Tenaris, a Luxembourg-based global maker and supplier of steel pipe products, on Thursday reached a $78 million settlement with the Securities and Exchange Commission for violations of the Foreign Corrupt Practices Act (FCPA) related to an alleged bribery scheme involving its Brazilian subsidiary.
According to the SEC’s order, the resolution resulted from an alleged bribe scheme involving agents and employees of Tenaris’ Brazilian subsidiary, Confab, in exchange for contracts with Brazil state-owned company Petrobras. Between 2008 and 2013, approximately $10.4 million in bribes was paid to a Brazilian government official in connection with the bidding process to influence Petrobras.
A long-time agent of Confab funded the bribes on its behalf. Consequently, during this time period, Confab obtained more than $1 billion in contracts from Petrobras. “Confab would benefit through the elimination of international competitors which may have submitted lower bids and forced Confab to lower its price, if not lose the contract altogether,” the SEC order stated.
“Tenaris failed for many years to implement sufficient internal accounting controls throughout its business operations despite known corruptions risks,” said Charles Cain, Chief of the SEC Enforcement Division’s FCPA Unit, in a press release. “This failure created the environment in which bribes were facilitated through a constellation of companies associated with its controlling shareholder.”
According to the SEC, Tenaris violated the anti-bribery, books and records, and internal accounting controls provisions of the Securities Exchange Act of 1934 and agreed to pay more than $78 million in combined disgorgement, prejudgment interest, and civil penalties. The company also agreed to comply with undertakings for a two-year period related to its ongoing remedial efforts. Tenaris consented to the SEC’s order without admitting or denying the findings.
The SEC noted that this wasn’t the first time Tenaris has been involved in a corruption scheme. In 2011, the company entered into a non-prosecution agreement with the Department of Justice and a deferred prosecution agreement with the SEC for alleged bribes the company paid to obtain business from a state-owned entity in Uzbekistan. 