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SEC v. Jackson et al.

 
:
James J. Ruehlen
:
SEC Civil
:
February 24, 2012
:
SEC v. Jackson et al.
:
SEC v. Jackson et al., 4:12-cv-00563 (S.D. Texas 2012)
:
Noble Corporation was charged with FCPA violations as part of a sweep of the oil services industry in late 2010.

Of note in the decision is the court's discussion on whether a plaintiff must allege the specific government official who received the illegal payments and its decision on whether merely negating facilitation payments can establish a violation of a primary offense. Also of note, is the court's rejection of the SEC's continuing offense argument and its discussion of what constitutes internal controls violations.
:
Energy (Non-Utility)-Oil & Gas-Exploration/Production
:
Nigeria
:
2003; 2004; 2005; 2006; 2007
:
Customs officials in the Nigeria Customs Service (“NCS”)
:
The SEC alleges that Mark A. Jackson, former Noble Corporation CEO, and James J. Ruehlen, current Director and Division Manager of Noble’s Nigerian subsidiary ("Noble-Nigeria"), bribed Nigeria Customs Service (“NCS”) officials to (1) favorably process false paperwork, (2) grant temporary import permits (“TIPs”) for oil rigs based on that false paperwork, and (3) abuse their discretion in granting extensions to these illicit TIPs. Neither Ruehlen nor Jackson has settled with the SEC.

Between 2003 and 2007, Noble-Nigeria operated seven oil rigs offshore in Nigeria on the basis of one-year TIPs granted by NCS. At the expiration of the TIP and available extensions, the rigs were required to be exported and re-imported under a new TIP or be permanently imported with the payment of sizable duties. According to the SEC, Ruehlen and other Noble-Nigeria officials, and its customs agent, with Jackson’s knowledge and approval, created false documents showing that the rigs moved out of and back into Nigerian waters and bribed NSC officials to process these documents. The alleged scheme thus spared Noble Corporation the operational costs associated with exporting and re-importing rigs from Nigeria in order to qualify for new TIPs and allowed Noble to retain business under lucrative drilling contracts.

Jackson and Ruehlen allegedly participated in paying hundreds of thousands of dollars to obtain 11 illicit permits and 29 permit extensions. Bribes were paid through a customs agent for Noble-Nigeria. Jackson approved the bribe payments and concealed the payments from Noble’s audit committee and auditors. Ruehlen assisted the custom's agent in preparing false documents, sought approval for the bribes (disguised as "special handling" charges), and processed and paid the bribes.

The SEC’s complaint against Jackson and Ruehlen alleges they directly violated the anti-bribery provisions and the internal controls and false records provisions of the FCPA. The complaint further alleges that they aided and abetted Noble’s violations of the books and records and internal controls provisions.

Jackson and Ruehlen filed motions to dismiss on May 8, 2012. The SEC's opposition was filed on June 22, 2012.

On December 11, 2012, the Southern District for Texas granted in part and denied in part the motion to dismiss. The court granted, in part, the motion to dismiss on the grounds that the complaint did not properly allege that defendant’s payments were made corruptly and did not plausibly allege facts supporting the allegation that granting TIPS extensions are a matter of discretion. The court denied, in part, the motion to dismiss on the grounds that the complaint adequately pled the involvement of a foreign official.

The SEC filed an amended complaint on January 25, 2013, which Jackson and Ruehlen moved to dismiss. The parties then jointly moved to grant SEC leave to file a second amended complaint, which the court granted. The SEC filed its second amended complaint on March 25, 2013, to which Jackson and Ruehlen filed answers on April 19, 2013, denying most of the SEC's allegations.
:
Aiding and abetting anti-bribery, Aiding and abetting books and records, Aiding and abetting internal controls, Anti-bribery (Other Persons), Books and records (Individual), Internal Controls (Individual)
:
Not stated.
:
0
:
Aider/abettor, Director of Domestic Concern
:
Director, Other Senior Officer
:
U.S.
:
License/Permit
:
Not stated.
:
Cash
:
Customs Broker or Agent/Consultant
:
309,352
:
Nigeria
:
No
:
No