The FCPA Report

The definitive source of actionable intelligence covering the Foreign Corrupt Practices Act

Articles By Topic

By Topic: Oil and Gas Industry

  • From Vol. 6 No.5 (Mar. 15, 2017)

    Rolls Settlement Illuminates SFO Expectations for Cooperation and Compliance

    Rolls-Royce’s recent settlement with U.K., U.S. and Brazilian authorities was a key development in global anti-corruption enforcement. The case opens a window into what the SFO, now a major player on the field of anti-corruption enforcement, expects from companies both in terms of cooperation and remediation. That information may prove crucial for many multinational companies as U.K. enforcement continues to assert its dominance on the anti-corruption stage. See “Rolls-Royce Settlement Offers Lessons on How to Pay Commissions Without Corruption” (Feb. 15, 2017) and “SFO Arrives in the Anti-Corruption Premier League With Rolls-Royce Settlement” (Mar. 1, 2017).

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  • From Vol. 6 No.4 (Mar. 1, 2017)

    SFO Arrives in the Anti-Corruption Premier League With Rolls-Royce Settlement

    The U.K.’s Serious Fraud Office has struggled for legitimacy in recent years, with a limited number of enforcement actions under its belt and a shrinking budget. But its recent settlement with Rolls-Royce has established it as a force to be reckoned with in global anti-corruption enforcement. “The settlement catapults the SFO into the Premier League of global anti-bribery law enforcement,” said London-based Barry Vitou, head of Pinsent Masons’ corporate crime team. But is it sending mixed messages about the value of cooperation and self-reporting? For more on the settlement, see “Rolls-Royce Settlement Offers Lessons on How to Pay Commissions Without Corruption” (Feb. 15, 2017).

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  • From Vol. 6 No.3 (Feb. 15, 2017)

    Rolls-Royce Settlement Offers Lessons on How to Pay Commissions Without Corruption

    Rolls-Royce’s recent massive settlement with U.S., U.K. and Brazilian authorities is a stark reminder of the anti-corruption risks associated with intermediaries, agents and fixers when negotiating contracts with state-owned entities. Commissions paid by Rolls-Royce to its agents – including notorious oil-and-gas “solutions” provider Unaoil – often were eventually passed on to foreign officials to close deals, netting Rolls-Royce a global settlement for hundreds of millions of dollars. In this first article discussing the case, we look at the bribes Rolls-Royce paid, how its compliance program failed to prevent them and what companies can do to make sure that commissions paid to agents are not used improperly. In a second article, we will look at the implications for cooperative U.S. and U.K. enforcement and what the SFO is looking for in terms of cooperation and remediation. See “Bribery Act Experts Discuss the Impact of Brexit, DPAs and Other U.K. Developments” (Jul. 13, 2016).

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  • From Vol. 5 No.23 (Nov. 23, 2016)

    Industry Risk Spotlight: Orrick Partner William Jacobson Examines Extractive Industry Corruption

    The FCPA Report’s Regional Risk Spotlight has made it clear that where a company operates can have a big impact on the level of corruption risk it faces. But risk does not just vary from region to region; it can also vary widely from industry to industry. Most multinational companies will find themselves interacting with business partners and third parties in a multitude of industries, and familiarity with the risks specific to each sector will help a company better assess its overall level of risk. In this first installment of The FCPA Report’s Industry Risk Spotlight series, we spoke with Billy Jacobson, a partner at Orrick and the former chief compliance officer of Weatherford International Ltd., to shine a light on the extractive industry, which has historically faced steep hurdles for anti-corruption compliance. See also “Corruption Risks and Compliance Programs in the Oil & Gas Industry: An Interview With Samuel Cooper of Paul Hastings” (Mar. 19, 2014).

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  • From Vol. 5 No.17 (Aug. 31, 2016)

    Key Energy Claims Financial Hardship, Receives DOJ Declination and No Civil Penalty for Mexican Corruption

    Key Energy Services’ recent SEC settlement resolving internal controls and books and records charges once again highlights the dangers of failing to supervise foreign subsidiaries. The company agreed to disgorge $5 million to resolve charges that it violated the FCPA when a consultant working on behalf of its Mexican subsidiary allegedly made improper payments to an employee of Mexico’s state-owned oil company, Petroleos Mexicanos, commonly known as Pemex. Key Energy previously announced that the DOJ declined to prosecute it based on the same conduct. Despite significant evidence of wrongdoing, the company avoided a civil penalty due to its precarious financial condition, significant remediation efforts and its imminent exit from the Mexican market. See also “Could Johnson Controls Have Prevented the Flagrant Circumvention of Its Revamped Compliance Program?” (Jul. 27, 2016).

