c.2013 New York Times News Service
c.2013 New York Times News Service
The United States on Tuesday announced one of the biggest settlements ever made for corporate misbehavior overseas, chronicling a litany of charges against a leading energy services provider. The charges included bribery and kickbacks in the Middle East and Africa and systematic defiance of economic sanctions on Iran and three other countries.
The announcement came two days after the United States and other world powers reached a breakthrough agreement with Iran that eases, at least temporarily, some of the sanctions over its disputed nuclear program. The timing of the announcement seemed to be partly intended to send a signal that the Obama administration still considers Iran subject to economic isolation, despite the atmosphere of rapprochement embodied in the nuclear agreement.
The Securities and Exchange Commission said the company that settled, Weatherford International Ltd., a Swiss provider of oil and gas services that operates in more than 100 countries, had agreed to pay more than $250 million to resolve charges that it violated the Foreign Corrupt Practices Act and other laws from 2002 to 2011.
The settlement included $91 million in fines and penalties related to illicit dealings with Cuba, Iran, Sudan and Syria that violated a range of U.S. sanctions on those countries from 2003 to 2007. The Treasury Department, in its own announcement, said the settlement was the largest for sanctions violations outside the banking industry.
A number of federal agencies, including the SEC and the Treasury, Justice and Commerce departments, collaborated on the investigation into Weatherford’s behavior, described in the Treasury announcement as “egregious actions which compromised U.S. sanctions.”
Weatherford had said it was cooperating with the investigation. It said in a statement from its global headquarters in Geneva that it had set aside the money for the settlement and wanted to move on.
“This matter is now behind us,” Bernard J. Duroc-Danner, the company’s chairman, president and chief executive, said in the statement. “With the internal policies and controls currently in place, we maintain a best-in-class compliance program and uphold the highest of ethical standards as we provide the industry’s leading products and services to our customers worldwide.”
In papers filed in federal court in Houston, where Weatherford has significant operations, the SEC said the company had authorized “bribes and improper travel and entertainment for foreign officials in the Middle East and Africa to win business.”
It said the misconduct also included kickbacks paid in Iraq to obtain contracts under the corrupt and now defunct U.N. oil-for-food program, which was established in the mid-1990s and ended in 2003 after the U.S.-led invasion of Iraq.
Weatherford’s bribery transgressions, according to the complaint, included the creation of a Middle East “slush fund” to pay foreign officials; payments to Algerian officials for a World Cup tournament trip, a daughter’s honeymoon and a religious pilgrimage; and misappropriation of funds by managers in Italy for items like golf equipment and perfume.
Weatherford employees also created false accounting and inventory records from 2002 to 2007 to hide “illegal commercial sales to Cuba, Syria, Sudan and Iran,” the complaint said. Both the sales and the efforts to conceal them, it said, violated a range of export control laws and regulations concerning those countries.
Treasury officials said the timing of the announcement was unrelated to the nuclear agreement, which was announced Sunday in Geneva and gives Iran relief, for the first time in 10 years, from some of the sanctions imposed against it.
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Israel and other critics of that agreement have called it deeply flawed, saying that Iran made few concessions in exchange for billions of dollars of badly needed cash that has been frozen in bank accounts abroad, and for inducements that could begin to unravel other sanctions.
The Obama administration has countered that all major sanctions remain in place, that the relief is reversible and that the agreement does not signal the end of Iran’s economic isolation or any relaxation of the enforcement of remaining sanctions.
“Today’s action underscores our deep commitment to target those who seek to violate our sanctions,” Adam J. Szubin, director of the Treasury’s Office of Foreign Assets Control, which supervises the administration of sanctions, said in the announcement of the Weatherford settlement.
Critics of the agreement with Iran welcomed the Weatherford settlement but noted that it applied to behavior that had been halted years ago.
“The real question is whether the Treasury Department will be permitted politically to enforce current sanctions for current illicit activity,” said Mark Wallace, the chief executive of United Against Nuclear Iran, a New York-based group that has pushed for stronger sanctions on Iran.