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Oilfield services company Weatherford International has been charged with violating the Foreign Corrupt Practices Act (FCPA) by the US Securities and Exchange Commission. The SEC charged Weatherford with authorizing bribes and improper travel and entertainment for foreign officials in Africa and the Middle East to win business.
The company was also charged with paying kickbacks in Iraq to obtain UN Oil-for-Food contracts.
According to documents, SEC alleged that Weatherford and its subsidiaries carried out commercial transactions with Cuba, Syria, Iran and Sudan violating US sanctions and export control laws. The company failed to establish an effective system of internal control and, along with its subsidiaries, falsified books and records to conceal illicit payments and transactions violating US sanctions.
Weatherford has already agreed to pay more than $250 million to settle the charges and parallel actions conducted by the Fraud section of the US Department of Justice.
Andrew Ceresnev, co-director of the SEC’s Enforcement Division said, “They used code names like ‘Dubai across the water’ to conceal references to Iran in internal correspondence, placed key transaction documents in mislabeled binders, and created whatever bogus accounting and inventory records were necessary to hide illegal transactions.”
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He further said the nonexistence of internal controls at the company “fostered an environment where employees across the globe engaged in bribery and failed to maintain accurate books and records.”
According to the complaint filed in federal court in Houston, the alleged misconduct took place between 2002 and 2011.
In a single instance, the SEC found Weatherford and its subsidiaries awarded more than $11.8 million in improper “volume discounts” to a distributor who was suggested by an official at a national oil company in the Middle East.
Going beyond the simple use of agents or other third parties, Weatherford provided improper entertainment and travel to officials of a state-owned company in Algeria without any legitimate business purpose. Managers of the company in Italy misappropriated more than $200,000 in company funds – some of which was paid to Albanian tax auditors.
