2023-04-27 14:53:20
Frank’s International NV, a Dutch oil services company, has agreed to pay $8 million to settle a long-running investigation into alleged bribery violations by the company’s operations in Angola, US regulators said on Wednesday. Announced the Wall Street Journal.
The company, now part of Houston-based Expro Group Holdings NV, paid commissions to a sales agent that authorities in the region knew was likely to use the funds to bribe Angolan government officials, according to the Securities and Exchange Commission ( SEC) of the USA.
Some of the funds were, in fact, siphoned off to an employee of Angola’s state oil and gas company, Sociedade Nacional de Combustíveis de Angola EP, also known as Sonangol, to influence the award of oil and natural gas service contracts.
The SEC settlement resolves violations of the US Foreign Corrupt Practices Act, including statutory provisions that require companies to maintain proper books and records and internal accounting controls.
The alleged misconduct took place between January 2008 and October 2014, prior to Expro’s 2021 acquisition of the company, according to the SEC. Frank’s Angolan operations at the time were committed to expanding their business, but faced challenges in winning over Sonangol executives.
The business that Frank’s International was targeting was contracts to provide Sonangol with tubular services and technology used to drill wells offshore in deep water. While Frank’s International primarily hired the major oil companies working on the concessions, those companies would not hire suppliers who were not in Sonangol’s good graces, according to the SEC.
Senior managers at Frank’s International learned in 2007 that Sonangol had directed a client to use a competitor, which the state-owned company claimed had made a superior financial investment in Angola, the SEC said.
A senior Sonangol executive told Frank’s International officials that Sonangol might change its mind if Frank’s International set up a consulting firm and allocate 5% of the contract value as payments to senior Sonangol officials.
“I don’t think it’s an exaggeration to say that we are fighting for our survival,” a Frank employee wrote in an email at the time, which was quoted by the SEC on Wednesday.
Frank’s ended up not forming the consulting firm and instead decided to hire a sales agent. The chosen agent did not have the necessary technical knowledge to defend the company, but had close relationships with senior Sonangol officials, according to the SEC.
Frank’s International continued to use the agent through its initial public offering in 2013 when it became subject to the FCPA, entering into new contracts with the agent and falsely recording payments to the agent as legitimate sales commissions and travel and entertainment expenses.
The SEC credited Frank’s International for cooperating with the investigation, including flying witnesses to the US for interviews and sharing the findings of its own internal investigation.
The company also terminated employees involved in the alleged violations, as well as the agent involved, and took steps to improve its compliance program, the SEC said.
Frank’s International has agreed to pay a $3 million civil fine and return nearly $5 million in profits earned from the alleged violations, as well as interest on those profits, pursuant to Wednesday’s settlement with the SEC.
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