SEC v. Noble Corporation (S.D. Tex. 2012)
SEC v. Mark A. Jackson and James J. Ruehlen (S.D. Tex. 2012)
SEC v. Thomas F. O’Rourke (S.D. Tex. 2012)
Case Details
- Case Name
- SEC v. Noble Corporation (S.D. Tex. 2012)
SEC v. Mark A. Jackson and James J. Ruehlen (S.D. Tex. 2012)
SEC v. Thomas F. O’Rourke (S.D. Tex. 2012)
- Foreign Official
- Nigerian customs officials.
- Date of Conduct
-
2003 to 2007
- Nature of Business
- Noble Corporation is an international oil and gas drilling contractor that owns and operates drilling rigs through its subsidiaries and affiliates. In March 2009, Noble re-domesticated from the Cayman Islands and is now incorporated in Switzerland. The company is headquartered in Sugar Land, Texas. Noble Drilling (Nigeria) Ltd. is a wholly owned Noble subsidiary, incorporated in Nigeria. Noble’s common stock is registered under Section 12(b) of the Exchange Act and is traded on the New York Stock Exchange.
Defendant Mark A. Jackson was Noble’s CFO from September 2000 to February 2006. By the time he retired from Noble in 2007, Jackson had also served as CEO, President, and COO of Noble. Defendant James J. Ruehlen is the current Director and Division Manager of Noble Nigeria and is responsible for all of Noble-Nigeria’s operations. He reported directly to Jackson from May 2005 to 2007. Defendant Thomas O’Rourke was Noble’s former Director of Internal Audit and controller.
- Influence to be Obtained
- According to the SEC, from 2003 to 2007, Noble authorized its subsidiary in Nigeria to make improper payments to customs agents in Nigeria to obtain temporary importation permits for its drilling rigs and avoid costly sanctions for non-compliance or expensive efforts to move the rigs out of the country as required by the temporary permits.
Specifically, Noble-Nigeria operated oil rigs offshore in Nigeria pursuant to one-year TIPs granted by the Nigerian Customs Service. At the expiration of the TIPs and TIP extensions, the rigs were required to be exported and re-imported under a new TIP or be permanently imported with the payment of sizable duties. Then, according to the SEC, Ruehlen, with Jackson’s approval, and Noble’s customs agent created false documents showing that the rigs moved out of and back into Nigerian waters and bribed NSC officials to process these documents. The alleged scheme thus spared Noble Corporation the operational costs associated with exporting and re-importing rigs from Nigeria to qualify for new TIPs and allowed Noble to retain business under lucrative drilling contracts.
Further, according to the SEC’s complaint filed against Jackson and Ruehlen, Jackson and Ruehlen allegedly bribed NCS officials with hundreds of thousands of dollars to (1) favorably process false paperwork; (2) grant temporary import permits (“TIPs”) for oil rigs based on that false paperwork; and (3) abuse their discretion in granting extensions to these illicit TIPs. The complaint also alleges that Jackson approved the bribe payments and concealed the payments from Noble’s audit committee by misleading the auditors while Ruehlen processed and paid the bribes.
According to the O’Rourke Complaint, O’Rourke allegedly assisted officials at Noble’s Nigerian subsidiary in bribing Nigeria Customs Service officials to grant and extend temporary import permits for oil rigs based on false paperwork, facilitated the approval of these charges, and hid the true nature of the charges from the company’s audit committee.
- Enforcement
- On November 12, 2010, Noble consented to the entry of a final judgment against it for violations of the anti-bribery, books-and-records, and internal controls provisions of the FCPA. Noble agreed to pay $5,576,998 in disgorgement and prejudgment interest. In a related criminal action, the DOJ entered into a non-prosecution agreement with Noble.
On May 8, 2012, Jackson and Ruehlen filed motions to dismiss the complaint, arguing that the complaint failed to plead adequately 1) the involvement of a foreign official; 2) that the payments were not facilitation payments; and 3) that the defendants acted corruptly. On December 11, 2012, the Southern District for Texas granted in part and denied in part the motion to dismiss, largely based on deficient pleadings regarding the statute of limitations. Judge Keith Ellison held that 1) the SEC did not need to plead the identity of the foreign official with specificity (acknowledging his disagreement with fellow S.D. Texas Judge Lynn Hughes, who stated differently in the DOJ’s case against John O’Shea); 2) the SEC pleaded sufficient facts to support the conclusion that the payments made to obtain new TIPs were corrupt and were not facilitation payments; but 3) the SEC did not plausibly allege facts that support the allegation that granting the TIPS extensions was a matter of discretion (and thus potentially excluded from the definition of “facilitation payments”).
