An announcement from the Securities and Exchange Commission (SEC) said that Honeywell International Inc. has agreed to settle Foreign Corrupt Practices Act (FCPA) charges over schemes with officials in Brazil and Argentina. Anticipating the initiation of cease-and-desist proceedings, the company made an offer to the SEC which the agency accepted. In total, the payment to the SEC will be about $42.4 million after a $38.7 million offset in payments made to Brazilian authorities.
According to the SEC’s order, the multinational manufacturing company and its international subsidiaries violated the law’s anti-bribery, books and records, and internal accounting controls provisions. In Brazil, Honeywell’s wholly-owned subsidiary, Honeywell UOP (UOP), through an intermediary, offered as much as $4 million to a Brazilian official to win a contract with the Brazilian state-owned oil company, Petrobras.
Reportedly, UOP emerged as the lead in the design contest of an undescribed nature by mid-July 2010. Then, the company revised its initial bid of $425 million to $348 million with insider guidance, and secured the contract, the SEC said. Though Petrobras ultimately terminated the contract due to financial and other difficulties, Honeywell UOP obtained at least $61.56 million profits, now ordered to be disgorged to the SEC.
The alleged misconduct in Algeria dates to 2004 when Honeywell Process Solutions business unit sought to bid on a project to modernize the instrumentation and control systems at NAFTEC’s Arzew refinery in Oran, Algeria. Reportedly, employees, with the assistance of a Monaco-based agent, paid money to an Algerian government official to secure a contract amendment with the Algerian state-owned oil company.
According to the SEC, not only did Honeywell provide bribes, it also failed to maintain books and records accurately, thereby facilitating the schemes. In addition, the agency says Honeywell lacked sufficient internal accounting controls in place to detect or prevent the misconduct. In addition to the penalties, Honeywell has also agreed to make revisions to its accountability practices such as strengthening its ethics and compliance programs and firing individuals responsible for orchestrating the bribes.
In a parallel proceeding, Honeywell entered into a deferred prosecution agreement and agreed to pay more than $78 million to settle criminal charges brought by the U.S. Department of Justice as well as charges brought by the Brazilian government.
