5.2.5Compliance Reporting

SBM Offshore reports on significant fines paid by SBM Offshore and all affiliate companies. To define a significant fine the following thresholds are considered (subject to final assessment by Management Board on a case by case basis):

  1. Operational fines of a regulatory and/or administrative nature which exceed US$ 500,000

    No significant operational fine had to be paid in 2018.
  2. Legal and compliance fines of a criminal nature which exceed US$ 50,000 :

    During 2018, two cases brought through Brazilian dispute resolution mechanisms led to significant fines to be paid by the Company:
    1. On July 26, 2018, the Company signed a Leniency Agreement with Brazilian Ministry of Transparency and Comptroller’s General Office (Ministerio da Transparencia e Controladoria-Geral da Uniao – ‘CGU’), the Attorney General’s Office (Advocacia Geral da Uniao – ‘AGU’) and Petrobras. The Leniency Agreement provides for:
      1. cash payment BRL 549 million (approximately US$ 146 million), which consists of:
        1. BRL 264 million (approximately US$ 70 million) civil fine;
        2. BRL 285 million (approximately US$ 76 million) compensation for alleged damages; and
      2. a 95% reduction in future performance bonus payments related to FPSOs Lease and Operate contracts; representing approximately US$ 180 million, as compensation for alleged damages to be paid by the Company; and
    2. On September 1, 2018, the Company reached resolution with the Brazilian Federal Prosecutor’s Office (Minesterio Publico Federal – ‘MPF’), by means of an agreement that provides for a fine of BRL 200 million (approximately $48 million as per December 31, 2018) to be paid by the Company to Petrobras. As with all such agreements signed by the MPF, this agreement is subject to approval by the Fifth Chamber of the MPF.

The legal fines and compensations for alleged damages amount to US$ 374 million. With the signing of the agreements mentioned above, the Company is allowed to resume normal business activities with Petrobras.