On April 17, 2020, Eni S.p.A., an Italian multinational oil and gas company whose American Depositary Receipts are listed on the New York Stock Exchange, agreed to pay $24.5 million to the US Securities and Exchange Commission to resolve allegations under the books and records and internal controls provisions of the US Foreign Corrupt Practices Act.
According to the SEC’s Order, Eni’s minority-owned and controlled subsidiary at the time, Saipem S.p.A,, entered into four sham contracts with a third-party intermediary between 2007 and 2010, pursuant to which Saipem paid the intermediary approximately €198 million. The order states that the intermediary provided a portion of these funds to Algerian government officials, which resulted in Saipem receiving at least seven contracts with an Algerian state-owned oil company. The SEC’s Order further alleges that Saipem conducted inadequate due diligence on the intermediary, which provided no legitimate services, and despite this, Saipem recorded these payments as lawful brokerage fees in its financial statements. Because Eni consolidated Saipem’s financial statement into its books and records, Eni failed to accurately record the nature of the payments in its books and records. The SEC’s Order also states that a former Saipem senior executive orchestrated the payments to the intermediary, and continued to facilitate the payments after he had been hired as the CFO of Eni in 2008. As a result of the former executive’s conduct while he was an employee of Eni, Eni failed to satisfy its obligations, as a minority owner, to “proceed in good faith to use its influence, to the extent reasonable under [Eni’s] circumstances” to cause Saipem to devise and maintain internal controls consistent with the FCPA’s requirements.
Without admitting or denying the SEC’s findings, Eni agreed to cease-and-desist from violating the FCPA’s books and records and internal controls provisions and to pay approximately $19,750,000 in disgorgement and $4,750,000 in prejudgment interest.
The SEC previously charged Eni with violations of the FCPA’s books and records and internal controls provisions in July 2010, based on the actions of Eni’s subsidiary Snamprogetti Netherlands, B.V., which had allegedly engaged in a bribery scheme in connection with a joint venture to construct liquefied natural gas facilities in Nigeria. More recently, the US Department of Justice (DOJ) in 2019 declined to prosecute Eni for allegations of corruption in connection with an oil prospecting license obtained in Nigeria (which Eni had disclosed to the DOJ in 2014), as well as for the above-described conduct by Saipem. Furthermore, on April 22, 2020, Eni announced that the SEC ended its investigation into the license obtained in Nigeria (described above) as well as an investigation of Eni’s activities in Congo.