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Royal Dutch Shell bribery and corruption in Nigeria

Shell, the Anglo-Dutch energy giant, is expected to pay around $30 million in penalties to settle charges stemming from its use of Panalpina as an agent in Nigeria…

Law Blog October 15, 2010

The FCPA Steamroller Nears Panalpina, Royal Dutch Shell

We began hearing that the Justice Department was ramping up its enforcement of the Foreign Corrupt Practices Act sometime in 2006.

Last week, the WSJ’s Dionne Searcey broke the news of the Justice Department’s investigation of oil-services company Schlumberger for alleged bribery-related activity in Yemen. Today’s news: A big Swiss shipping and logistics company and Royal Dutch Shell, one of its customers, are close to settling foreign-bribery charges stemming from a three-year U.S. investigation. Click here for the story, from the WSJ’s Kara Scannell and Thomas Catan. Click here for a sidebar from Searcey on the revitalization of the law.

According to the story, Panalpina Group, which has 14,000 employees and branches in more than 80 countries, has been at the center of a sprawling probe into whether it paid officials in places including Nigeria, Saudi Arabia, Algeria and Kazakhstan to expedite services, such as clearing drilling rigs and other equipment through customs.

The case could set new standards of vigilance for global companies that rely on contractors to operate in parts of the world where resources are plentiful but the rule of law is shaky, attorneys familiar with such cases said.

Spokesmen for the companies and agencies involved in the Panalpina probe either declined to comment or didn’t respond to requests for comment.

Panalpina is expected to pay around $85 million in fines to settle charges that it violated the U.S. Foreign Corrupt Practices Act, said people familiar with the matter.

Shell, the Anglo-Dutch energy giant, is expected to pay around $30 million in penalties to settle charges stemming from its use of Panalpina as an agent in Nigeria, these people said.

In the meantime, the DOJ is using an interesting tactic: going after contractors alleged to have paid bribes on behalf of their corporate clients. Ignorance is no defense under this law, so companies have been advised they must know exactly what their agents are doing in order to avoid liability.

Some legal experts are wondering whether this means that companies now have the legal obligation to monitor the activities of even the most-established contractors.

“How much due diligence were [customers] expected to do on a large, publicly traded Swiss company?” said Alexandra Wrage, president of Trace International Inc., which advises companies on their compliance programs.


Blog article headline by John Donovan

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