On December 19, 2022, the US Department of Justice and the Securities and Exchange Commission announced that resolutions had been reached with Honeywell International Inc., a US-based company focusing on aerospace, building technologies, chemical, and automation products, to resolve allegations that the company violated the Foreign Corrupt Practices Act (“FCPA”) by engaging in bribery schemes in Brazil and Algeria. The resolutions were also coordinated with enforcement authorities in Brazil, including the Controladoria-Geral da União (the Comptroller General of Brazil or “CGU”), the Ministério Público Federal (Federal Prosecution Services or “MPF”), and the Advocacia-Geral de União (Attorney General of Brazil or “AGU”). According to Honeywell, the U.S. and Brazilian resolutions will cost the company a total of $202.7 million in penalties, disgorgement, and prejudgment interest.
The DOJ entered into a deferred prosecution agreement (“DPA”) with Honeywell International’s US-based subsidiary, Honeywell UOP, which provides technology products to petroleum refining, gas processing, and petrochemical production companies. Honeywell International, which was not a defendant in the DOJ resolution, also agreed, as part of the DPA, to certain remediation and reporting requirements.
According to the DPA, between 2010 and 2014, employees and intermediaries of Honeywell UOP engaged in a bribery scheme to obtain and retain business with and receive other business advantages from Petroleo Brasileiro SA (“Petrobras”), the Brazilian state-owned oil company. In 2010, Honeywell UOP offered a high-ranking executive of Petrobras approximately $4 million in an effort to win a $425 million contract from Petrobras to design and build an oil refinery. Honeywell then made incremental bribe payments from around 2011 to 2014.
The SEC also alleges that, in 2011, Honeywell SA Belgique, Honeywell’s subsidiary in Belgium, paid more than $75,000 via a “consultant” to an official with La Société Nationale pour la Recherche, La Production, le Transport, la Transformation, et la Commercialisation des Hydrocarbures (“Sonatrach”), Algeria’s state-owned oil company, in order to obtain and retain business with that company. Based on the SEC order and Honeywell’s press release, the bribe payments were facilitated by Unaoil, as Unaoil repaid, on behalf of Honeywell SA Belgique, the “consultant” that made the bribe payments.
As part of resolving the investigations, Honeywell UOP entered into a three-year DPA with the DOJ and agreed to pay a criminal penalty of approximately $79 million to resolve charges that the company conspired to violate the anti-bribery provisions of the FCPA. The DOJ agreed to credit approximately $39.6 million of the penalty against amounts the company paid to enforcement authorities in Brazil.
The DPA states that Honeywell UOP received a 25 percent reduction in its criminal penalty. Although Honeywell UOP did not receive credit for voluntarily disclosing the misconduct, it did receive cooperation credit for its extensive cooperation, significant remediation, and its lack of prior recent, relevant civil or criminal misconduct. Under the terms of the DPA, Honeywell International and Honeywell UOP agreed to continue to make improvements to their compliance programs, and to provide annual progress reports to the DOJ for the term of the DPA. In a press release, Honeywell stated that it had a similar reporting obligation to Brazilian authorities for a period of one year.
In resolving the SEC’s parallel investigation, Honeywell agreed to pay more than $81 million to settle charges that it violated the anti-bribery, books and records, and internal accounting controls provisions of the FCPA. The SEC Order also provides for an offset of approximately $38.7 million for any payments Honeywell makes to Brazilian authorities.