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SEC v. PBSJ Corporation

 
:
PBSJ Corporation
:
SEC Civil
:
January 22, 2015
:
SEC v. PBSJ Corporation
:
SEC v. PBSJ Corporation (2015)
:
PBSJ was credited with cooperating with the SEC’s investigation after discovering and disclosing the violations.
:
Engineering Services
:
Qatar
:
2008; 2009
:
Director of International Projects at Qatari Diar Real Estate Investment Company.
:
PBSJ Corporation (“PBSJ”) was an engineering and construction firm based in Tampa, Florida. PBS&J International, Inc. (“PBS&J Int’l’) was a wholly owned subsidiary of PBSJ which provided engineering services in international markets, including the Middle East.

In 2009, PBS&J Int’l won a pair of multi-million dollar development project contracts in Qatar and Morocco. Both projects were solicited through a competitive bidding process with the Qatari Diar Real Estate Investment Company—an agency of the Qatari government to development real estate investments.

According to the SEC, the two projects were facilitated by the efforts of a PBSJ employee, and later President of PBS&J Int’l, Walid Hatoum. Hatoum allegedly arranged for PBS&J Int’l to bid on the two Qatari Diar projects by partnering with a local subcontractor (“Local Partner”) in charge of managing the project’s local operations.

The SEC explains that, unbeknownst to PBSJ, the Local Partner was owned and controlled by the Director of the Qatari Diar (“Foreign Official”). According to the SEC, as part of the arrangement, Hatoum planned to use the Local Partner as a conduit to funnel bribes to the Foreign Official, agreeing to share 40% of the project profits with the Local Partner and to pay the partner “agency fees” for the successful tenders. Additionally, PBS&J agreed to pay half of the salary of the Foreign Official’s wife, who worked for the Local Partner. In exchange, the Foreign Official allegedly provided PBS&J Int’l confidential bid information to assist PBS&J Int’l win both contracts.

While the SEC contends that the PBSJ officials who oversaw the bid process were never aware of the scheme, the SEC claims that the officials ignored significant red-flags, including the fact that PBS&J Int’l was being given confidential bid information; the fact that Hatoum described Foreign Official as a good friend; and the fact that one official was aware that one of the employees of the Local Partner was the Foreign Official. According to the SEC, had PBSJ conducted “meaningful due diligence” it would have discovered the Foreign Official’s role as a Qatari Diar official and owner of Local Partner.

On January 22, 2014 the SEC announced that it entered into a deferred prosecution agreement with WS Atkins, the corporate parent of PBSJ. In the agreement, Atkins, on behalf of PBSJ, agreed to pay a total sanction of $3,407,875.

On the same day, Hatoum settled charges against him by the SEC in a cease-and-desist order, agreeing to pay a $50,000 civil penalty for violations of the FCPA’s anti-bribery, books-and-records, and internal controls provisions.
:
Anti-bribery (Issuer), Books and records (Issuer), Internal controls (Issuer)
:
Deferred-prosecution Agreement
:
PBSJ was ordered to pay a total sanction of $3,407,875. This included the disgorgement of $2,892,504, prejudgment interest of $140,371, and a civil penalty of $375,000.
:
3,407,875
:
0
:
Issuer
:
U.S.
:
United States
:
Contract Procurement/Retention
:
60,600,000
:
Cash
:
Subcontractor
:
1,390,000
:
Qatar
:
No
:
Yes