Noble Execs Settle Nigerian Bribery Case With SEC

Mark A. Jackson, Noble Corp. CEO, and James J. Ruehlen, Director of Noble’s Nigerian subsidiary, Noble Drilling (Nigeria), Ltd., settled SEC charges accusing the pair of bribing Nigerian officials. The settlement comes on the heels of U.S. District Judge Keith P. Ellison’s denial of the executives’ motion for summary judgment in which Jackson and Ruehlen argued that they were acting in good faith and believed the payments to Nigerian officials were allowable costs to obtain permits. Judge Ellison also ruled that the payments did not fit the narrow exception for facilitating payments under the FCPA.

Final judgments signed by Judge Ellison on July 3, 2014 contained injunctions against Jackson and Ruehlen but did not require any financial penalties or admission of wrongdoing.

After having several similar claims dismissed for statute of limitations reasons, the SEC sued Jackson and Ruehlen in 2012 for conduct from May 2006 forward. During that time, Jackson and Ruehlen allegedly paid Nigerian officials to obtain numerous extensions for temporary permits beyond the three extensions allowed by law in order to circumvent sizeable custom duties. Under local law, oil companies operating with temporary permits may obtain up to three permit extensions for six-month periods to import. After that, the rigs either must be exported and reimported under a new temporary permit, or the company must permanently import the rigs and pay hefty duties. Since 2006, Jackson and Ruehlen allegedly paid “hundreds of thousands of dollars in bribes to Nigerian customs officials to obtain 11 illicit permits and 29 extensions,” according to the SEC. The agency further alleged that Ruehlen prepared the false paperwork related to the company’s import and export of oil platforms and paid the officials while Jackson sought to hide the payments from the audit committee.

In 2012, Noble executive Thomas O’Rourke agreed to pay $35,000 without admitting or denying allegations that he aided and abetted Jackson and Ruehlen in their alleged scheme to bribe Nigerian officials.

See additional coverage at Reuters and the Houston Business Journal

UK’s Serious Fraud Office (SFO) Ramps up Anticorruption Efforts with Increased Investigations and Prosecutions

The SFO is keeping busy this summer, securing a jury conviction of two individuals and conducting two separate probes investigating alleged bribery in Asia and the Middle East.

On June 18, 2014, a jury at Southwark Crown Court convicted two former Innospec Limited executives for conspiracy to commit corruption. The convictions of Dennis Kerrison, a former CEO of Associated Octel Corporation (later renamed Innospec Ltd.), and Miltiades Papachristos, a former Regional Sales Director for the Asia Pacific region, mark the conclusion of the SFO’s six-year investigation into Innospec. The global specialty chemicals company pled guilty to making payments to officials in Indonesia in exchange for securing contracts from the government to supply an Innospec chemical, Tetraethyl Lead, whose use was prohibited in the United Kingdom in 2000. Mr. Kerrison and Dr. Papachristos will face sentencing on August 1, 2014, along with two other former Innospec executives who pled guilty in 2012. The SFO collaborated with U.S. agencies and authorities in Indonesia, Switzerland and Singapore during this investigation. Read the SFO’s press release and more coverage at the FCPA Blog

In mid-July, the SFO arrested and questioned several people in connection with a long-running investigation into GPT Special Project Management, an Airbus Group NV subsidiary. While the SFO did not confirm if these arrests were linked to the ongoing probe regarding alleged corrupt business practices in Saudi Arabia, news reports indicate that two current and two former employees were recently interviewed and released on bail. SFO has been examining Airbus’ Saudi business operations for more than two years in response to whistleblower claims that the European aircraft and defense company’s GPT division secured contracts via bribes and gifts given to Saudi generals. See more details at Bloomberg and Reuters UK.

Finally, on July 14, 2014, SFO confirmed that it is investigating British survey and construction services firm, Sweett Group, in relation to allegations of bribery in the United Arab Emirates (UAE) and elsewhere in the Middle East. This probe relates to claims that a former Dubai-based employee of a Sweett subsidiary asked a firm of architects to make a payment to an official inside the UAE president’s personal foundation in exchange for a $100 million contract to build a hospital in Morocco sponsored by the president’s foundation. Sweett Group originally notified the SFO in April 2014 about the alleged impropriety of this employee and has expressed its commitment to cooperate fully with the SFO as the investigation proceeds. The FCPA prohibits companies from offering charitable donations as a quid pro quo in order to wrongfully obtain business opportunities. For more information, see the Sweett’s Group press release and additional coverage at the Telegraph and the London Evening Standard.

Spanish Drug Company Discloses Internal FCPA Investigation in Europe and the Middle East

In a recent 6-K filing with the SEC, Grifols, S.A. revealed that they have retained an external expert to investigate their sales practices in Central and Eastern European countries, specifically Belarus and Russia. Trading practices in Brazil, China, Georgia, Iran and Turkey are also being investigated, in addition to other countries “considered necessary,” according to the filing. The investigation was initiated prior to the acquisition of Talecris, which also faced scrutiny for FCPA violations in Europe in 2012. The pharma company produces more than 90 percent of its sales outside of the United States. For more information, see coverage at Compliance Week.

Macau’s Anticorruption Agency Probes Wynn Resorts Land Deal 

Macau’s Commission Against Corruption (CACC) has formed a task force to review the land deal that forged the path for Wynn Resorts' (“Wynn”) $4 billion casino-resort in the globe’s largest gambling hub and only legal gambling site in China. Executed in 2012, this deal provided Wynn with the necessary land in Macau’s desirable Cotai area to construct Wynn Palace, currently underway to open in 2016. This transaction encompassed a $50 million payment by Wynn to Macau-registered Tien Chiao Entertainment and Investment Co. Ltd. in exchange for rights to the construction site. 

CACC initiated the investigation after a request by the U.S.-based International Union of Operating Engineers, a trade association calling for increased transparency in Wynn’s business dealings in Macau, to provide more details on how an unknown company obtained rights to the land before it was granted to Wynn. They also called into question why a payment was made to an entity with possible connections to politically influential figures. The company’s CEO, Steve Wynn, maintains that the deal complies with U.S. antibribery laws. Another company executive said that the company has not been contacted by authorities as of mid-July.

The SEC previously investigated Wynn in connection with allegations that a company affiliate made an improper payment to the University of Macau Development Foundation. The investigation closed in July 2013 with the SEC declining to proceed with an enforcement action.

For additional coverage, see Bloomberg and Reuters.