(U) Australian engineering and services giant Worley has denied any corruption and refuted media reports that followed its recent international arbitration loss relating to historic operations in Ecuador — these reports alleged Worley had a tax liability in the South American nation.
Detailing its side of the story, Worley on Wednesday confirmed that WorleyParsons (now Worley) provided services in Ecuador from 2011 until 2017.
In 2019, Worley commenced arbitration relating to historic unpaid trade receivables owing to a subsidiary of Worley by state-owned oil company Petroecuador, and a related state entity (the Worley receivables). The arbitration was commenced under the Bilateral Investment Treaty between the US and Ecuador, with the tribunal issuing its decision on 22 December 2023.
“Worley disagrees with the decision and is considering the options for further legal proceedings,” the company reiterated on Wednesday.
The contractor noted that the arbitral decision was confidential under applicable rules at the time it was issued but since then, Ecuador has made the decision public.
“The tribunal’s decision to dismiss the arbitration is based on jurisdictional and admissibility grounds relating to corruption, illegality and bad faith by Worley and a subcontractor, including wilful blindness by Worley to the subcontractor’s corruption,” said Worley.
“Because the tribunal dismissed Worley’s claims on these grounds, it did not address the merits of Worley’s claim for payment of the Worley receivables.”
Worley added that it denies any corruption, illegality or bad faith on its part.
“In particular, Worley did not breach anti-bribery and corruption laws. Worley takes its responsibilities under such laws extremely seriously.”
However, the company confirmed that principals of a Worley sub-contractor were prosecuted and found to be corrupt by an Ecuadorian court.
“Following investigations, Worley terminated its connection with that sub-contractor in 2016 as soon as it became evident to Worley that the sub-contractor had engaged in wrongdoing,” the company said.
Worley stressed that it had followed proper processes, including conducting due diligence, and denied that it was wilfully blind in respect of the sub-contractor’s corruption.
Worley said that since 2017 it has further strengthened its processes for engaging business partners and sub-contractors.
The company noted that some other specific issues raised in the decision related to the legitimacy and proper reporting of a limited number of historical business entertainment events during the 2011-2017 period.
“Since that time and as part of ongoing processes to strengthen our ethical business practices, Worley has improved its processes for training and education, approval and recording of entertainment expenses.
“Issues were also raised regarding improper hiring. Worley believes that all project employees were hired in accordance with proper processes,” it said.
Worley on Wednesday clarified that the net amount owed to Worley is AS58 million (US$38.9 million), which has been recorded as non-current in its periodic reporting since the 2019 financial year.
Also, the arbitration decision awarded costs to Ecuador of approximately US$6 million, which is not material to the 2024 financial year results.
“Worley’s own legal costs of the arbitration have been and continue to be expensed as incurred,” the Sydney-headquartered company said.
“The media also reported an alleged tax liability in Ecuador. Worley believes that it has complied with its tax obligations and that the tax positions in the financial statements have been appropriately taken.”
Brazil Energy Insight 
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