Jump to content Jump to menu
Why Register?

Shearman FCPA Website: Cases Logo Shearman & Sterling LLP FCPA.Shearman.com: The One-Stop Resource on the Foreign Corrupt Practices Act

In the Matter of Key Energy Services, Inc.

 
:
Key Energy Services, Inc.
:
SEC Civil
:
August 11, 2016
:
In the Matter of Key Energy Services, Inc.
:
In the Matter of Key Energy Services, Inc., Admin. Pro. File No. 3-17379 (2016).
:
Key Energy settled the SEC’s charges against the company by disgorging $5 million in profits but avoiding payment of any civil penalties or prejudgment interest.
:
Energy (Non-Utility)-Oil & Gas-Exploration/Production
:
Mexico
:
2010; 2011; 2012; 2013
:
Contract employee at the Mexican state-owned oil company, Petróleos Mexicanos ("Pemex”).
:
Key Energy is a Maryland corporation headquartered in Houston, Texas. Key Energy maintains a class of common stock listed on the New York Stock Exchange. Key Mexico is a pair of entities operating in Mexico and are wholly owned subsidiaries of Key Energy. Key Mexico’s financial results were included in Key Energy’s consolidated financial statements.

From August 2010 through at least April 2013, Key Mexico allegedly made improper payments to a contract employee from Pemex in exchange for inside information as well as advice on Pemex contracts. Specifically, according to the SEC, in August 2010, Key Mexico hired a consulting firm (the “Consulting Firm”) to provide “expert advice on contract with … Pemex.” The SEC claims that Key Mexico’s country manager knew that the Consulting Firm had ties to the Pemex employee and that payments to the Consulting Firm would be funneled to the Pemex employee, but never disclosed the nature of the relationship to Key Energy. From 2010 through 2013, Key Mexico allegedly paid the Consulting Firm tied to the Pemex employee at least $229,000 for purported consulting services. Over the course of those three years, the SEC claims that the Pemex employee provided Key Mexico with non-public information regarding upcoming Pemex tenders and lobbied internally for lucrative amendments to Key Mexico contracts with Pemex.

As early as 2011, Key Energy personnel allegedly became aware that Key Mexico was doing business with the consulting Firm, yet Key Energy failed to conduct due diligence on the Consulting Firm, despite policies requiring due diligence to be performed. Furthermore, the SEC alleges that Key Mexico improperly recorded the payments made to the Consulting Firm as legitimate business expenses.

On August 11, 2016, the SEC announced that it had settled the charges against Key Energy through a cease and desist order. According to the SEC, Key Energy would disgorge $5,000,000 in ill-gotten gains for violations of the FCPA’s books-and-records and internal controls provisions.
:
Books and records (Issuer), Internal controls (Issuer)
:
Cease and Desist, Disgorgement
:
Disgorgement of $5,000,000.
:
5,000,000
:
0
:
Issuer
:
U.S.
:
United States
:
Contract Procurement/Retention
:
Not stated.
:
Cash
:
Customs Broker or Agent/Consultant
:
229,000
:
Mexico
:
No
:
No