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SEC v. Willbros Group, Inc., Jason Steph, Gerald Jansen, Lloyd Biggers, Carlos Galvez

 
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Willbros - Steph, Jason
:
SEC Civil
:
May 14, 2008
:
SEC v. Willbros Group, Inc., Jason Steph, Gerald Jansen, Lloyd Biggers, Carlos Galvez
:
SEC v. Willbros Group, Inc., et al., No. 4:08-cv-01494 (S.D. Tex. 2008)
:
Despite discovery through an internal investigation of certain aspects of the improper activities, Steph and others thereafter devised new schemes to raise cash in Nigeria in order to honor preexisting improper "commitments" to be paid to Nigerian officials.
:
Energy (Non-Utility)-Oil & Gas-Other/Multi
:
Nigeria
:
2003; 2004; 2005
:
Officials of state-owned Nigerian National Petroleum Corporation ("NNPC"); Officials of NNPC's subsidiary National Petroleum Investment Management Services ("NAPIMS"); Officials of NNPC's majority-owned joint venture operator, Shell Petroleum Development Company of Nigeria ("SPDC"); A senior official in the executive branch of the Nigerian federal government; Officials in the dominant political party in Nigeria; Nigerian tax officials; Nigerian court officials.
:
Steph settled the SEC action without admitting or denying the allegations set forth in the SEC complaint as follows: Jason Edward Steph was employed by Willbros International, Inc. ("WII"), a wholly-owned subsidiary of Willbros Group, Inc. ("WGI") from approximately 1998 to April 2005 when he resigned. He served as the General Manager - Onshore in Nigeria for WII from 2002 until his resignation. WGI violated the FCPA when a WII officer and subsidiaries' employees used contractual payments, fraudulent loans, and petty cash obtained from fraudulent invoices to funnel money to two "consultants" for the purposes of bribing Nigerian officials to obtain and retain construction projects, lower tax liabilities, and influence litigation. EGGS CONTRACTS The EGGS project was divided into two phases: Phase 1 concerned the engineering, procurement, and construction of the pipeline and included an optional second contract for applying a polyethylene-concrete coating to the pipeline; Phase 2 concerned the construction of a second pipeline.

WGI, through its subsidiaries in late 2003, pursued contracts relating to both EGGS phases. To further those efforts, a WII officer contracted with two consulting firms ostensibly to provide consulting services relating to obtaining those contracts. The contracts between WII and the consulting firms required WII to pay the firms 3% of all contract revenue from Nigerian construction projects. WGI representatives authorized approximately $6 million in improper payments to Nigerian officials of NNPC, NAPIMS, and SPCD through two consultants affiliated with both firms in furtherance of obtaining the EGGS contracts for WII. The consultants also bribed a senior official in the Nigerian government and made payments to a prominent Nigerian political party. WII subsidiaries received the $216,000,000 construction contract for EGGS Phase 1 and the $30,000,000 coating contract. A WII employee in Nigeria sent the invoices recieved from the consulting firms to WGI's offices in Houston, TX with instructions to wire payments to foreign bank accounts as instructed in the invoices. In an internal audit begun in January 2005, WGI uncovered and stopped some of these payments, and an officer central to the Nigerian consultant payments left WII. The officer's subordinates, including Steph, and the consultants became concerned that the corporate interference at WGI would jeopardize WII's ability to receive the EGGS Phase 2 contract. In February and March 2005, one subordinate facilitated a $1,000,000 loan from WII's consortium partner to a WII subsidiary. At the same time, Steph borrowed $500,000 cash from another company and used fraudulent invoices to withdraw $350,000 in petty cash from a WII subsidiary. The other subordinate and Steph gave the $1,850,000 to one of the consultants who paid Nigerian officials.

FALSE INVOICES The SEC also alleged that WII employees in Nigeria from the early 1990's through 2005 abused petty cash accounts to pay clerks and other officials within the Nigerian justice and tax systems for favorable treatment in pending cases and to obtain favorable tax treatment. These employees in Nigeria improperly obtained cash from WGI's office in Houston by obtaining fictitious invoices to inflate the cash needed by the Nigerian operating subsidiaries, knowing that amounts would be diverted to make improper payments to government officials. At least $300,000 of this money was used to make payments to Nigerian tax and court officials, and Steph used $350,000 from petty cash accounts that were fraudulently funded through this scheme to pay part of prior "commitments" related to contract procurement efforts. Steph knew of and approved of the fraudulent invoices scheme used to secure funds from WGI for use as improper payments to Nigerian officials. Having settled the civil action, the case against Steph is stayed awaiting Steph's criminal sentencing. The SEC maintains the right to seek an order imposing civil penalties against Steph.
:
Aiding and abetting anti-bribery, Aiding and abetting books and records, Aiding and abetting internal controls, Anti-bribery (Issuer), Books and records (Individual), Books and records (Issuer), Internal Controls (Individual), Internal controls (Issuer)
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Civil Settlement, Injunction/Cease and desist
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As part of Steph's settlement with the SEC, in addition to the interlocutory judgment enjoining Steph from violating or assisting another in violating the FCPA in the future, the court will "determine whether a civil penalty ... is appropriate and, if so, the amount of the penalty" upon the Commission's future motion. The court stayed determination of his penalty, if any, pending resolution of the criminal matter against him. On January 28, 2010, Steph was sentenced in the criminal matter to 15 months of imprisonment.
:
Not stated.
:
0
:
Agent of Issuer, Aider/abettor, Employee of Issuer, Person (B&R/internal controls)
:
General Manager
:
U.S.
:
Contract Procurement/Retention, Legislation, Tax
:
487,000,000
:
Cash, Wire/check
:
Sales Agent/Consultant
:
6,300,000
:
Nigeria
:
Nigeria
:
No