United States SEC Fines $142 Billion Honeywell $202.7 Million for Bribery in Brazil & Algeria, $4 Million in Bribes to High Ranking Brazil Government Official for Bidding Process at Brazil Oil Giant Petrobras
21st December 2022 | Hong Kong
The United States Securities & Exchange Commission (SEC) has fined $142 billion Honeywell (market cap. 20/12/22) $202.7 million for bribery, offering at least $4 million in bribes to high ranking Brazil government official for bidding process at Brazil oil giant Petrobras and Honeywell Belgian subsidiary paying more than $75,000 in bribes in Algeria. United States SEC: “The SEC’s order finds that Honeywell, a U.S.-based global manufacturer of aerospace, building technologies, and automation products, engaged in a bribery scheme involving intermediaries and employees of its U.S. subsidiary to obtain business from the Brazil state-owned entity Petrobras. Specifically, the order finds that, in 2010, Honeywell offered at least $4 million in bribes to a high-ranking Brazilian government official in connection with the bidding process at Petrobras. The SEC’s order also finds that, in 2011, employees and agents of Honeywell’s Belgian subsidiary paid more than $75,000 in bribes to an Algerian government official to obtain and retain business with the Algerian state-owned entity Sonatrach.” Charles Cain, Chief of the United States SEC Enforcement Division’s FCPA Unit: “For years, Honeywell neglected to implement sufficient internal accounting controls to mitigate against known corruption risks in countries like Brazil and Algeria. This failure created an environment in which Honeywell employees and agents could and did facilitate bribes.” See below for United States SEC and Honeywell announcement.
“ United States SEC Fines $142 Billion Honeywell $202.7 Million for Bribery in Brazil & Algeria, $4 Million in Bribes to High Ranking Brazil Government Official for Bidding Process at Brazil Oil Giant Petrobras “
United States SEC announcement
SEC Charges Honeywell with Bribery Schemes in Algeria and Brazil
19th Dec 2022 – The Securities and Exchange Commission today announced charges against Honeywell International Inc. for violations of the Foreign Corrupt Practices Act (FCPA) arising out of bribery schemes that took place in Brazil and Algeria. The company has agreed to pay more than $81 million to settle the SEC’s charges.
The SEC’s order finds that Honeywell, a U.S.-based global manufacturer of aerospace, building technologies, and automation products, engaged in a bribery scheme involving intermediaries and employees of its U.S. subsidiary to obtain business from the Brazil state-owned entity Petrobras. Specifically, the order finds that, in 2010, Honeywell offered at least $4 million in bribes to a high-ranking Brazilian government official in connection with the bidding process at Petrobras. The SEC’s order also finds that, in 2011, employees and agents of Honeywell’s Belgian subsidiary paid more than $75,000 in bribes to an Algerian government official to obtain and retain business with the Algerian state-owned entity Sonatrach.
“For years, Honeywell neglected to implement sufficient internal accounting controls to mitigate against known corruption risks in countries like Brazil and Algeria,” said Charles Cain, Chief of the SEC Enforcement Division’s FCPA Unit. “This failure created an environment in which Honeywell employees and agents could and did facilitate bribes.”
Honeywell consented to the SEC’s order that it violated the anti-bribery, books and records, and internal accounting controls provisions of the Securities Exchange Act of 1934. The SEC’s order provides for an offset of up to approximately $38.7 million of any payments made to Brazilian authorities. Therefore, the company’s minimum payment to the SEC would be approximately $42.4 million.
In a parallel case, Honeywell also entered into a deferred prosecution agreement and agreed to pay more than $78 million to settle criminal charges brought by the U.S. Department of Justice. Honeywell also agreed to settle additional charges brought by the Brazilian government.
The SEC’s investigation was conducted by Catherine W. Brilliant and Maria F. Boodoo of the FCPA Unit and was supervised by Ansu N. Banerjee. The SEC appreciates the assistance of the Department of Justice Criminal Division’s Fraud Section, the FBI, and the Controladoria-Geral Da União/Advocacia-Geral da União and the Ministério Público Federal in Brazil.
Honeywell (NASDAQ: HON) has agreed to resolutions with the U.S. Department of Justice (“DOJ”), U.S. Securities and Exchange Commission (“SEC”), and the Brazilian authorities (the Federal Prosecution Service (“MPF”), the Comptroller General of Brazil (“CGU”), and the Attorney General of Brazil (“AGU”)) to resolve previously disclosed anti-corruption investigations into the Company’s historical operations in Brazil in relation to Petróleo Brasileiro S.A. (“Petrobras”) and, with respect to the SEC resolution, also relating to historical conduct involving the intermediary, Unaoil. In connection with the resolutions, the Company will pay a total of $202.7 million in penalties, disgorgement, and prejudgment interest.
As part of the resolutions, Honeywell’s subsidiary, UOP, LLC (“UOP”), has entered into a three-year Deferred Prosecution Agreement (“DPA”) with the DOJ related to charges of conspiracy to violate the Foreign Corrupt Practices Act (“FCPA”) in connection with a project awarded in 2010. UOP entered into leniency agreements with both the MPF and the CGU/AGU related to the same matter in Brazil. Honeywell agreed to certain compliance and compliance reporting obligations but was not charged criminally in this matter. Honeywell also agreed to a resolution with the SEC that resolves allegations relating to the Brazil conduct, as well as conduct relating to a foreign subsidiary’s contract with the intermediary, Unaoil, in Algeria, executed in 2011. These resolutions entirely resolved the Petrobras and Unaoil investigations.
As has been disclosed in previous public filings (most recently in 3Q 2022), these matters have been fully reserved and no additional financial impact has occurred as a result of these resolutions.
Honeywell has received full credit for its cooperation with this investigation. In the many years since the events occurred, the company has meaningfully redesigned and continued to evolve its global ethics and compliance program to meet the evolving risk environment. The SEC acknowledged that Honeywell had “strengthen[ed] its ethics and compliance organization.” The Department of Justice echoed this assessment, acknowledging that Honeywell and UOP “engaged in extensive remedial measures . . . including strengthening its anticorruption compliance program by investing in its compliance resources” and has committed to “continuing to enhance its compliance program and internal controls.” Honeywell will not be required to have a monitor and will instead provide reports on its anti-corruption compliance program to the Brazilian authorities and DOJ for one and three years respectively.
Honeywell has been publicly recognized as Honeywell is a seven-time honoree of Ethisphere’s World’s Most Ethical Companies award, including in every year since 2019. Honeywell was also named #3 of America’s Top 10 Most Transparent Companies overall and #1 in the Industrials segment in Labrador’s 2022 U.S. Transparency Awards for its public disclosures.
“We are pleased to have this legacy matter behind us, as these events in no way reflect the current leadership, culture and values that Honeywell has come to establish over a decade since this activity occurred,” said Darius Adamczyk, chairman and chief executive officer of Honeywell. “We stand behind our recognized world-class ethics and compliance program and all Honeywell employees are expected to abide by all laws in the countries in which we operate and conduct themselves with the highest levels of integrity at all times.”
Honeywell (www.honeywell.com) delivers industry-specific solutions that include aerospace products and services; control technologies for buildings and industry; and performance materials globally. Our technologies help aircraft, buildings, manufacturing plants, supply chains, and workers become more connected to make our world smarter, safer, and more sustainable. For more news and information on Honeywell, please visit www.honeywell.com/newsroom.
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