United States v. Weatherford International Ltd. (S.D. Tex. 2013)
United States v. Weatherford Services, Ltd. (S.D. Tex. 2013)
Case Details
- Case Name
- United States v. Weatherford International Ltd. (S.D. Tex. 2013)
United States v. Weatherford Services, Ltd. (S.D. Tex. 2013)
- Countries
- Angola, Algeria, Albania, Iraq
- Foreign Official
- Government officials in Angola; employees at a state-owned oil company in an unnamed country in the Middle East; Iraqi Ministry of Oil; employees at Sonatrach, an Algerian state-owned oil company; employees at Albania’s National Petroleum Agency; Albanian tax director.
- Date of Conduct
-
2004 to 2011
- Nature of Business
- Weatherford International Ltd., a Swiss corporation, provides equipment and services to the oil industry in over 100 countries. During the relevant period, Weatherford was incorporated in Bermuda and headquartered in Texas. It maintains a class of securities trading on the New York Stock Exchange. Weatherford Services Ltd. (“WSL”), a Bermuda corporation, is a wholly-owned subsidiary of Weatherford International Ltd. Among other responsibilities, WSL managed most of Weatherford’s activities in Angola.
- Influence to be Obtained
- In Angola, between 2006 and 2007, Weatherford Oil Tool Middle East Limited (“WOTME”), a wholly-owned subsidiary of Weatherford, retained a Swiss agent to pay bribes to an Angolan official. WOTME paid these bribes for the approval of an oil services contract renewal. Although the contract was with a privately-owned corporation, Angolan law requires Sonangol, the Angolan state-owned oil company, to approve the award or renewal of any oil services contract in Angola. To facilitate these bribes, WOTME entered into a consultancy agreement with the Swiss agent. Even though the agent refused to sign the initial agreement because it contained an FCPA clause, neither Weatherford nor WSL conducted any anti-corruption due diligence on the agent and ultimately retained the agent.
Also in Angola, in 2004, WSL formed a joint venture with a company controlled by Sonangol officials and a company controlled by a relative of an Angolan minister, with the view of obtaining well screen contracts from Sonangol. Prior to entering into the joint venture, neither Weatherford nor WSL conducted any meaningful due diligence on either joint venture partner. Instead, Weatherford’s in-house counsel falsely represented to outside counsel that the joint venture had been vetted and approved by other outside counsel, when, in fact, no outside law firm ever conducted such vetting or gave such approval. Sonangol officials awarded all well screen contracts to the joint venture, and Weatherford paid dividends to the joint venture partners, even though they contributed no capital, expertise, or labor.
In an unidentified country in the Middle East, between 2005 and 2011, WOTME awarded improper volume discounts to a company that supplied Weatherford products to a state-owned and controlled national oil company. The volume discounts were used to create a slush fund for bribe payments to decision makers at the national oil company. Prior to entering into the contract with the distributor neither WOTME nor Weatherford conducted any due diligence on the distributor, even though: (a) the distributor would be furnishing Weatherford goods directly to an instrumentality of a foreign government; (b) a foreign official had directed WOTME to contract with that particular distributor; and (c) WOTME knew that the country’s royal family had an ownership stake in the distributor.
In Iraq, WOTME paid illegal kickbacks to the Iraqi government as part of the United Nations Oil for Food Program. To conceal the payments, WOTME inflated the price of the contracts before submitting them to the UN for approval. The payments were then recorded as cost of goods sold on the company’s books and records.
- Enforcement
- On November 26, 2013, Weatherford entered into a three-year deferred prosecution agreement with the DOJ under which Weatherford agreed to pay an $87.2 million penalty. In addition to the monetary penalty, Weatherford agreed to retain an independent corporate compliance monitor for eighteen months, with self-reporting to follow for the remaining duration of the deferred prosecution agreement.
Also on November 26, 2013, WSL pleaded guilty to violating the anti-bribery provisions of the FCPA and agreed to pay a fine of $420,000.
In a related civil settlement with the SEC, Weatherford International agreed to pay disgorgement and prejudgment interest of approximately $95.4 million, and a penalty of $1.85 million. The disgorgement amount was offset by the $31,646,907 fine Weatherford paid pursuant to a DPA with the U.S. Attorney’s Office.
In a separate matter, Weatherford and four of its subsidiaries agreed to pay a combined $100 million to resolve criminal charges relating to violations of export controls.
- Amount of the Value
- Approximately $14.2 million.
- Amount of Business Related to Payment
- Profits of approximately $59.3 million.
- Intermediary
- Subsidiary Companies; Third-Party Distributors; Third-Party Agents; Joint Ventures.
- Citizenship of Parent Entity
- United States
- Total Sanction
- $ 87,178,256
- Reporting Requirements
- No
- Total Combined Monetary Sanction
- $ 152,790,616
Defendants
Weatherford International Ltd.
- Citation
- United States v. Weatherford Int’l Ltd., No. 4:13-cr-00733 (S.D. Tex. 2013);
- Other Statutory Provision
- None
- Disposition
- Deferred Prosecution Agreement
- Defendant Jurisdictional Basis
- Issuer
- Defendant's Citizenship
- United States
Weatherford Services, Ltd.
- Citation
- United States v. Weatherford Servs., Ltd., No. 13-cr-00734 (S.D. Tex. 2013).
- Other Statutory Provision
- None
- Disposition
- Plea Agreement
- Defendant Jurisdictional Basis
- Territorial Jurisdiction
- Defendant's Citizenship
- United States
