HOUSTON (CN) – Pride International, one of the world’s largest offshore drillers, paid millions of dollars in bribes “to government officials in every country in which the company does business,” according to a shareholder’s derivative complaint. Bribery was so rampant that the company created a $56 million “reserve” to cover penalties for violating the Foreign Corrupt Practices Act, the complaint states.
Pride’s own investigation revealed that it had paid more than $4 million in kickbacks, “in every country in which the company does business – Venezuela, Saudi Arabia, Libya, Kazakhstan, Angola, Mexico, Brazil and the Republic of the Congo,” according to the complaint in Harris County Court.
Pride has 7,000 employees, and offices in every continent but Antarctica and Australia.
On Feb. 16 this year, “Pride announced that the company was creating a reserve of $56.2 million to resolve the violations of the FCPA,” the complaint states. “However, this massive reserve will only cover the fines, penalties, and disgorgements for the company’s clear violation of the law. It does not include the costs that have been incurred to date investigating and remedying the damage done to the company as a result of the board’s failure to require that the company install and maintain a system of internal controls for compliance with the FCPA that would have prevented the payments at the outset.
“Because the bribes were made on dozens of occasions over the course of many years in every market Pride does business [sic], it illustrates that the board failed to institute a system of controls. These state law breaches of fiduciary duties of good faith and loyalty were the direct and proximate cause of at least $56 million in damage to the company.”
Named as defendants are Pride’s board of directors: Louis Raspino, David Brown, Ralph McBride, Archie Dunham, Frank Kalman, Kenneth Burke, Robert Phillips and David Hage.
“Due to their conscious disregard that the company lacked the internal accounting controls required by the FCPA, none of the defendants took any steps to prevent this colossal mistake,” says named plaintiff Edward Ferguson.
Ferguson seeks at least $56 million in damages and “disgorgement of all profits, benefits and other compensation obtained by the defendants during the relevant period.”
He is represented by Joe Kendall of Dallas.