On January 25, 2013, the SEC filed an amended complaint, which Jackson and Ruehlen moved to dismiss on February 22, 2013. The parties then jointly moved to grant the SEC leave to file a second amended complaint with corrected pleadings regarding the statute of limitations, which the court granted. The SEC filed its second amended complaint on March 25, 2013, to which Jackson and Ruehlen filed answers on April 19, 2013, denying most of the SEC’s allegations.
On February 24, 2012, without admitting or denying the allegations, O’Rourke consented to the entry of an order permanently enjoining him from further FCPA violations and requiring him to pay a civil money penalty of $35,000. The order notes that O’Rourke agreed to cooperate with the SEC’s subsequent investigation. The action was terminated on February 28, 2012.
In July 2014, the SEC settled the outstanding suit against Jackson and Ruehlen. The consent orders merely enjoined Jackson and Ruehlen from violating the FCPA in the future and did not require any disgorgement or civil monetary penalty. If it had not settled, the case would have marked the first instance the SEC pursued FCPA-related charges to trial.
- Amount of the Value
- Not Stated
- Amount of Business Related to Payment
- Not Stated
- Intermediary
- Subsidiary; Customs agent.
- Citizenship of Parent Entity
- Switzerland
- Total Sanction
- $ 5,576,998
- Reporting Requirements
- No
Defendants
Noble Corporation
- Citation
- SEC v. Noble Corp., No. 4:10-cv-04336 (S.D. Tex. Nov. 12, 2010);
- Disposition
- Complaint and Consent Order
- Defendant Jurisdictional Basis
- Issuer
- Defendant's Citizenship
- Switzerland
- Individual Sanction
- $5,576,998.
Mark A. Jackson
- Citation
- SEC v. Jackson et al., No. 4:12-cv-00563 (S.D. Tex. July 3, 2014);
- FCPA Statutory Provision
-
- Aiding and Abetting: Anti-Bribery
- Aiding and Abetting: Books-and-Records
- Aiding and Abetting: Internal Controls
- Other Statutory Provision
- Exchange Act Rules 13b2-2 and 13a-14 (Certification of disclosure in annual and quarterly reports) (Wire Fraud); Criminal Forfeiture.
- Disposition
- Complaint and Consent Order
- Defendant Jurisdictional Basis
- Aiding and Abetting, Agent of Issuer
- Defendant's Citizenship
- United States
- Individual Sanction
- Enjoined from violating Section 13(b)(2)(A) of the Exchange Act
James J. Ruehlen
- Citation
- SEC v. Jackson et al., No. 4:12-cv-00563 (S.D. Tex. July 3, 2014);
- Other Statutory Provision
- Anti-Bribery (Other Persons); Books-and-Records (Individual); Internal Controls (Individual); Aiding and Abetting (Anti-Bribery; Books-and-Records; Internal Controls).
- Disposition
- Complaint and Consent Order
- Defendant Jurisdictional Basis
- Aiding and Abetting, Agent of Issuer
- Defendant's Citizenship
- United States
- Individual Sanction
- Enjoined from aiding and abetting any violation of Section 13(b)(2)(A) of the Exchange Act.
Thomas F. O’Rourke
- Citation
- SEC v. O’Rourke, No. 4:12-cv-00564 (S.D. Tex. Mar. 28, 2012).
- FCPA Statutory Provision
-
- Aiding and Abetting: Anti-Bribery
- Aiding and Abetting: Books-and-Records
- Aiding and Abetting: Internal Controls
- Disposition
- Complaint and Consent Order
- Defendant Jurisdictional Basis
- Aiding and Abetting, Agent of Issuer
- Defendant's Citizenship
- United States
- Individual Sanction
- Enjoined from violating Sections 30A, 13(b)(5), 13b2-1, and 13(b)(2)(A) of the Exchange Act; and aiding and abetting Section 13(b)(2)(B); civil penalty of $35,000.
