Australian engineering contractor Worley has resumed trading after it issued a statement to the stock market denying it acted corruptly, illegally or in bad faith following an international tribunal ruling that the company bribed foreign government officials linked to contracts to rebuild Ecuador’s oil and gas industry.
Worley was placed in a trading halt on Tuesday following revelations in News Corp that the company lost a contractual dispute with Ecuador just before Christmas, but failed to disclose the corruption findings to the market.
The tribunal ruling stated the disputed amount as about $700 million. Worley told the market the figure was $60 million.
Shares in the company lifted 0.8 per cent after trading resumed on Wednesday.
An international arbitration tribunal made up of three senior lawyers dismissed Worley’s claims against the Ecuadorian government because it found Worley engaged in a “widespread pattern of illegality and bad faith”. The contracting giant told shareholders in December the tribunal rejected its claims on “jurisdictional grounds”, and made no reference to the damning comments of graft behind the ruling.
“The tribunal’s decision to dismiss the arbitration is based on jurisdictional and admissibility groups relating to corruption, illegality and bad faith by Worley and a subcontractor, including wilful blindness by Worley to the subcontractor’s corruption,” the company said in a statement to the ASX at 3.30pm on Wednesday.
“Worley denies any corruption, illegality or bad faith on Worley’s party. In particular, Worley did not breach anti-bribery and corruption laws. Worley takes its responsibilities under such laws extremely seriously.”
Worley, which has a subsidiary in the United States, took Ecuador to the tribunal in 2019 under the Bilateral Investment Treaty between the US and Ecuador, seeking payments of about $700 million.
The company told the tribunal that state-owned company Petroecuador failed to pay Worley for the work it had been contracted.
However, in its ruling, the tribunal said Worley had bribed officials with gifts ahead of the awarding of contracts, benefitted from illicit insider information and broke local laws limiting the amount of work that could be subcontracted.
The tribunal determined that Worley sought and accepted insider information “in bad faith” during the negotiation phase, and misrepresented the involvement of one of its subcontractors, Tecnazul, at that point to ensure it was awarded the contract.
Tecnazul was under the scrutiny of the Ecuadorean government after the 2016 Panama Papers leak revealed evidence it had paid tens of millions of dollars in bribes to key government officials and Petroecuador executives.
“The tribunal is therefore faced with a widespread pattern of illegality and bad faith affecting the centrepieces of the claimant’s [Worley’s] investment from their origination and flowing into the claimant’s subsequent investments in Ecuador,” the tribunal ruled.
In its statement to the ASX on Wednesday, Worley said it had terminated its connection with Tecnazul in 2016 “as soon as it became evident that the subcontractor had engaged in wrongdoing”.
“Worley had followed proper processes, including conducting due diligence, and denies that it was wilfully blind in respect of engagement of business partners and subcontractors,” it said.
“Since 2017, Worley has further strengthened its processes for engagement of business partners and subcontractors.”
The company said it disagreed with the tribunal findings, and was considering its options for further legal proceedings.
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