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

S.E.C. v. Tenaris, S.A.

 
:
Tenaris, S.A.
:
SEC Civil
:
May 17, 2011
:
S.E.C. v. Tenaris, S.A.
:
S.E.C. v. Tenaris S.A., May 17, 2011, Deferred Prosecution Agreement
:
Tenaris, S.A. is the first company to enter into a deferred prosecution agreement with the SEC.
:
Manufacturing-Other/Multi
:
Uzbekistan
:
2006; 2007; 2008
:
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 allegedly 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’s then-regional sales personnel also agreed to make payments to officials at the Uzbek government agency, Uzbekexpertiza JSC (“Uzbekexpertiza”), to encourage Uzbekexpertiza not to investigate the bidding process. However, evidence of such payment was not found. According to the SEC, 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 allegedly 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 and disclosed the allegations to the SEC in 2009. In 2010 Tenaris launched a world-wide investigation and also took steps to update and improve existing compliance programs.
:
Books and records (Issuer), Internal controls (Issuer)
:
Deferred-prosecution Agreement
:
Disgorgement in the amount of $4,786,438 plus prejudgment interest of an estimated $641,900 totaling $5,428,338. Under the Agreement Tenaris agreed to implement compliance measures, cooperate with the ongoing investigation, toll the statute of limitations, and observe and enhance reporting obligations. The Agreement allowed Tenaris to “neither admit nor deny” the allegations with only the proviso that it could not dispute the facts in any subsequent SEC proceeding. The Agreement also required Tenaris to refrain from seeking or accepting a U.S. federal or state tax credit or deduction for any monies paid pursuant to the Agreement.
:
5,428,338
:
0
:
Issuer
:
Foreign
:
Luxembourg
:
Contract Procurement/Retention
:
4,786,438
:
Wire/check
:
Customs Broker or Agent/Consultant
:
32,141
:
Uzbekistan
:
United States
:
No
:
Yes