Was Amec Foster Wheeler afraid of its agents?
Its a strange scenario. Last week the company agreed to pay around $41 million to resolve criminal and civil FCPA offenses. Facts recited by the DOJ and SEC described an unlikely web of corrupt agents that formed around Amec Foster Wheeler and eventually trapped it. Briefly, heres what happened. AFW hoped to win a $190 million contract from Brazils state-owned Petrobras to design a gas-to-chemicals complex. The company began dealing with an Italian agent. The Italian agent said it had links to a Monaco-based agent with good intelligence, probably Unaoil. Retaining an agent before or during due diligence violated AFWs compliance policy, but AFW retained the Italian agent anyway. The SEC said: In fact, [Amec Foster Wheelers] general counsel drafted an interim agency agreement to use Italian Agent even though Foster Wheelers policy on outside agents did not allow for interim agreements while due diligence was pending.  Amec Foster Wheelers earlier due diligence on Unaoil revealed disqualifying corruption risks. Due diligence also disqualified the Italian agent because of links to Unaoil and misrepresentations about past experience. AFW, however, didnt terminate the interim agreement but left it in place. The Italian agent introduced AFWs Brazil country manager to a Brazilian agent to help with the Petrobras project. Due diligence was fudged. Incriminating links to the Italian agent were concealed, and AFW retained the Brazil agent. According to the SEC, AFWs country manager thought the Brazil agents influence with Petrobras was diminished owing to changes in positions over the last 18 months.  But the country manager also told a colleague that despite their loss of influence, the Brazil agent can make life difficult for us if we do not pay [them].  Between February 2013 and July 2014, the SEC said, the Brazil agent sent Amec Foster Wheeler four invoices, none of which documented any meaningful work . . . to justify its two percent commission.  The Brazil and Italian agents used part of the commission to pay over $1 million in bribes to officials for the Petrobras project. I only know what the feds said. But theres this: Agents with a grievance can do serious damage. In Egypt, a company I knew fired its long-serving agent as part of a new agent-less business approach. Within months, labor problems engulfed the companys local operations. The Egyptian government sided with the workers. A provincial sheriff seized the companys property and auctioned it to the public for pennies on the dollar. In Indonesia, a company that wanted a fresh start terminated its powerful local agent without cause, offering just a token final payment. The insulted former agent refused to sign any documents related to the companys business. Without the agents cooperation as the official country representative, the company couldnt obtain new visas for expat workers or permits to import and export equipment. The standoff lasted years. (Ironically, Petrobras eventually canceled the project early for unrelated financial reasons. By then, Amec Foster Wheeler had made about $13 million in profit, the DOJ said.) The feds didnt adopt that narrative. Instead, the DOJ and SEC both said Amec Foster Wheeler succumbed to the profit motive. Maybe. But thats no excuse for bribery. And of course, no company should expect sympathy after ignoring the requirements of its own compliance program.