Australia-based professional services firm Worley Ltd. has further clarified to the Australia Securities Exchange previous statements related to corruption issues alleged against the company in a December arbitration panel ruling that dismissed its claim in a long-running contract pay dispute with Ecuador state-owned energy firms that halted trading of company stock on Jan. 9.
The company responded in a more detailed disclosure to questions posed by the exchange that the firm "strongly disputes the statements regarding corruption" alleged by the Paris-based arbitration judges in the proceeding held under U.N. global trade auspices—"in particular it did not breach anti-bribery and corruption laws, and takes its responsibility under such laws extremely seriously."
Worley said it was responding to the arbitration panel's decision to dismiss the firm's claim for "historic unpaid trade receivables" owed on project work between 2011 and 2017 for Petroecuador and related government-owned entities that had been in process since 2019.
Ecuador then proceeded to file a U.S. federal court suit last month in Texas against company unit Worley International Service to enforce the 163-page arbitration panel ruling, making it public.
Click here to read the arbitration ruling.
Worley said the decision was “confidential under applicable rules at the time,” but the firm told the exchange that Ecuador had issued a statement that the ruling was based "on jurisdictional and admissibility grounds relating to corruption, illegality and bad faith by Worley and a subcontractor.” The government statement also noted “willful blindness by Worley to the subcontractor’s corruption.”
In its latest statement, Worley said it was not approached by Ecuador about release of the ruling details nor did it consent to their publication beforehand, as arbitration rules require.
"We’re working with our external lawyers, and we’re going to refute the [arbitration] ruling. We’re not a corrupt culture,” Worley CEO Chris Ashton told publication Australian Financial Review in a Jan. 12 interview, noting intensive meetings with investors and analysts.
Worley ranks at No. 7 on ENR’s list of the current Top 225 Global Design Firms, reporting about $4.95 billion in global design revenue in 2022, and it ranks at No. 166 on the Top 225 Global Contractors list, reporting $1.9 billion in global construction revenue.
Firm stock fell 6% to $A16.06 per share at that market's close on Jan. 12, its lowest level since July, said the publication. Dubai-based engineering firm Dar Group is its largest shareholder at 23%.
Ashton, who said Worley has not worked in Ecuador since 2017, became CEO in 2020, succeeding Andrew Wood, who retired from the firm. “We’re fighting to protect the integrity of the organization,” he said.
The country's Attorney General could not be reached for comment and a spokesman for the U.S. attorneys for Ecuador have not responded to an ENR query as to whether it had a role in release of the panel decision.
According to Worley, principals of its unnamed subcontractor “were prosecuted and found to be corrupt by an Ecuadorian court."
The local subcontractor has been identified as Tecnazul. According to the ruling, Ecuador cites "investigations that followed the release of the Panama Papers"—documents leaked by investigative journalists in 2016 that show previously unknown global financial connections linked to corruption. They "showed that Tecnazul used offshore accounts in Panama and Switzerland to pay more than $1 million in bribes to several former Petroecuador employees," says the ruling.
Following investigations, Worley says it "terminated its connection with the firm in 2016 as soon as it became evident … [it] had engaged in wrongdoing.”
The engineer said it “disagrees” with the grounds for dismissing its claim, saying the arbitration panel “did not address the merits.” The firm is weighing options for further legal action against the Ecuador entities, which Ashton said would include "taking them to task" over the arbitration ruling disclosure.
Worley also “denies that it was willfully blind in respect of the subcontractor’s corruption,” noting that since 2017, it “has further strengthened its processes for engagement of business partners and subcontractors.”
Noting the ruling’s references to “legitimacy and proper reporting of a limited number of historical business entertainment events during the 2011-2017 period,” as well as alleged improper hiring, Worley pointed to its “ongoing processes to strengthen our ethical business practices.” The firm also has enacted tighter rules related to project payment pursuits, without approval from the chief financial officer, Ashton told the Review.
Worley clarified it is owed about $71 million for the projects but also claimed about $30 million in arbitration legal expenses and sought about $141 million in damages. But there also was a liability of about $33 million. Worley also noted separate legal claims by Ecuador against it totaling about $327.2 million, but described those as "being pursued ... unreasonably."
The decision would hae no "material" effect on Worley's bottom line, the firm said, because it did not come from a court "in the context of a prosecution," its contentions had been denied and there was potential further legal action.
The arbitration ruling comes as Ecuador faces liquidity problems and a likely deficit for last year of about $5.7 billion, Reuters reported.
Worley said earlier In December that its awards in the first quarter of its fiscal 2024 “are in line with our expectations and continue to support our outlook previously announced” last year.
The firm said also that it signed a reimbursable engineering, procurement and construction contract for the Calcasieu Pass 2 (CP2) LNG export project first phase in Louisiana.
“Worley continues to win early-phase projects (feasibility and FEED) across both sustainability-related and traditional work as well as wins in later phases as these projects progress.” the firm said.
The firm is set to release its second quarter earnings report on Feb. 28.