The US Securities and Exchange Commission (SEC) settled its civil enforcement action against NATCO Group Inc (NATCO) earlier this year. On 11 January 2010, the SEC charged NATCO, under provisions of the Foreign Corrupt Practices Act 1977, for making unlawful payments to immigration officials in Kazakhstan. NATCO has agreed to pay a penalty of $65,000 to the SEC. The relevant facts of the case were as follows, TEST Automation & Controls (TEST), a wholly owned subsidiary of oil field services provider NATCO, secured contracts to provide instrumentation and electrical services to Kazakhstan. In 2007, Kazakh's immigration authority found, during their periodic audits of immigration documentation, that TEST's expatriate employees lacked proper documentation. The immigration authorities threatened to fine, jail or deport TEST workers if the company did not pay cash fines. The payments were duly authorised by senior management at TEST by way of reimbursement for employees who had used their personal monies to pay the authorities. It is also alleged that TEST proceeded to cover up the nature of the extortion payments by describing them as advance bonus payments and made payments to an intermediary with official connections in order to obtain necessary visas. NATCO's systems of internal accounting controls failed to ensure that TEST recorded the true purpose of the payments, and NATCO's consolidated books and records did not accurately reflects these payments.
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US SEC files civil action charging NATCO with violations under FCPA
- Herbert Smith Freehills LLP
- Peter Burrell, Susannah Cogman, Nichola Peters, Graham More and Daniel Hudson
- June 3 2010
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