In the Matter of Halliburton Company and Jeannot Lorenz (2017)

• Case Name
• In the Matter of Halliburton Company and Jeannot Lorenz (2017)

• Date Filed
• 07/27/2017

• Enforcement Agency
• SEC

• Countries
• Angola

• Foreign Official
• Unnamed official at Sonangol, Angola’s state-owned oil company.

• Date of Conduct
• 2010 to 2011

• Nature of Business
• Halliburton Company, a Delaware corporation headquartered in Houston, Texas, is an oilfield services company that, during the relevant time period, operated in more than 70 countries.  The company maintains stock that is registered with the SEC under Section 12(b) of the Exchange Act and trades on the New York Stock Exchange.  Jeannot Lorenz, a French citizen, is a former Halliburton vice president who, from 2008 to 2013, led Halliburton’s local content efforts in Angola.

• Influence to be Obtained
• According to the SEC, officials with Sonangol, Angola’s state-owned oil company, threatened in 2008 to not award additional contracts to Halliburton unless the company agreed to increase its local content efforts with Angolan-owned businesses.  In response to that threat, Halliburton attempted to contract with an Angolan company that promised to provide ground transportation and real estate management services; that company was owned by a former Halliburton employee who resided next to a Sonangol official with authority to modify or terminate contracts awarded to Halliburton.  According to the SEC, Halliburton and the Angolan company could not reach an agreement with respect to the ground transportation services, although Halliburton agreed to rent commercial and residential real estate from the Angolan company at above-market rates.  Under the same agreement, the Angolan company promised to provide quarterly reports to Halliburton on the local real estate market.  No such reports were ever rendered.
  
  The SEC alleges that Jeannot Lorenz violated Halliburton’s internal accounting controls by helping award the $3.705 million contract to the Angolan company.  Halliburton’s internal accounting controls include specific procedures for selecting a supplier or subcontractor: the company must first identify the need for a particular service, not the supplier itself.  By contrast, Lorenz allegedly identified a supplier—the Angolan company—and only later considered Halliburton’s need for the supplier’s services.  According to the SEC, Lorenz also violated Halliburton’s internal accounting controls by failing to solicit bids from other suppliers or to offer a sufficient explanation for the single-source bid.  Finally, Lorenz allegedly backdated Halliburton’s contract with the Angolan company and paid the company for services never rendered; in doing so, Lorenz falsified Halliburton’s books-and-records and caused Halliburton’s violations of the FCPA’s books-and-records and internal controls provisions.

• Enforcement
• On July 27, 2017, the SEC settled its enforcement action against Halliburton Company and Jeannot Lorenz for violations of the FCPA’s books-and-records and internal controls provisions.  According to the cease-and-desist order, Halliburton agreed to pay $14 million in disgorgement, $1.2 million in prejudgment interest, and a $14 million civil penalty—totaling $29.2 million in sanctions.  Moreover, Halliburton is required to retain an independent compliance consultant for eighteen months.  Lorenz agreed to pay a $75,000 civil penalty.  

• Amount of the Value
• $3,705,000.

• Amount of Business Related to Payment
• Approximately $14 million in profit.

• Intermediary
• Unnamed Angolan company.

• Citizenship of Parent Entity
• United States

• Total Sanction
• $ 29,200,000

• Compliance Monitor
• Yes

• Reporting Requirements
• No

• Case is Pending?
• No

Halliburton Company

• Citation
• In the Matter of Halliburton Company and Jeannot Lorenz, Admin. Proc. File No. 3-18080 (July 27, 2017).

• Date Filed
• 07/27/2017

• Filed Under Seal
• No

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

• Other Statutory Provision
• None

• Disposition
• Cease-and-Desist Order

• Defendant Jurisdictional Basis
• Issuer

• Defendant's Citizenship
• United States

• Individual Sanction
• $29,200,000 

Jeannot Lorenz 

• Citation
• In the Matter of Halliburton Company and Jeannot Lorenz, Admin. Proc. File No. 3-18080 (July 27, 2017).

• Date Filed
• 07/27/2017

• Filed Under Seal
• No

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

• Other Statutory Provision
• None

• Disposition
• Cease-and-Desist Order

• Defendant Jurisdictional Basis
• Agent of Issuer

• Defendant's Citizenship
• France

• Individual Sanction
• $75,000