![People with convictions: Bourbon, Swiber and Pertamina [Offshore Accounts]](http://media.assettype.com/bairdmaritime%2F2024-07%2F5cf5b19a-d605-4413-b164-30b67077c4be%2FUntitled.jpeg?w=480&auto=format%2Ccompress&fit=max)
Last Friday saw judgement handed down in France in the criminal case involving offshore support vessel owner Bourbon and a group of its most senior executives and former executives. They were charged with corruption in 2019 after a suitcase full of money was seized in Marseille airport back in 2012. Court appearances pitted the man carrying the money in his baggage, Marc Cherqui, the former tax director of Bourbon, against the company’s current CEO, Gaël Bodénès and six other executives.
They were alleged to have participated in a scheme to settle tax claims in three West African countries by paying bribes to officials to reduce the amounts the company owed. The case stalled, but in May, the prosecutor Jean-Yves Lourgouilloux requested prison sentences against three members of the executive committee of Bourbon at the time, including Mr Bodénès.
Bourbon claimed Mr Cherqui was acting as a "loose cannon" with no authority from the company or its corporate officers, and he was immediately fired in the aftermath of the quarter of a million US dollars in cash in suitcase being discovered by customs officers. Mr Cherqui told an open court that he had acted on the orders of his superiors in Bourbon and that paying what he described as “African gifts” was authorised by the company’s executive committee.
"I was not a negotiator," he claimed. "Bourbon humiliated me, it sullied my name, and made me a scapegoat".
He admitted, however, that he had paid US$2.7 million in two separate payments as bribes to individuals working with the Nigerian tax authorities to reduce Bourbon’s tax assessment and penalties from US$227 million to just US$4.1 million. Given that Bourbon as whole only made a net profit of US$57 million for the whole of 2012, such a large assessment does seem absurd, like so many things in Nigeria.
According to investigators, Bourbon also paid €400,000 in February 2011 to a consultant to reduce an initial tax claim in Equatorial Guinea from €8 million to just €44,849. In November 2011, the investigation also found evidence that tax inspectors in Cameroon were paid €150,000 euros to annul a tax bill of €11 million euros against the company. The court noted that Bourbon was operating in countries described as "dangerous, even very dangerous" and that the company had set up tax arrangements that "exposed it to adjustments and requests for hidden compensation" from the local tax authorities.
Indeed, we have previously covered the conviction of trading house Glencore for paying bribes to officials in Cameroon, Nigeria and Equatorial Guinea (as well as Ivory Coast and South Sudan), whilst SBM Offshore's long-running and very expensive corruption scandal began when whistle-blower Jonathan Taylor spotted some "irregular payments" to officials in Equatorial Guinea.
So, who prevailed in the Bourbon case?
Firstly, the court decided that the US$250,000 found in the suitcase was forfeit as "inextricably linked to corruption," and should be kept by the French state.
The three most senior Bourbon managers charged were convicted of corruption. Gaël Bodénès, Laurent Renard, and Christian Lefevre were designed as the "perpetrators of the corruption offences" by the judge. M Lefèvre, who is now 66, has retired from Bourbon, but in 2011 and 2012, when the offences occurred, he was the CEO of Bourbon at group level. M. Lefevre received a 30-month suspended prison sentence and an €80,000 (US$87,000) fine.
For those of you wondering what a suspended sentence is, it means that the convicted do not go to prison now, they only go to prison later if they commit a subsequent offence. So, thankfully, nobody was led out the courthouse in handcuffs.
M. Bodénès, who was COO of the company in 2012, was sentenced to a two-year suspended prison sentence, fined €80,000, and received a three-year ban from the court on managing a company (a critical point given his current role).
Laurent Renard, who was Marc Cherqui’s boss’ boss, and was the former deputy director general in charge of finance at Bourbon, received the same two year suspended sentence as M. Bodénès, the same €80,000 fine, and the same three-year ban from the court on managing a company. However, M. Renard is now 70 years old and has retired.
The judges acquitted Lilian Genevet, M. Cherqui's immediate line manager, the only acquittal of the case, and one that the prosecutor had already requested for lack of evidence.
Additionally, the judges sentenced Rodolphe Bouchet, the current head of Bourbon Marine and Logistics, the group’s most important division, along with Kunle Areogun and Eric Verrière for being "involved in the corruption process as decision-makers or facilitators.". M. Bouchet (who was the Vice President for Marine Services at the time) and M. Areogun (the current and in 2012 managing director of Bourbon’s joint venture in Nigeria) were sentenced to 12-months suspended jail terms apiece, and a fine of €20,000 (US$22,000) each. M. Verrière (who was the General Manager of Bourbon Offshore Surf in 2012) received a six-months suspended sentence, and a fine of €5,000 (US$5,400).