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  • From Vol. 5 No.4 (Feb. 24, 2016)

    Regional Risk Spotlight:  Ayoka Akinosi Discusses the Crackdown on Corruption in Nigeria

    Nigeria recently overtook South Africa as Africa’s largest economy with a nominal GDP of $500 billion. Its abundance of natural resources, including the tenth-largest proven reserves of petroleum in the world, allows the economy room for even more growth in mining and manufacturing. In this installment of the Regional Risk Spotlight, The FCPA Report spoke with Nigerian attorney Ayoka Akinosi, a visiting specialist at Hughes Hubbard, about the recently elected Nigerian President’s anti-corruption efforts and the information challenges companies may face when performing due diligence and internal investigations in Nigeria. See also “Regional Risk Spotlight: Samuel Nam of Kim & Chang Discusses a South Korean Anti-Corruption Landscape in Flux” (Jan. 27, 2016).

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  • From Vol. 5 No.3 (Feb. 10, 2016)

    Kevin Abikoff of Hughes Hubbard Discusses the Benefits and Risks of African Local Content Laws

    Foreign investment in a country has historically been a double-edged sword. While investment may allow elites to prosper, often the benefits do not flow to the general population. In response to this pattern, many countries have adopted “local content laws” that require a certain level of reinvestment by foreign companies into the countries where they operate. While these programs can have clear benefits in terms of technology transfer and local ownership, they can also be a source of corruption risk, as Japanese conglomerate Hitachi learned in 2015 when it was fined $19 million for corruption related to its local partner. The FCPA Report discussed how to navigate these programs when doing business in African countries, where they are prevalent, with Hughes Hubbard partner Kevin Abikoff. He explained why local content laws are beneficial but also how they can lead to corruption, and what companies can do to avoid problems when working with local partners. See “Lack of Training and Due Diligence Leads to $19 Million Penalty for Hitachi” (Oct. 7, 2015).

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  • From Vol. 4 No.21 (Oct. 21, 2015)

    Regional Risk Spotlight: John Vincent Lonsberg of Baker Botts Helps Untangle the U.A.E.’s Web of Anti-Corruption Laws

    The Middle East is an increasingly attractive place to do business, particularly for the energy and defense sectors.  It can be tempting to consider the region as a uniform block with the same laws and cultures.  However, local anti-corruption laws can vary drastically from country to country in the area.  The United Arab Emirates is not the largest country in the region, but due to its federal structure, it has one of the most complicated anti-corruption regimes.  Its web of federal laws, local laws and ministry policies can make it difficult for foreign companies to identify anti-corruption risks.  For this installment of the Regional Risk Spotlight series, The FCPA Report spoke with John Vincent Lonsberg, a partner at Baker Botts based in Dubai, who has more than three decades of experience doing business in this part of the world.  Lonsberg discussed, among other things, how the U.A.E.’s conflicts of interest laws and economic offset programs complicate working with local third parties, the difficulties of determining who is a foreign official and changing attitudes towards gift-giving in this wealthy federation.  See “Mitigating Corruption Risk in the Middle East (Part One of Two),” The FCPA Report, Vol. 4, No. 15 (Jul. 22, 2015); Part Two, Vol. 4, No. 16 (Aug. 5, 2015).

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  • From Vol. 4 No.13 (Jun. 24, 2015)

    To Resolve Kuwaiti Bribery Charges, IAP Pays $7.1 Million and Former Executive Pleads Guilty

    In the DOJ’s first corporate FCPA settlement action of 2015, Florida-based defense and government contracting company IAP Worldwide Services, Inc. has agreed to pay $7.1 million in four installments to resolve charges it conspired to bribe Kuwaiti officials, through an intermediary, in exchange for a contract to build a homeland surveillance system.  The company admitted the charges in a non-prosecution agreement and the primary employee involved, James Michael Rama, pled guilty.  The DOJ cited IAP’s cooperation as a factor for entering into the NPA.  See “Prosecutors and Defense Lawyers Discuss FCPA Risk Areas, Government Expectations and the Length of Investigations,” The FCPA Report, Vol. 4, No. 11 (May 27, 2015).

