Tidewater: FCPA Matters

Tidewater’s foreign-bribery case followed payments used to resolve tax problems in Azerbaijan and keep vessels operating in Nigerian waters. In the November 2010 deferred prosecution agreement, Tidewater Inc. and Tidewater Marine International accepted the accompanying statement of facts. That account connects local agents, regional managers and accounting records to payments for officials who controlled tax and customs decisions.

The two countries involved different business problems. In Azerbaijan, the payments were tied to tax audits. In Nigeria, a freight-forwarding agent made payments to address import-permit problems affecting vessels. A tax employee, vessel manager or accounts-payable worker may recognize how an operational problem became an instruction to pay someone outside the company.

The Parent, the Marine Business and the Local Operator

The admitted facts distinguish Tidewater Inc. from Tidewater Marine International and the Nigerian entity, Tidex. Their roles connected the parent company’s reporting, international management and local vessel operations. Employees responsible for different parts of that structure participated in the payment and approval processes described in the agreement.

That distinction matters when an insider follows an instruction across offices. A local agent can identify a problem and request money, while a regional manager approves the payment and an accounting employee assigns its description. The records in the admitted account trace those separate steps rather than treating every company name as interchangeable.

A Tax Audit With Two Payment Destinations

The agreement’s Azerbaijan account describes payments arranged through an agent and an entity in Dubai. Communications about tax audits connected money paid outside the tax authority with the amount that would appear in the official audit paperwork. The formal assessment and the other payment were parts of the same proposed resolution.

In the account of the later tax audit, the agent explained that only a small part of the proposed payment would appear in the tax report. The rest was to be wired to the Dubai entity, with consulting invoices supplied to cover it. Tidewater Marine International made the transfer and recorded it as crew-travel expense, according to the admitted facts.

Those records tell different parts of the story. The tax report states the formal assessment. The bank instruction identifies the beneficiary of the larger transfer. The invoice supplies a consulting description, while the accounting entry assigns a travel category. An employee who handled the transaction could explain why those descriptions differed.

We see the contradiction: the company was resolving a tax audit, but the books called the payment crew travel. The accounting label does not explain what the recipient did or why the tax agent requested the transfer. The communications behind the entry supply that connection.

Paperwork Created Around the Payment

The Azerbaijan account also describes altered and backdated contract paperwork prepared for an auditor. A tax director approved the revised contract and asked that it be prepared for submission. The admitted facts place the document change within the effort to resolve the audit.

A later audit involved invoices describing tax and legal consulting services. The communications discussed the payments, the paperwork needed to support them and the timing of transfers. For an employee familiar with the service provider, the question is what actual work the invoice describes and how that work relates to the official’s decision.

This is where original versions and internal explanations can matter. Someone who saw a contract before it was changed may understand what the revised document conceals. Someone asked to approve the invoice may know whether the request arrived as a purchase of services or as a solution to a tax problem.

Keeping Vessels Working in Nigeria

The Nigerian account concerns temporary importation permits for vessels. Tidex used a freight-forwarding agent to obtain permits and extensions. The agreement describes payments to customs officials when vessels arrived before paperwork was complete, moved between customs zones, changed customers or continued operating with expired permits.

The freight-forwarding agent described these charges as intervention or recycling payments. Tidex employees understood that the payments were bribes, in whole or in part, to customs officials. The agent invoiced Tidex for reimbursement, moving the cost into the company’s ordinary payment process.

The admitted facts connect the payments to specific operational decisions. A vessel needed to enter or keep working in Nigerian waters, and the agent proposed a payment to get around the paperwork requirements. That is a concrete connection for a vessel manager: the sailing or charter decision, the permit problem and the approval of the agent’s charge.

A freight-forwarding invoice by itself may not explain that connection. The person who requested the intervention may know which permit was missing and what the agent promised. An accounts-payable employee may know the description used to obtain reimbursement and who approved it.

Managers Knew What the Agent’s Charges Covered

The agreement states that managers and employees of Tidewater Marine International became aware that intervention and recycling payments included bribes. Payments continued after that awareness. The admitted account includes communications describing how an intervention could avoid delay while the required documents remained incomplete.

The Nigeria payments were recorded as payments to the freight-forwarding agent in an account for other vessel costs. Tidex’s records were then consolidated into the parent company’s financial statements. The local reimbursement and the parent’s reporting therefore belonged to the same accounting trail.

For an insider, the important history includes what management learned before the next payment. A warning, approval or explanation can connect knowledge of the agent’s practice to a later invoice. The agreement’s account shows why the sequence of those decisions matters alongside the transfer itself.

The Government’s Later Dismissal Request

In its motion, the government reported that the companies had complied with their obligations under the deferred prosecution agreement and asked the court to dismiss the criminal information. That is the government’s own account and request. The attached proposed order is a proposed order, so this page does not turn it into a separately verified court disposition.

The company’s admitted statement of facts explains the conduct described here. The later motion explains the government’s position after the agreement’s term. Keeping those documents distinct preserves both the payment account and the procedural status each document actually establishes.

What Your Knowledge Can Explain

The tax and vessel accounts share a practical feature: an operational problem generated a payment whose description did not explain the official benefit. An insider can connect the agent’s request with the transaction the company was trying to complete. We work with the people who understand those decisions and the records left behind.

An FCPA tip to the SEC can earn 10% to 30% of sanctions over $1 million; where a government contract is involved, a False Claims Act case can pay 15% to 30% of what the government recovers. Our experts assess the program that fits your information and work with foreign-bribery whistleblower lawyers who understand the company’s international operations.

You Know Why the Agent Was Paid

If you know what a tax consultant or freight-forwarding agent was paid to arrange, speak with our whistleblower experts about the transaction. We build your strongest case with you, bring in FCPA whistleblower lawyers suited to the business involved, and stay beside you throughout the process.