United States v. Baker Hughes Inc. (S.D. Tex. 2007)
United States v. Baker Hughes Services Int’l, Inc. (S.D. Tex. 2007)

• Case Name
• United States v. Baker Hughes Inc. (S.D. Tex. 2007)
  United States v. Baker Hughes Services Int’l, Inc. (S.D. Tex. 2007)

• Date Filed
• 04/11/2007

• Enforcement Agency
• DOJ

• Countries
• Kazakhstan

• Foreign Official
• Officials of Kazakhoil, a State-Owned Entity.

• Date of Conduct
• 2001 to 2003

• Nature of Business
• Procurement of a contract for oilfield development by Baker Hughes Services International, Inc. (“Baker Hughes Services”), a wholly-owned subsidiary of Baker Hughes Incorporated (“Baker Hughes”).  Baker Hughes is a U.S. oilfield services company.

• Influence to be Obtained
• In February 2000, Baker Hughes Services submitted a bid for a services contract relating to the development of Karachaganak, a large gas and oil field in northwestern Kazakhstan.  In September 2000, the company received unofficial notification that it would win the contract.  However, later that month Kazakhoil officials demanded that Baker Hughes Services retain an unidentified consulting firm to secure approval of the Karachaganak contract and pay the firm a commission based on Baker Hughes Services’s revenues from the contract.  Shortly thereafter Baker Hughes Services entered into a contract with the consulting firm, and in October 2003 Baker Hughes Services was formally notified that it had been awarded the Karachaganak contract.  Then, on an approximately monthly basis from May 2001 to November 2003, Baker Hughes and Baker Hughes Services made commission payments totaling approximately $4.1 million to the consultant as a reward for securing the contract.  Employees of Baker Hughes Services understood that all or part of these commissions would be transferred to officials of Kazakhoil as bribes.

• Enforcement
• Baker Hughes Services pleaded guilty to violations of the anti-bribery and books-and-records provisions of the FCPA and agreed to an $11 million criminal fine.  Baker Hughes entered into a deferred prosecution agreement with the DOJ and accepted responsibility for the conduct of its employees and Baker Hughes Services.  Under the terms of the agreement, Baker Hughes must hire an independent monitor that will oversee the implementation of a robust compliance program and make a series of reports to the company and the DOJ.  

• Amount of the Value
• Approximately $4.1 million.

• Amount of Business Related to Payment
• Approximately $205 million.

• Intermediary
• An Unidentified Isle of Man-Based Consulting Firm.

• Total Sanction
• $ 11,000,000

• Compliance Monitor
• No

• Reporting Requirements
• No

• Case is Pending?
• No

• Total Combined Monetary Sanction
• $ 44,078,015

• Related Enforcement Actions
• 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)
  SEC v. Baker Hughes Inc. and Roy Fearnley (S.D. Tex 2007)
  

Baker Hughes Inc. 

• Citation
• United States v. Baker Hughes Inc., No. 07-cr-130 (S.D. Tex. 2007).

• Date Filed
• 04/11/2007

• Filed Under Seal
• No

• FCPA Statutory Provision
• • Anti-Bribery
  • Books-and-Records
  • Conspiracy: Anti-Bribery

• Other Statutory Provision
• None

• Disposition
• Deferred Prosecution Agreement

• Defendant Jurisdictional Basis
• Issuer

• Defendant's Citizenship
• United States

Baker Hughes Services Int’l, Inc.

• Citation
• United States v. Baker Hughes Servs. Int’l, Inc., No. 07-cr-129 (S.D. Tex. 2007); 

• Date Filed
• 04/11/2007

• Filed Under Seal
• No

• FCPA Statutory Provision
• • Aiding and Abetting: Books-and-Records
  • Anti-Bribery
  • Conspiracy: Anti-Bribery

• Other Statutory Provision
• None

• Disposition
• Plea Agreement

• Defendant Jurisdictional Basis
• Domestic Concern

• Defendant's Citizenship
• United States