Samsung Heavy Industries announced on Feb. 23 that it reached an agreement with Brazilian authorities with regard to a ship broker’s illegal act related to its drillship contract. The authorities decided to drop all administrative and judicial proceedings on condition that Samsung Heavy Industries pays 812 million real (about 160 billion won) in settlement money.

Samsung Heavy Industries to Pay Settlement Money in Brazil

Petrobras ordered three drillships in 2006 and 2007 and Samsung Heavy Industries delivered the ships from 2009 to 2011. Later, the Brazilian prosecution initiated a corruption investigation against Petrobras in 2014 and found that the ship broker misappropriated some of the commission for the purpose of bribery, and Samsung Heavy Industries overlooked it.

Earlier, one of the three ships was called into question in the United States, too. Samsung Heavy Industries signed a shipbuilding contract with U.S. shipping company Pride, which is now Valaris, and delivered one drillship in 2011. Petrobras signed a five-year charter contract with Ensco regarding the ship.

However, Petrobras filed a damage suit in 2016, claiming that Samsung Heavy Industries unfairly used some of the brokerage commission paid to the broker in the process of contract conclusion, and it had to sign the charter contract at an unnecessarily high cost as a result. Then, Petrobras canceled the charter contract, claiming that Ensco was aware of the fact. Ensco requested arbitration in the United Kingdom, holding Samsung Heavy Industries accountable.

A suspension of indictment followed in 2019 by Samsung Heavy Industries paying a fine of US$75 million in the United States. Also in 2019, it ended the disputes by paying US$200 million to Valaris.

Source: Business Korea