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  • From Vol. 4 No.6 (Mar. 18, 2015)

    Operation Car Wash: Examining the History and Consequences of the Petrobras Scandal

    As the Petrobras investigation continues to unfold, consequences for companies and individuals, both in Brazil and worldwide, grow.  Raids have been conducted; hundreds of subpoenas issued; and the number of guilty pleas is already in the double digits.  Companies involved with Petrobras face a variety of consequences including potential FCPA charges.  In a recent webinar, Mayer Brown partner Kelly Kramer, and Tauil & Chequer Advogados partners Salim Jorge Saud Neto and Leonardo Morato discussed the history of the Petrobras investigation, the economic consequences for Petrobras suppliers and the international consequences of the scandal.  See also “The Changing Dynamics of Anti-Corruption Enforcement in Brazil,” The FCPA Report, Vol. 2, No. 23 (Nov. 20, 2013).

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  • From Vol. 3 No.16 (Aug. 6, 2014)

    International Anti-Corruption Enforcement Roundup

    In this issue, we cover the sentencing of four Innospec executives in the U.K. for bribes in Indonesia and Iraq, and the Wells Notice issued to Cobalt International Energy by the SEC regarding an FCPA investigation into activity in Angola.  Plus, more anti-corruption enforcement activity against Alstom: bribery charges will reportedly be leveled against ex-employees by the U.K.’s SFO and in Brazil, Sao Paulo prosecutors allege Alstom bribed an ex-government official through a Swiss account.  Also, developments in two FCPA-related individual cases in the U.S. – French citizen Frederic Cilins gets 24 months in prison for obstructing an FCPA investigation and the former BizJet president pleads guilty to bribing officials in Mexico and Panama.  The South Korean government sets up a task force to stamp out corruption.  And, adding to GSK’s corruption troubles: a whistleblower alleges the company paid bribes in Syria.

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  • From Vol. 3 No.6 (Mar. 19, 2014)

    Corruption Risks and Compliance Programs in the Oil & Gas Industry: An Interview with Samuel Cooper of Paul Hastings LLP

    Oil and gas was one of the first industries the DOJ and SEC seized on when they began to focus on the FCPA a decade ago.  The corruption risk profile of oil and gas companies remains high, but recent enforcement actions that appear to be the last breaths in a few wide-ranging and longstanding investigations (such as Panalpina and Oil-for-Food) have led to speculation that the government’s attention may be focused elsewhere.  Paul Hastings’ Samuel Cooper, a partner based in the firm’s Houston office, shared his insights with The FCPA Report about corruption risk and FCPA compliance in the oil and gas industry, discussing, among other things, the dynamics of the traditionally high-risk profile of oil and gas companies, the effect on the industry of the early enforcement actions, what’s next for the sector, as well as advice for oil and gas companies (and others) for strengthening their compliance programs.  See also “Compliance Lessons from Total S.A.’s $398 Million FCPA Settlement: Foreign Cooperation, Compliance Monitors, Broad Jurisdiction and the Effect of Reluctant Cooperation with the DOJ and SEC,” The FCPA Report, Vol. 2, No. 12 (Jun. 12, 2013).

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  • From Vol. 3 No.2 (Jan. 22, 2014)

    A Guilty Plea and Two Flight Risks in PetroTiger Colombian Bribery Case

    Three individual cases in the corruption risk-ridden oil and gas industry have added to January’s FCPA enforcement flurry.  The DOJ has unsealed FCPA charges against former PetroTiger executives related to alleged payments to an employee of Ecopetrol S.A., the Colombian state-owned petroleum company, to obtain a lucrative contract.  The former General Counsel has pled guilty and the two former CEOs were arrested (one at Newark airport and one in the Philippines) and are free on bail.  The article distills six compliance and enforcement takeaways from this case.  See also  “For Individual FCPA Defendants, Providing Assistance Can Lead Directly to Downward Departures in Sentencing,” The FCPA Report, Vol. 2, No. 8 (Apr. 17, 2013).

