The Securities and Exchange Commission (“SEC”) is no longer headed to trial this week in a case where it alleged bribery violations against two former executives of oil and gas drilling contractor Noble Corp. (“Noble”). In anticipation of a rare jury trial in Houston set to start on July 9, 2014, the SEC agreed to settle the remaining claims arising under the Foreign Corrupt Practices Act (“FCPA”).
The lawsuit, filed in February 2012, alleged that former Noble CEO Mark A. Jackson and James J. Ruehlen, the director of Noble’s Nigerian subsidiary company, violated the FCPA’s books and records provisions by authorizing and failing to report to the company’s audit committee and auditors the payment of bribes to Nigerian customs officials between 2003 and 2007. See SEC v. Jackson, et al., Case No. 4:12-cv-00563 (S.D. Tex.). The SEC alleged that Noble paid the bribes to obtain 11 improper permits and secure 29 permit extensions for drilling platforms that it operated in Nigerian waters.
Over the past two years, the SEC’s claims against Jackson and Ruehlen had significantly narrowed. In 2013, the court dismissed all pre-2006 claims as time-barred under the five-year statute of limitations. In April 2014, the court granted the SEC’s own motion to voluntarily dismiss those claims alleging violations for failure to maintain adequate internal controls under the Securities and Exchange Act of 1934 (the “Exchange Act”).
By pushing the SEC to the brink of trial, Jackson and Ruehlen extracted a favorable settlement from the SEC. Notably, the individual defendants did not agree and were not ordered to pay any civil fines or admit to any liability in the case. Instead, they agreed to entry of an injunction prohibiting the aiding and abetting of any violations of the Exchange Act related to the maintenance of accurate books and records and internal controls. In a related case, former Noble controller and head of internal audit Thomas F. O’Rourke settled similar allegations with the SEC in March 2012 and agreed to pay a $35,000 civil penalty. See SEC v. O’Rourke, Case No. 4:12-cv-00564 (S.D. Tex.).
This case was set to be the first known FCPA civil trial for the SEC. While the Department of Justice (“DOJ”) has brought several FCPA criminal cases to trial in recent years, the SEC has not proceeded to trial in an FCPA matter.
Previously, in 2010, Noble entered into a settlement with the DOJ and SEC for FCPA violations related to their industry-wide investigation of bribes paid on behalf of clients by freight forwarding agent, Panalpina Group. At that time, Noble agreed to pay $8.1 million in fines and disgorgement of profits and interest.