The Securities and Exchange Commission on Thursday charged Halliburton Co. with violating the Foreign Corrupt Practices Act. The company has agreed to pay $29.2 million to settle the case.

According to the SEC, Halliburton violated the FCPA’s books and records provisions, as well as the law’s internal accounting controls provisions, while selecting and making payments to a company in Angola in the course of winning lucrative oilfield services contracts. The company profited by approximately $14 million from the deals, the SEC said.

In addition to the monetary settlement, the company also agreed to obtain an independent compliance consultant to oversee its anti-corruption policies and procedures in Africa. Former Halliburton vice president Jeannot Lorenz has agreed to pay a $75,000 penalty for causing the violations, circumventing internal accounting controls, and falsifying books and records.

According to the SEC’s order, officials at Angola’s state oil company, Sonangol, advised Halliburton management in 2008 that it was required to partner with more local Angolan-owned businesses to satisfy regulations for foreign firms operating in the country. Halliburton tasked Lorenz to spearhead these efforts.

When a new round of oil-company projects came up for bid, Lorenz began a lengthy effort to retain an Angolan company owned by a former Halliburton employee, who was a friend of the Sonangol official who later approved the award of the contracts, the SEC said. Halliburton ultimately outsourced more than $13 million worth of business to the local Angolan company.

The SEC’s order finds that Lorenz violated Halliburton’s internal accounting controls by starting with the local Angolan company and then backing into a list of contract services, rather than first determining the services and then selecting an appropriate supplier.

Lorenz also failed to conduct competitive bidding or substantiate the need for a single source of supply, the SEC charged. Additionally, he avoided an internal accounting control that required contracts of more than $10,000 in countries like Angola with high corruption risks to be reviewed and approved by a special committee within Halliburton.

The company eventually paid $3.705 million to the local Angolan firm, and Sonangol approved the award of seven subcontracts to Halliburton.

”Halliburton committed to using a particular supplier that posed significant FCPA risks, and a company vice president circumvented important internal accounting controls to get the deal done quickly,” said Antonia Chion, associate director in the SEC’s enforcement division.

Without admitting or denying the findings, Halliburton and Lorenz consented to the order requiring them to cease and desist from committing or causing any violations or any future violations of the books and records and internal accounting controls provisions of the FCPA.

Halliburton agreed to pay $14 million in disgorgement plus $1.2 million in prejudgment interest and a $14 million penalty.

Home-page photo: Joshua Doubek, Wikimedia Commons, CC-BY-SA 3.0

, , , , , ,

Leave a Reply

Your email address will not be published. Required fields are marked *