A corrupt Brazilian shipping agent has failed in a UK court bid to extract $16.66m of drillship charter commissions from George Economou companies.
Hamylton Padilha's HPOR operation was trying to overturn a tribunal ruling in the high court.
The tribunal said in March that Padilha's payment - a 2% commission for arranging charters for two drillships with Petrobras - was forfeit due to his involvement in paying bribes to the Brazilian oil company in a previous unconnected deal.
The agent began his relationship with the defendants, referred to as OR in the judgement, in September 2010.
But HPOR did not inform OR, as it should have done, that Padilha had previously paid bribes to Petrobras executives and that these bribes were paid to advance the commercial interests of two of OR's competitors, the court said.
HPOR was paid $16.66m by OR.
Justice Sara Cockerill said that by late 2014 or early 2015 the defendants were concerned about the impact Operation Car Wash - the Petrobras corruption probe - could have on them, initially because of the inadvertent rental of an apartment from a relative of a disgraced Petrobras official convicted of corruption in Brazil, and were in discussions with Padilha about, in his words, the 'possible media crisis for OR'.
HPOR did not reveal and deliberately concealed Padilha's own involvement in establishing a corrupt relationship with Petrobras, which was subsequently revealed during the investigation, the court said.
Corruption denied
Padilha denied any involvement in corruption in 2015 to OR. "That denial was a lie, as subsequent events ultimately demonstrated," Cockerill said.
In June 2015, OR forwarded a press article identifying Padilha as a lobbyist implicated in an overpriced contracts scandal involving Petrobras. HPOR was, once again, asked to comment. Padilha, untruthfully, reassured OR that there was "nothing to worry about".
In July 2015, Padilha confessed to at least one of his acts of corruption in connection with the Vantage Drilling investigation. HPOR did not, however, explain to OR that Padilha had already admitted participation in two corrupt deals to the Brazilian authorities.
Two months later, HPOR urged OR to remain calm and stated that none of Padilha's other clients had elected to terminate their agency contracts. That assurance was untrue, as the Vantage contract had already been torn up.
Padilha later admitted that he had lied in compliance interviews with Vantage's lawyers and had denied any irregularities with its drilling contracts. HPOR made no mention of this to OR at any time.
By this stage, OR faced questions from Petrobras as to their dealings with Padilha.
They instructed that an 'audit' process be undertaken to investigate all payments made to HPOR.
"The relationship of trust and confidence in their agent had totally, and irretrievably, broken down. Ultimately, OR were 'red-flagged' by Petrobras as an unacceptable compliance risk due to their relationship with Mr Padilha," the ruling said.
By September 2015, Padilha's past corruption and involvement with Operation Car Wash led the defendants to the conclusion that the agency contracts could no longer continue and these were terminated.
Padilha was convicted of bribery and money laundering in Brazil in 2016.
He was found to have "brokered" payments to Petrobras officials totalling $31m to secure a $1.81bn contract for Vantage Drilling at the behest of shareholder Nobu Su, who paid Padilha $10m for his services as Vantage agent, the UK high court said.
Su has denied any wrongdoing.
Confidence destroyed
Padilha's testimony included an admission that he did not answer truthfully in internal investigations by Vantage Drilling.
He was sentenced to 12 years in prison, but this was commuted due to his collaboration with prosecutors. He was fined $22.1m.
The tribunal found that Padilha's conduct was a repudiatory breach on the part of HPOR, destroyed the relationship of trust and confidence, disabled HPOR from future performance and entitled OR to terminate the agency contracts.
It ruled that although the corrupt activities did not relate to the drilling contracts or the agency contracts and there was no evidence that HPOR acted corruptly in relation to those contracts, the prior corrupt relationship created an irredeemable conflict of interest.
The tribunal said: "Whether… there was hope or expectation of some recompense or there was an expression of gratitude in awarding the drilling contracts can never be known. That is the insidious effect of bribery and an agent cannot be allowed to profit from it, directly or indirectly".
HPOR submitted that there was no rule that contractual remuneration is forfeit whenever there is a breach of duty.
Cockerill said: He [Padilha] did provide value, but he provided it at the same time and alongside a serious continuing breach of duty."
