On June 2, 2022, Tenaris S.A., a Luxembourg-based manufacturer of steel pipes, entered into an administrative resolution with the US Securities and Exchange Commission in which it agreed to pay $78.1 million to resolve allegations that it had violated the anti-bribery and accounting provisions of US Foreign Corrupt Practices Act (FCPA).
According to the SEC Order, between 2008 and 2013 Tenaris’ Brazilian subsidiary, Confab Industrial SA (Confab), through a third-party intermediary, paid at least $10.4 million in bribes to a high-ranking manager in the procurement and tender department of Brazil’s state-owned petroleum company, Petróleo Brasileiro S.A. (Petrobras), in order to obtain and retain over $1 billion in contracts. Specifically, in 2008, a Confab agent entered into an understanding with the Petrobras official whereby the official would influence Petrobras to forego international tender processes for certain contracts for steel pipes, thereby allowing Confab to continue as the sole domestic supplier for these contracts. This arrangement -- which provided Confab with a steady stream of business from Petrobras -- also allowed Confab to maintain its production unit at full capacity, thus enabling it to offer competitive tender offers for other business in Brazil due to economies of scale.
As described in the SEC Order, the bribe payments were routed from numerous Tenaris-affiliated companies, including an unnamed Panamanian company, into a bank account in the name of an Uruguayan shell company controlled by the Petrobras official. To conceal the bribe payments, the Panamanian company entered into sham contracts with Uruguayan shell company in which the Panamanian company made payments in exchange for non-existent “consultancy and advisory services.” These payments were not accurately reflected in Confab’s books and records (which were consolidated into Tenaris’ books and records). The SEC Order also states that Tenaris—despite having entered into a May 2011 non-prosecution agreement with the US Department of Justice and a deferred prosecution agreement with the SEC to resolve allegations that Tenaris had made corrupt payments to a foreign official to obtain business from a state-owned enterprise in Uzbekistan, and despite the “known corruption risks in connection with its Brazilian operations” -- failed to devise or maintain internal controls sufficient to detect and prevent the bribe payments to the Petrobras official.
Without admitting or denying the SEC’s findings, Tenaris agreed to cease and desist from future violations of the FCPA’s anti-bribery and accounting provisions, and to pay $42,842,497 in disgorgement, $10,257,841 in prejudgment interest, and $25 million as a civil money penalty. Additionally, Tenaris agreed to regularly report to the SEC during a two-year period regarding its anti-corruption compliance and remediation measures, and to certify compliance at the conclusion of the period. The SEC noted that, in determining to accept this resolution, it took into account Tenaris’ cooperation during the course of the investigation, as well as its remedial actions (including enhancing its internal accounting controls and global compliance practices, implementing a code of conduct, and terminating its relationships with commercial agents in Brazil).
According to a Tenaris press release, the DOJ informed Tenaris that a parallel criminal investigation into Confab’s conduct would not result in a DOJ enforcement action.