M. Cherqui also received a six-months suspended prison sentence, and a €30,000 (US$33,000) customs fine for failing to declare the cash he was bringing into the country. The court made the surprising finding that it considered that M. Cherqui was bringing the money back to France unknown to the company "for his own account and his own profit" – that he intended to pocket the left-overs from the bribe he had paid to the Nigerians.
However, the court said he had displayed "great transparency with the investigators and the justice system" and therefore deserved a shorter sentence than the three years of jail time the prosecutors had demanded.
(Un)fortunately, you can’t really become a whistleblower after you have been caught by the authorities doing bribery.
The conviction is potentially very serious for M. Bodénès and for Bourbon as whole. His lawyer, Patrick Maisonneuve, immediately announced that he would appeal the sentence on his client, telling AFP that "even if the court has put a lot of things into perspective, the facts are disputed, and we disagree with this decision."
Given it has taken twelve years to get this first judgement, this threatens to draw out the process for even longer, but understandably M. Bodénès is unwilling to give up his position and face enforced retirement under the cloud of the case. The Supervisory Board of Bourbon expressed its support for M. Bodénès, putting out a press release that was reported by La Provence, but that is not on the company’s website.
I have to say that the timing is not great (not that there is ever a good time to be convicted of corruption, really) as Bourbon’s restructuring remains ongoing, with many of its European bank creditors allegedly selling their debts in the company and also their shareholdings in Bourbon to new funds from the United States and Scandinavia. We also understand that negotiations ongoing with other legacy creditors and leaseholders.
One ray of sunlight was that the judges found that there was "no generalised system within the Bourbon Group to evade tax". But with seven employees of the company from 2012 convicted of bribery, and only one acquittal, the evidence of what was going on twelve years ago is damning.
We observe again that it should not have taken twelve years between the cash being found, the red flag and metaphorical smoking gun, and the first judgement. Justice delayed is justice denied.
Finally, despite the action in France to hold the bribe payers in Bourbon to account, it takes two to tango. No cases have opened in other countries of the recipients of the alleged bribes, to our knowledge.
As we noted in our coverage of both the SBM and Glencore corruption cases, every bribe has a giver and a receiver. The Bourbon case shines a harsh light on the those convicted of having authorised the payment of the illegal payments, but nothing has yet emerged to uncover in the public domain those tax officials who may have been receiving the payments, the bribe takers.
Where are they now and what did they do with the loot? Why are they also not in the dock? The governments in Cameroon, Equatorial Guinea and Nigeria don’t seem to be in a hurry to find out who took what.
The Bourbon case is not the only long running criminal case involving the leaders of a prominent offshore company to reach judgement recently. We had earlier observed how the Commercial Affairs Department of the Singapore Police Force and the Monetary Authority of Singapore took almost seven years to place charges against certain directors of Swiber for reckless disclosure and neglect. That was after the SGX had reviewed the case and found that Swiber had been in breach of stock exchange rules by making a misleading announcement in 2015.
Finally, readers of The Straits Times, Singapore’s leading English language newspaper, learnt last Monday that Yeo Chee Neng, Swiber’s former CEO, had been fined SG$310,000 (US$230,000) in total from convictions from four charges under the Securities and Futures Act. Mr Yeo was fined SG$100,000 (US$70,000) for his involvement in Swiber making a false announcement to investors relating to a US$710 million project award in (surprise!) Equatorial Guinea, which was only a letter of intent with a US$2 million value, rather than a firm contract as the company stated in its notification to the stock exchange. The company directors, including Mr Yeo, had authorised the announcement, despite knowing that the contents were “materially false,” the court found.
Mr Yeo was not the only Swiber director convicted of his involvement in the issuance of the misleading announcement. Earlier in the year, seven other former directors of Swiber were convicted and fined for their neglect in connection with the company’s false announcement, in low key convictions that were not initially made public in the press, as far as we know.
The company’s founder and executive chairman Raymond Kim Goh was fined SG$100,000, as was executive director and Group CEO Francis Wong Chin Sing, executive director and Group CFO Leonard Tay Gim Sin, along with executive director Nitish Gupta. Mr Goh owned 16 per cent of the shares in the company and had a lot to gain from boosting the company’s share price.
Executive director Jean Pers and the company’s independent directors Oon Thian Seng and Chia Fook Eng were each fined SG$10,000 (US$7,000). All eight directors were also disqualified from being directors of any Singapore company and are not allowed to directly or indirectly take part in the management of any company for five years.
Not only did the government fine the board members SG$530,000 (US$390,000) in total, but Mr Yeo received additional fines for insider trading and a large forfeit of the proceeds of that action.
