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S.E.C. v. Baker Hughes Incorporated and Roy Fearnley

 
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Baker Hughes - Baker Hughes Inc.
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SEC Civil
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April 26, 2007
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S.E.C. v. Baker Hughes Incorporated and Roy Fearnley
:
S.E.C. v. Baker Hughes Inc. and Roy Fearnley, No. 07-cv-1408 (S.D. Tex. 2007)
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Energy (Non-Utility)-Oil & Gas-Other/Multi
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Angola, Indonesia, Kazakhstan, Nigeria, Russia, Uzbekistan
:
1998; 1999; 2000; 2001; 2002; 2003; 2004; 2005
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Officials of Kazakh state-owned oil and oil transport companies (Kazakhoil, KazMunaiGas and KazTransOil) and nuclear official; Officials of Angolan state-owned oil company (Sonangol); Nigerian tax officials; Nigerian and Indonesian customs officials.
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Baker Hughes allegedly made payments to agents in Kazakhstan to secure a major services contract relating to the development of Karachaganak, a large gas and oil field in northwestern Kazakhstan. Although Baker Hughes was unofficially notified that it would win the contract, Kazakhoil representatives insisted prior to official notification that Baker Hughes retain an Isle of Man-based consultant and agree to pay it a percentage commission of the revenues from the Karachaganak contract. Baker Hughes and its subsidiaries complied, making payments totaling approximately $4.1 million to the consultant from May 2001 to November 2003.

Baker Hughes also allegedly engaged in a host of other violations, including paying nearly $1.1 million in commission payments to another agent in Kazakhstan to influence government decision-making. The SEC's complaint further alleges that Baker Hughes failed to conduct adequate due diligence to assure itself that several payments, including (among others) a $10.3 million payment to an Angolan agent and payments totaling approximately $5.3 million to an agent active in Russia, Uzbekistan, and Kazakhstan were not partly or entirely passed on to government officials in those countries.

On April 26, 2007, Baker Hughes agreed, without admitting or denying the SEC's allegations, to pay over $23 million in disgorgement and prejudgment interest for these alleged violations, as well as an additional $10 million penalty for violating an existing SEC cease-and-desist order issued against it in 2001 pursuant to an investigation of a bribe paid to an Indonesian tax official. The settlement also permanently enjoins Baker Hughes from further violations of the FCPA or the 2001 cease-and-desist order. The complaint seeks relief against Roy Fearnley, who has not reached a settlement with the SEC in this matter.
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Anti-bribery (Issuer), Books and records (Issuer), Internal controls (Issuer)
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Civil penalty, Compliance Monitor, Disgorgement, Injunction/Cease and desist, Prejudgment Interest
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This sanction consisted of: Disgorgement of $19,944,778 plus pre-judgment interest of $3,133,237.41 and a civil penalty of $10,000,000, totaling $33,078,015.41.
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33,078,015
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0
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Issuer
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U.S.
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Contract Procurement/Retention, Customs Clearance, License/Permit, Tax
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468,000,000
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Cash, Travel, Wire/check
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Customs Broker or Agent/Consultant, Direct, Freight-forwarder, Sales Agent/Consultant
:
24,000,000
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United Kingdom
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Latvia, Switzerland, United Kingdom, United States
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No