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  • From Vol. 2 No.24 (Dec. 4, 2013)

    Oil and Gas Company Weatherford Settles Civil and Criminal FCPA Charges for $153 Million

    Weatherford International, a Geneva-based oilfield services company with significant operations in Texas, has agreed to settlements with both the SEC and DOJ to resolve government investigations into a number of matters, including charges that it violated the FCPA, sanctions and export controls.  The total fine was $253 million.  The $153 million fine for the FCPA portion makes this the eighth largest FCPA fine to date, and this is the first time the SEC has used books and records charges to allege the violation of export control and sanctions laws.  Weatherford announced a tentative deal last month.  For insight on FCPA training from Weatherford’s chief compliance officer, hired after the government probe began, see “FCPA Training That Works: An Interview with Billy Jacobson, Chief Compliance Officer of Weatherford International,” The FCPA Report, Vol. 2, No. 8 (Apr. 17, 2013).

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  • From Vol. 2 No.17 (Aug. 21, 2013)

    Former Ambassador Files Civil Suit Alleging That FCPA Violations Can Trigger RICO Liability

    While there is no private right of action under the FCPA, a private citizen may sue under the Racketeer Influenced and Corrupt Organizations Act (RICO) for damages caused by an enterprise that engages in a pattern of “racketeering activities,” the broad definition of which may include violations of the FCPA.  These principles – the broad sweep of RICO and the potential for FCPA violations to trigger RICO liability – are at issue in a civil suit recently commenced by the Honorable Otto J. Reich, a former Ambassador to Venezuela, against three Venezuelan expatriates.  Reich alleges that the expatriates sought to damage his business and reputation after Reich sought to assist a Venezuelan bank.  The bank was a vocal critic of the Hugo Chavez regime and claimed that those expatriates had bribed Venezuelan officials in order to secure lucrative contracts to build power plants in Venezuela.  This article summarize Reich’s complaint.  See also “How to Anticipate and Manage Collateral Litigation after an FCPA Investigation Becomes Public,” above, in this issue of The FCPA Report; and “Non-FCPA Liability for Alleged FCPA Violations,” The FCPA Report, Vol. 1, No. 1 (Jun. 6, 2012).

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  • From Vol. 2 No.12 (Jun. 12, 2013)

    Compliance Lessons from Total S.A.’s $398 Million FCPA Settlement: Foreign Cooperation, Compliance Monitors, Broad Jurisdiction and the Effect of Reluctant Cooperation with the DOJ and SEC

    The DOJ and the SEC recently announced significant FCPA settlements with Total S.A., a French oil and gas company.  Total faces charges that, starting in 1995, it used third parties to make illegal payments to a government official in Iran in order to obtain valuable oil and gas concessions.  The nearly $400 million civil and criminal settlement may not spell the end of Total’s troubles, however, as French authorities continue to investigate.  Total’s vulnerability in multiple jurisdictions highlights the increasing international cooperation among anti-corruption regimes and the possibility of carbon copy prosecutions.  The settlement agreement also demonstrates the importance of cooperation.  Experts say that Total’s fine, which does not include a reduction from the Sentencing Guidelines, as well as the long investigation that preceded the settlement, may stem from Total’s reluctant cooperation with authorities.  Total was also required to retain an external compliance monitor – a costly proposition many thought was becoming a rarity.   See “How to Find a Business-Minded Compliance Monitor and Minimize Reporting Requirements When Negotiating an FCPA Settlement (Part One of Three),” The FCPA Report, Vol. 2, No. 4 (Feb. 20, 2013); Part Two of Three, Vol. 2, No. 5 (Mar. 6, 2013); Part Three of Three, Vol. 2, No. 6 (Mar. 20, 2013).  This article analyzes these and other key compliance takeaways from the Total settlement, with input from practitioners.  This article also details the bribery scheme and the terms of the settlement, including the compliance program enhancements required by the DOJ.

