Worley pauses trading amid reports of corruption findings in $700m dispute with Ecuador

The news: Australian contracting giant Worley has paused trading amid reports it lost a $700 million dispute with Ecuador due to “conduct amounting to corruption”.

The numbers: On 27 December, Worley issued an ASX announcement stating that arbitration, which commenced in 2019 relating to historical unpaid trade receivables of USD470 million ($700 million) owing to a subsidiary of Worley by state-owned Petroecuador, was dismissed by an international arbitration tribunal on 22 December on jurisdictional grounds. Worley, which takes around $7 billion in annual revenue from global engineering contracts, said it was "considering the options for further legal proceedings".

The context: The Australian reported late on Monday that the arbitration tribunal also found Worley engaged in “serious and widespread illegal conduct”, including sending gifts to government officials, and benefited from illicit insider information when bidding for government contracts. The report said Worley failed to disclose to shareholders in its original announcement that the Miami-based tribunal said it was “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”. RBC Capital Markets said in a note it is negative on Worley following the allegations.