He also received a fine of SG$200,000 (US$150,000) for an insider trading charge after he told his wife to sell their joint holdings in SG$500,000 (US$370,000) of Swiber debt certificates (known as debentures) based on his possession of non-public and material information on the troubled company’s financial difficulties in June 2016. Those difficulties ultimately led to the company defaulting on its debts shortly thereafter, and then to its bankruptcy and liquidation.
At the time the incidents occurred eight years ago, the company was trying to redeem the SG$305 million (US$227 million) of debt and find new lenders, and Mr Yeo had just been promoted to CEO. Mr Yeo knew that the debt renewal discussions were failing, and that Swiber might default.
The Singapore police said that Mr Yeo and his wife avoided losses of SG$629,762 (US$468,977) by selling the debt using his insider knowledge ahead of the default. He bailed out using his insider knowledge, leaving the other debtholders to face wipeout. The Singapore government, like the French government with the suitcase of cash at the airport, has confiscated this amount.
Mr Yeo was also received two fines of SG$5,000 (US$3,700) each, for failing to disclose that he had an interest in the debentures that his wife had sold. Like other Swiber directors, he was also also disqualified from being a director of any company or taking part in the management of any company, in his case for five years.
This is a good result, albeit too long after the event, and reminds Singapore’s other non-executive directors of public companies to exercise their duties responsibly and not just rubber stamp the stock exchange announcements prepared by management.
Swiber is long gone, but the case should act as a salutary warning to directors to tell the truth and avoid insider trading. Swiber was not alone in being subject to manipulation by insiders.
Indonesian tycoon Kris Wiluan, the founder, former chief executive, and former chairman of offshore rig owner KS Energy (now under liquidation), was previously fined SG$480,000 (US$350,000) by the State Courts in Singapore in 2021 on three counts of market rigging involving the company's shares. Like Mr Goh and the other Swiber directors, he escaped prison.
These cases suggest that when the market falls the authorities should be vigilant for manipulation, insider trading and untrue statements to support company stock prices.
In fact, the only person who may go to prison in our crime update this week is someone who seemed to gain no personal benefit from her actions. At the end of last month, Karen Agustiawan, who was CEO of Indonesia's state energy firm Pertamina between 2009 and 2014, was sentenced to nine years in jail for what seems to be incompetence and failing to follow state procurement rules, and she was also fined IDR500 million (US$30,000).
The Central Jakarta Corruption Court found Ms Agustiawan guilty of improper procurement after she had signed long-term liquefied natural gas (LNG) purchase contracts in 2013 and 2014 with Cheniere Energy to buy LNG from the American company’s Corpus Christi plant in Texas, which began production in 2018 and shipped its first cargo to Pertamina the next year. The Indonesian government claimed that Pertamina and its state owner suffered losses of US$113.84 million because it did not need all the LNG it had committed to buy, and so ended up re-selling them at a loss in international markets.
The judges in Jakarta ruled that Cheniere had a duty to repay the Indonesian government for the losses, but it is not clear whether this is a legal or a moral responsibility. We stress that Cheniere was not a party to the case against the former Pertamina CEO. Prosecutors claimed that Ms Agustiawan had signed the LNG purchase agreements without conducting a proper assessment of the market and without approval from Pertamina’s board of commissioners. It is not clear how this is Cheniere’s responsibility or fault.
Luhut Pangaribuan, her lawyer, told Reuters that she would appeal the verdict. In 2020 she was acquitted by the Indonesian Supreme Court after she was previously sentenced to eight years in prison by a lower court for Pertamina’s ill-fated acquisition of a 10 per cent interest in the Basker Manta Gummy oil field offshore Australia in 2009, which quickly shut down production. The former Finance Director of Pertamina, Frederick Siahaan, was also convicted in the lower courts in Jakarta for the failed Australian investment, but was acquitted in the Supreme Court in 2019.
The lesson here seems to be that if you pay bribes or mislead investors, you will most likely be fined and disqualified from office, but will not go to prison. Cost the government millions through bad contracts, however – that is what will get you sentenced (if not actually sent) to jail.
Unfortunately, as in France and Singapore, judgements and appeals in Indonesia take far too long. Let’s see how Ms Agustiawan fares in her appeal. Just don’t hold your breath for a quick outcome there, nor in Marseille.
Background reading
As usual, Le Marin has been consistent in its reporting of the Bourbon story.
We covered the background of the false announcement by Swiber here.
Jonathan Taylor recently took SBM Offshore and two of its former directors to court in the Netherlands in a civil case over this treatment by the company – which you can find more about here. A judgement is scheduled for September, and we’ll keep you posted as usual.
