In re Tenaris, S.A. (2011) 

• Case Name
• In re Tenaris, S.A. (2011) 

• Date Filed
• 03/29/2011

• Enforcement Agency
• SEC

• Countries
• Uzbekistan

• Foreign Official
• Officials at OJSC O’ztashqineftgaz (“OAO”), a subsidiary of Uzbekneftegaz, the state-owned holding company of Uzbekistan’s oil and gas industry.

• Date of Conduct
• 2006 to 2007

• Nature of Business
• Tenaris S.A. (“Tenaris”) is a corporation organized under the laws of Luxembourg.  Tenaris is a global manufacturer and supplier of steel pipe products and related services to the oil and gas industry throughout the world.  Tenaris’s operations include supplying steel pipe and related services in the Caspian Sea region, including Uzbekistan, through Tenaris’s offices in Azerbaijan and Kazakhstan.

• Influence to be Obtained
• During 2006 and 2007, Tenaris utilized the services of an agent to bid on a series of contracts with OJSC O’ztashgineftgaz (“OAO”).  In or around February 2007, Tenaris entered into an agreement to pay the agent a commission of 3.5% for access to confidential bid information.  Using the confidential bid information, Tenaris was awarded the contract and OAO agreed to pay Tenaris $2,719,720 for pipe used in oil and gas development in Uzbekistan.  In or around April and May 2007, Tenaris entered into an agreement to pay the agent a commission of 3% for bid information related to three additional OAO contracts.  By using confidential bid information Tenaris was awarded the three contracts.  Tenaris’s then‑regional sales personnel understood that a portion of the commissions paid to the agent would be used to pay OAO officials.
  
  Tenaris’s then‑regional sales personnel also agreed to make payments to the Uzbek government agency, Uzbekexpertiza JSC (“Uzbekexpertiza”), to encourage Uzbekexpertiza not to investigate the bidding process.  However, evidence of such payment was not found.  According to the SEC, in or around 2007, Tenaris also failed to accurately account for these transactions with the agent and payments to OAO officials on their books and records.  Tenaris’s system of internal controls also allegedly failed to detect or prevent payments to OAO officials, including a failure to ensure that proper due diligence was conducted on the agent.

• Enforcement
• In 2009, Tenaris disclosed the improper activity to the SEC, and in 2010, launched a world‑wide investigation and took steps to update and improve its existing compliance programs.  On May 17, 2011 Tenaris entered into a deferred prosecution agreement with the SEC, under which Tenaris agreed to pay disgorgement in the amount of $4,786,438 plus prejudgment interest of an estimated $641,900, totaling $5,428,338.  Tenaris is the first company to ever enter into a deferred prosecution agreement with the SEC.  Tenaris agreed to implement compliance measures, cooperate with the ongoing investigation, toll the statute of limitations, and observe and enhance reporting obligations.  The deferred prosecution agreement allowed Tenaris to “neither admit nor deny” the allegations with only the proviso that it could not dispute the facts in any subsequent SEC proceeding.  Tenaris must also refrain from seeking or accepting a U.S. federal or state tax credit or deduction for any monies paid pursuant to the deferred prosecution agreement.
  
  On May 17, 2011, the DOJ and Tenaris also entered into a two‑year non‑prosecution agreement, under which Tenaris agreed to pay a monetary penalty in the amount of $3,500,000, implement rigorous compliance measures, toll the statute of limitations, adhere to enhanced reporting obligations, disclose required information, and cooperate fully with all law enforcement agencies

• Amount of the Value
• More than $32,140.

• Amount of Business Related to Payment
• Unknown

• Intermediary
• Agent

• Citizenship of Parent Entity
• Luxembourg

• Total Sanction
• $ 5,428,338

• Compliance Monitor
• No

• Reporting Requirements
• Yes (2 Years)

• Case is Pending?
• No

• Total Combined Monetary Sanction
• $ 8,928,338

• Related Enforcement Actions
• In re Tenaris, S.A. (2011)
  

Tenaris, S.A. 

• Citation
• In re Tenaris, S.A. (SEC Mar. 29, 2011) (deferred prosecution agreement).

• Date Filed
• 03/29/2011

• Filed Under Seal
• No

• FCPA Statutory Provision
• • Books-and-Records
  • Internal Controls

• Other Statutory Provision
• None

• Disposition
• Non-Prosecution Agreement

• Defendant Jurisdictional Basis
• Issuer

• Defendant's Citizenship
• Luxembourg