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  • From Vol. 2 No.8 (Apr. 17, 2013)

    FCPA Training That Works: An Interview with Billy Jacobson, Chief Compliance Officer of Weatherford International

    Creating and deploying best-in-class training is a fundamental aspect of maintaining a successful anti-corruption compliance program, and a robust training program can be a powerful defense if the SEC or DOJ finds a “rogue employee.”  But training is inherently limited – training sessions cannot cover the full range of anti-corruption situations an employee may face across geographies, and the sessions themselves are limited by time and cost.  How can a company maximize the impact of this important activity?  To answer this and related questions, The FCPA Report is undertaking a series of interviews on FCPA training with experts from different disciplines.  This article – the second installment in the series – includes our interview with Billy Jacobson, Senior Vice President, Co-General Counsel and Chief Compliance Officer of Weatherford International, one of the largest oil and natural gas service companies, operating in 100 countries.  Prior to his association with Weatherford, Jacobson served as a federal prosecutor for the Fraud Section of the U.S. Department of Justice’s Criminal Division, where he served in various positions, including as Assistant Chief for FCPA Enforcement.  He has also been in private practice as a partner at Fulbright & Jaworski L.L.P.  In the first installment of this series, The FCPA Report spoke with Joseph Spinelli, the head of Navigant’s FCPA practice and former Inspector General of New York State.  See “FCPA Training That Works: An Interview with Joseph Spinelli, Global Leader of Navigant’s Anti-Bribery & Corruption-FCPA Segment,” The FCPA Report, Vol. 2, No. 7 (Apr. 3, 2013).

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  • From Vol. 2 No.8 (Apr. 17, 2013)

    Parker Drilling DPA Provides a Checklist of Policies and Procedures That the DOJ Expects to See in an FCPA Compliance Program

    Parker Drilling Company, a Houston-based, publicly traded drilling company, has resolved civil and criminal FCPA charges pursuant to a Deferred Prosecution Agreement (DPA) in which the government emphasizes specific elements of compliance programs, policies and procedures, and demonstrates its increased reliance on self-reporting mechanisms in lieu of external monitors.  See “When and How Should Companies Self-Report FCPA Violations? (Part Two of Two),” The FCPA Report, Vol. 1, No. 2 (Jun. 20, 2012).  The charges resulted from Parker Drilling’s authorization of payments to an intermediary that Parker Drilling knew would be used to corruptly influence the decisions of a Nigerian government panel reviewing the company’s adherence to Nigerian customs and tax laws.  In addition to discussing the facts and circumstances relevant to the granting of the DPA, and providing details of the Nigerian bribery scheme, this article includes a detailed discussion of the specific ways in which the DPA requires Parker Drilling to enhance its FCPA compliance program.  The various required enhancements serve as a checklist of what the DOJ expects to see in an FCPA compliance program – and thus serves as an important benchmark against which companies can compare their own compliance efforts.

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  • From Vol. 2 No.2 (Jan. 23, 2013)

    In Possible Sign of Escalation of Canadian Anti-Bribery Enforcement, Griffiths Energy Agrees to Pay $10.35 Million to Resolve CFPOA Charges

    In line with many predictions about the imminent increase in what has been historically weak Canadian anti-bribery enforcement, Calgary-based Griffiths Energy International Inc. has pled guilty to violating the Corruption of Foreign Public Officials Act, Canada’s analogue to the FCPA.

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  • From Vol. 1 No.12 (Nov. 14, 2012)

    Landmark Early Termination of Pride International’s DPA Suggests That the DOJ May Offer Credit for Remedial Compliance Efforts Following an FCPA Prosecution

    In a surprising development, the DOJ agreed last week to end Pride International’s deferred prosecution agreement (DPA) a full year before it was set to expire.  The DOJ’s unusual decision has been viewed as a sign that the Department is willing to seriously consider and weigh a company’s compliance efforts, both before and after an investigation or prosecution.  This article discusses the Criminal Information filed in November 2010 against Pride International, the Pride International DPA, the Government’s Motion to Dismiss the Criminal Information and its Motion to Terminate the Probation.

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  • From Vol. 1 No.8 (Sep. 19, 2012)

    SEC Adopts Final Rules for Extractive Issuers That Overlap with FCPA Recordkeeping Requirements

    After vigorous lobbying, the SEC has voted to adopt final rules (Rules) implementing Section 1504 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), which added Section 13(q) to the Securities Exchange Act of 1934.  Deemed a victory by environmental and human rights groups, Section 1504 and the Rules take on corruption in extractive industries (gas, oil and mining) by requiring certain companies to disclose payments made to governments on a project-by-project basis.  While the FCPA’s books and records provision already requires issuers to keep records of payments to governments, the Rules require covered issuers to report payments to governments on a new form to be filed with the SEC called Form SD.

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