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U.S. v. Tenaris, S.A.

 
:
Tenaris, S.A.
:
DOJ Criminal
:
May 17, 2011
:
U.S. v. Tenaris, S.A.
:
U.S. v. Tenaris, S.A. (May 2011)
:
In parallel SEC proceedings, Tenaris, S.A. became the first company to enter into a deferred prosecution agreement with the SEC.
:
Manufacturing-Other/Multi
:
Uzbekistan
:
2006; 2007; 2008; 2009
:
Officials of OJSC O’ztashqineftgaz (“OAO”), a subsidiary of Uzbekneftegaz, the state-owned holding company of Uzbekistan’s oil and gas industry.
:
Tenaris, S.A. is a corporation organized under the laws of Luxembourg. Tenaris is a manufacturer and supplier of steel pipe products and related services to the oil and gas industry throughout the world. Tenaris is publicly traded on the New York Stock Exchange.

During 2006 and 2007, Tenaris utilized the services of an Agent to bid on a series of contracts with OAO. In or around February 2007, Tenaris entered into an agreement to pay the Agent a commission of 3.5% for access to confidential bid information. The Agent used portions of the commission to pay OAO officials. Tenaris was awarded the contract and OAO agreed to pay Tenaris $2,719,720 for pipe used in oil and gas development in Uzbekistan. In April and May 2007, Tenaris entered into an agreement to pay the Agent a commission of 3% for services related to three OAO contracts. Tenaris was awarded the three contracts. Tenaris employees also agreed to make payments to the Uzbek government agency, Uzbekexpertiza JSC (“Uzbekexpertiza”), to encourage Uzbekexpertiza not to investigate the bidding process. However, evidence of such payment was not found. In or around 2007, Tenaris also failed to accurately account for these transactions with the Agent and payments to OAO officials on their books and records. Tenaris's system of internal controls also failed to detect or prevent payments to OAO officials, including a failure to ensure that proper due diligence was conducted on the Agent.

Tenaris obtained independent counsel to investigate the allegations. Tenaris disclosed results of the preliminary investigation to the DOJ in 2009. In 2010 Tenaris launched a world-wide investigation of its internal operations and controls and cooperated with the DOJ in voluntarily disclosing information related to the transactions in Uzbekistan. Tenaris also took steps to update and improve its existing compliance programs.
:
Anti-bribery (Issuer), Books and records (Issuer), Internal Controls (Individual)
:
Non-prosecution Agreement
:
Monetary penalty in the amount of $3,500,000.
:
3,500,000
:
0
:
Issuer
:
Foreign
:
Luxembourg
:
Contract Procurement/Retention
:
4,786,438
:
Wire/check
:
Customs Broker or Agent/Consultant
:
32,141
:
Uzbekistan
:
United States
:
No
:
Yes