COLUMN | See you in court: Pacific Drilling, Bumi Armada and SBM – Part 2 [Offshore Accounts]

SBM Offshore’s twin FPSOs pass in Guanabara Bay, Brazil. Photo: SBM Offshore

In 2018, Anthony Mace, SBM Offshore’s former chief executive, was sentenced to three years in jail and fined US$150,000 fine by a Texas court for his role in the company’s massive international bribery racket.

SBM’s former sales and marketing executive in its US subsidiary, Robert Zubiate, was jailed for two-and-a-half years and fined US$50,000 at the same time. The Justice Department account of criminal prosecution of the SBM CEO is here – it remains one of the biggest bribery and corruption cases in the offshore industry, and is well worth reading.

Anyone tempted to pay a bribe to win a contract should remember that SBM paid a combined worldwide total of criminal penalties for bribery in excess of US$475 million, as the Justice Department reminds us here.

Now, Mace’s successor, Bruno Chabas, SBM Offshore’s current chief executive, is set to appear in court in Haarlem in the Netherlands on January 30 to answer questions about the historic corporate bribery at the company.

The case has received close coverage in the Dutch language press which you can read here regarding the appearance this week of the lawyer Jaap de Keijzer from the law firm De Brauw, which had carried out internal investigations into illicit payments by SBM to dubious foreign intermediaries. Scintillating it was not, but the appearance represented yet another attempt by the company to break with its toxic past.

Whistleblower alleges cover-up

The British whistle-blower Jonathan Taylor, a former SBM employee, who first made public claims about the corruption in 2012, had requested Amsterdam’s Appeal Court to proceed with witness hearings. Taylor accuses SBM of covering up the criminal activities of its former CEO and of misleading investors, allegations that SBM has consistently and repeatedly denied. Taylor’s biography is available here and Dutch magazine VN ran an in-depth account of the background to his role in exposing the case here

In February last year, Taylor was successful in winning a judgement in the appeal court. The court decided that that Chabas, De Keijzer and SBM’s former chief governance and compliance officer Sietze Hepkema must testify, under oath, about what they knew regarding the bribery and compliance violations at SBM.

While Hepkema did appear in court on May 22, 2019, Taylor has protested that he lied under oath in the hearings. This was reported by the Dutch media here as Taylor has requested that the Dutch justice department should investigate him for perjury.

I imagine Bruno Chabas will be picking his words very carefully when he does appear in the court to answer questions about what exactly he knew about Mr Mace’s illegal activities, when he knew, and whom he told. When you have paid hundreds of millions in bribes and hundreds of millions in fines, SBM is finding you can never really leave that past behind, and Mr Chabas is discovering that his predecessor’s jail time doesn’t remove him from jeopardy in future.

McDermott: $373 million in professional fees in bankruptcy

An account of shocking court room revelations cannot close without the latest from McDermott International, which is appearing at the bankruptcy court, as you will have read here.

The latest revelation is that the bankrupt offshore contractor will pay out $373 million in professional fees associated with the issuance of its debtor-in-possession financing, and its Chapter Eleven bankruptcy restructuring. Who knew that a bankrupt company had so much liquidity to pay bankers, accountants and lawyers?

According to the bankruptcy filing pages 595 and 598 of 607 here the embattled construction giant will pay out “US$25 million per month through April” of accrued professional fees, which then drops to a mere US$15 million per month in May and June, as part of a total of $373 million of professional fees relating to the insolvency petition and debtor in possession financing.

Wow. The fact that this disclosure appears right at the end of a six-hundred page filing shows you why it is always best to start at the bottom of a McDermott financial disclosure; that’s where CEO David Dickson and his ilk like to hide the juicy stuff.

If McDermott has a few million on hand, it will probably spend it on more lawyers and consultants.

nTan: Singapore’s opaque offshore bankruptcy boutique

If only Singapore companies were as open and transparent as McDermott’s Houston bankruptcy court filing. We’d love to know how much Singapore’s pre-eminent offshore bankruptcy adviser nTan Corporate Advisory, led by its eponymous rain maker, Nicky Tan, has been earning from its work with the various troubled offshore players it has been assisting in the Lion City these last few years. Unfortunately, the public filings from the various players don’t disclose the extent of the fees paid to professional advisers. As we have seen at McDermott, these costs can be massive.

However, we do note that in this judgement here that the Singapore High Court awarded nTan S$12.043 million (US$8.873 million) in professional fees for its work with then troubled company TT International, even though, and we quote from the Straits Times, “Judicial Commissioner Aedit Abdullah remarked after considering all submissions that, ‘it is not possible to come to a clear conclusion on the value created by (nTan)’s efforts’.”

Enough said.

Read part 1 here


Hieronymus Bosch

This anonymous commentator is our insider in the world of offshore oil and gas operations. With decades in the business and a raft of contacts, this is the go-to column for the behind-the-scenes wheelings and dealings of the volatile offshore market.