA, for example, agreed in June to pay $338 million in disgorgement and criminal fines to resolve charges that from 1994 to 2005 the company bribed Nigerian officials to win $6 billion in contracts.
That settlement was part of a separate FCPA investigation of a scheme to bribe Nigerian officials to obtain engineering, procurement and construction contracts. The SEC and the Justice Department have obtained more than $900 million in criminal and civil penalties in those cases.
The Panalpina investigation came to light in 2007, after subsidiaries of Vetco International Ltd. pleaded guilty to paying $2.1 million in bribes to Nigerian customs officials through the Swiss logistics company. Vetco agreed to pay $26 million in criminal fines, the largest-ever FCPA penalty at the time.
Taken together, the new Panalpina-related settlements could be among the largest in the statute's 33-year history. Based on company estimates in SEC filings, the total is likely to exceed $200 million in civil and criminal penalties.
Panalpina is expected to pay around $85 million in fines to settle charges that paid bribes to officials in Nigeria, Saudi Arabia, Algeria and Kazakhstan to expedite services, such as clearing drilling rigs and other equipment through customs, The Wall Street Journal reported.
Royal Dutch Shell is expected to pay around $30 million in penalties to settle charges stemming from its use of Panalpina as an agent in Nigeria, the paper reported.
Pride has reserved about $52 million to settle allegations that from 2001 to 2006 it paid government officials--directly and through companies such as Panalpina--in Saudi Arabia, Kazakhstan, Brazil, Nigeria, Libya, Angola and the Republic of the Congo to expedite services, according to SEC filings.
Tidewater has set aside $11 million to settle civil charges related to payments the company made in Nigeria and Azerbaijan, the company said in corporate filings. The company said in the filings it expects to pay a criminal fine as well but made no prediction about the amount. Meanwhile, Noble has reserved about $5 million for an expected settlement.
Nabors Industries and Transocean haven't disclosed how much they expect to pay to resolve civil and criminal investigations related to their business relationship with Panalpina.
But Transocean and other companies involved have said in SEC filings that the investigation has taken its toll.
Last month, Transocean disclosed that it may not be able to obtain or renew import permits to operate rigs in Nigeria and other West African countries without falling foul of the FCPA.
Although companies often acknowledge the risk of doing business in emerging markets, Transocean's disclosure was a stunning example of the escalating enforcement of the FCPA and the shadow it casts over those seeking to tap into West Africa's oil reserves, considered among the most promising in the world.
Noble, likewise, said in a filing that import permits for two of its three rigs in the area had expired in 2008, after the company came under investigation by U.S.authorities. The renewal applications have been pending for nearly two years without action by the Nigerian customs office, the company said.
Noble said it had obtained a temporary import permit for a third rig that arrived in the country in 2009.
Schlumberger Ltd. (SLB, SLBS.VI) has also disclosed an FCPA investigation related to Panalpina in SEC filings, and the company faces a separate FCPA probe for its dealings in Yemen, The Wall Street Journal reported.