In the Matter of Baker Hughes Inc. (2001)
SEC v. KPMG Siddharta Siddharta & Harsono, and Sonny Harsono (S.D. Tex. 2001)
SEC v. Eric L. Mattson and James W. Harris (S.D. Tex. 2001)
Case Details
- Case Name
- In the Matter of Baker Hughes Inc. (2001)
SEC v. KPMG Siddharta Siddharta & Harsono, and Sonny Harsono (S.D. Tex. 2001)
SEC v. Eric L. Mattson and James W. Harris (S.D. Tex. 2001)
- Foreign Official
- Indonesian tax official.
- Date of Conduct
-
1998 to 1999
- Nature of Business
- KPMG Siddharta Siddharta & Harsono is a public accounting firm in Indonesia (“KPMG”), and Sonny Harsono (“Harsono”), is a partner of KPMG, which is an affiliate firm of KPMG International. KPMG was the accountant and agent for Baker Hughes Incorporated (“Baker Hughes”), a Texas oilfield services company. Eric Mattson was Baker Hughes’s former chief financial officer and James Harris was Baker Hughes’s former controller.
- Influence to be Obtained
- In 1999, Mattson and Harris authorized Harsono and KPMG to pay a bribe to a local government official in Indonesia to significantly reduce the tax assessment against PTEastman Christensen (“PTEC”), an Indonesian company beneficially owned by Baker Hughes, from $3.2 million to $270,000. The amount of the bribe was then included in an invoice to PTEC, which paid the invoice and improperly entered the transaction on its books and records as payment for professional services rendered.
The SEC’s administrative order against Baker Hughes found that Baker Hughes’s senior managers authorized payments to Baker Hughes’s agents in India and Brazil in 1998 and 1995, respectively, without making an adequate inquiry as to whether the agents might give all or part of the payments to foreign government officials in violation of the FCPA.
- Enforcement
- The action against KPMG and Harsono was the first joint civil injunctive action by the SEC and DOJ. On September 11, 2001, the defendants consented to the entry of a final judgment that permanently enjoins both defendants from violating and aiding and abetting violations of the anti‑bribery, internal controls, and books-and-records provisions of the FCPA.
On September 12, 2001, Baker Hughes consented to a cease‑and‑desist order for violations of the internal controls and books-and-records provision of the Exchange Act, but it did not have to pay a financial penalty.
On September 11, 2001, the SEC filed a complaint against Mattson and Harris alleging that they violated the anti-bribery, books-and-records, and internal controls provisions of the FCPA and aided and abetted Baker Hughes’s violations of the FCPA’s books-and-records and internal controls provisions. Mattson and Harris challenged the SEC, alleging that the payment was not in contravention of the FCPA and claiming that the payment was due to extortion by a corrupt government official who threatened to peg the company with an excessive tax bill if not paid off. On September 9, 2002, the United States District Court for the Southern District of Texas dismissed the anti-bribery claim. Relying on United States v. Kay (S.D. Tex. 2001), the court ruled that because the payments to the Indonesian tax official did not help Baker Hughes “obtain or retain business,” the payments did not violate the FCPA. After this decision, the parties moved jointly to dismiss the SEC’s remaining charges on January 28, 2003. On March 25, 2003, the SEC filed a notice of appeal in the United States Court of Appeals for the 5th Circuit to challenge the district court’s dismissal of the anti-bribery charge. That appeal was stayed pending the decision by the 5th Circuit Court of Appeals in the Kay case. Upon the issuance of the Kay decision reinstating the charges against that defendant, the Court of Appeals granted the SEC’s July 14, 2004 motion to dismiss its appeal.
- Amount of the Value
- $75,000.
- Amount of Business Related to Payment
- $2.93 million.
- Citizenship of Parent Entity
- Indonesia
- Reporting Requirements
- No
- Total Combined Monetary Sanction
- $ 11,000,000
Defendants
Baker Hughes Inc.
- Citation
- In the Matter of Baker Hughes Inc., Admin. Proc. File No. 3-10572 (Sept. 12, 2001);
- Other Statutory Provision
- None
- Disposition
- Cease-and-Desist Order
- Defendant Jurisdictional Basis
- Issuer
- Defendant's Citizenship
- United States
KPMG Siddharta Siddharta & Harsono
- Citation
- SEC, et al. v. KPMG, et al., No. 01-cv-3105 (S.D. Tex. 2001);
- FCPA Statutory Provision
-
- Aiding and Abetting: Anti-Bribery
- Aiding and Abetting: Books-and-Records
- Aiding and Abetting: Internal Controls
- Other Statutory Provision
- None
- Disposition
- Complaint and Consent Order
- Defendant Jurisdictional Basis
- Agent of Issuer
- Defendant's Citizenship
- Indonesia
Sonny Harsono
- Citation
- SEC, et al. v. KPMG, et al., No. 01-cv-3105 (S.D. Tex. 2001);
- FCPA Statutory Provision
-
- Aiding and Abetting: Anti-Bribery
- Aiding and Abetting: Books-and-Records
- Aiding and Abetting: Internal Controls
- Other Statutory Provision
- None
- Disposition
- Complaint and Consent Order
- Defendant Jurisdictional Basis
- Agent of Issuer
- Defendant's Citizenship
- Indonesia
Eric L. Mattson
- Citation
- SEC v. Mattson, et al., No. 01-cv-3106 (S.D. Tex. 2001).
- FCPA Statutory Provision
-
- Aiding and Abetting: Books-and-Records
- Aiding and Abetting: Internal Controls
- Other Statutory Provision
- None
- Disposition
- Charges Dismissed
- Defendant Jurisdictional Basis
- Agent of Issuer
James W. Harris
- Citation
- SEC v. Mattson, et al., No. 01-cv-3106 (S.D. Tex. 2001).
- FCPA Statutory Provision
-
- Aiding and Abetting: Books-and-Records
- Aiding and Abetting: Internal Controls
- Other Statutory Provision
- None
- Disposition
- Charges Dismissed
- Defendant Jurisdictional Basis
- Agent of Issuer
