Royal Dutch Shell Plc  .com Rotating Header Image

Panalpina Settlements Announced, With $236.5 Million In Penalties

Commentary and news about money laundering, bribery, terrorism finance and sanctions.

November 4, 2010, 3:28 PM ET

The Justice Department and the Securities and Exchange Commission announced settlements in several foreign-bribery cases linked to Swiss logistics company Panalpina Group, with companies involved paying a total of about $237 million in civil and criminal penalties.

The group of settlements, which Corruption Currents reported last month as being likely, cap a three-year investigation that focused on services such as customs clearance and import permits that Panalpina provided to its customers in the oil industry.

The logistics company admitted paying $27 million in bribes to foreign officials in several countries to expedite services for a raft of companies, including Pride International Inc., Royal Dutch Shell PLC, Tidewater Inc., Transocean Inc., GlobalSantaFe Corp. and Noble Corp.

Settlements in those cases were also announced Thursday.

Panalpina agreed to pay about $11 million in civil penalties to the Securities and Exchange Commission and a $71 million criminal fine.

“The settlement of these claims marks the closing of an extremely burdensome chapter in Panalpina’s history and the end of a very demanding three-year effort to address and eliminate serious concerns,” said Monika Ribar, Panalpina’s chief executive officer, in a statement.

Panalpina would “look to the future” and build on its compliance systems, which have undergone “significant enhancements,” she added. The company was charged with conspiring to violate and violating the anti-bribery provisions of the Foreign Corrupt Practices Act, which bars companies with U.S. interests from paying bribes to foreign officials to secure business advantage.

Panalpina entered into a deferred prosecution agreement on those charges, and they will be dropped in three years if Panalpina meets its obligations under the pact. But Panalpina Inc., a U.S.-based subsidiary, pleaded guilty to violating the books and records provisions of the FCPA, which require companies to keep accurate accounting, and to helping other companies do the same.

“These companies resorted to lucrative arrangements behind the scenes to obtain phony paperwork and special favors, and they landed themselves squarely in investigators’ crosshairs,” said Robert Khuzami, director of the SEC Enforcement Division, in a statement.

The Panalpina investigation came to light in 2007, after subsidiaries of Vetco International Ltd. pleaded guilty to paying $2.1 million in bribes to Nigerian customs officials through the Swiss logistics company. Vetco agreed to pay $26 million in criminal fines, the largest-ever FCPA penalty at the time.

Soon other companies began examining their relationship with Panalpina, as the SEC and DOJ expanded their investigation.

“This investigation was the culmination of proactive work by the SEC and DOJ after detecting widespread corruption in the oil services industry. The FCPA Unit will continue to focus on industry-wide sweeps, and no industry is immune from investigation,” said Cheryl J. Scarboro, chief of the SEC’s FCPA unit, in a statement.

Royal Dutch Shell PLC agreed to pay a disgorgement of $18.15 million and a $30 million criminal fine after being charged by the SEC with conspiring to violate the anti-bribery and books provisions of the FCPA for using a customs broker to pay officials to get preferential treatment related to a project in Nigeria. It entered into a deferred-prosecution agreement with the Justice Department.

Pride International paid about $2 million to foreign officials from 2001 to 2006 in eight countries, and agreed to pay a $23.52 million disgorgement and, along with a subsidiary, a $32.63 million fine.

Tidewater Inc., which Corruption Currents reported previously could pay $4.35 million, will actually pay $8.1 million in disgorgement, a $217,000 penalty and a $7.35 million fine for both conspiring to violate the FCPA and for substantively violating the FCPA in giving $160,000 in bribes to Azerbaijan and for giving $1.6 million in reimbursements to a broker in Nigeria who bribed customs officials.

Transocean made illicit payments from at least 2002 to 2007 through customs agents to extend its importation status in Nigeria and to obtain false paperwork, and for that it agreed to pay $7.27 million in disgorgement and a $13.44 million fine.

GlobalSantaFe, or GSF, also paid bribes in Nigeria, to obtain paperwork saying its equipment had left Nigerian waters despite the fact that it never moved. GSF agreed to pay a disgorgement of $3.76 million and a penalty of $2.1 million.

Noble authorized payments by its Nigerian subsidiary to obtain eight temporary permits and will pay $5.58 million in disgorgement and a $2.59 million fine.

“The Department of Justice’s commitment to rooting out foreign bribery is unwavering,” said Assistant Attorney General Lanny A. Breuer, head of the department’s Criminal Division, in a statement. “Wherever possible, the department seeks to find and hold accountable all the players in corrupt deals – from customers who know that bribes are being paid on their behalf to those actually making the payments.”

So far this year, companies have agreed to pay more than $1 billion in criminal penalties for FCPA-related crimes, Breuer added. “As these fines show, foreign bribery has a steep cost — a cost that can be avoided through full compliance with the law.”

John G. Perren, acting assistant director in charge of the FBI’s Washington Field Office, said in a statement: “Any company that allows its employees to use bribery as a business practice, whether large or small, must face the consequences. Illegal business practices will not go unpunished.”

All of the court documents in the Panalpina case are available here.

-By Samuel Rubenfeld and Joseph Palazzolo


This website and sisters,,,, and, are owned by John Donovan. There is also a Wikipedia segment.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.