The SEC and Tenaris SA resolved a FCPA case with the Commission’s first deferred prosecution agreement.
The agreement: Under its terms the company agreed to pay $5.4 million in disgorgement and prejudgment interest. Tenaris also accepted responsibility for its actions and agreed “not to contest or contradict the factual statements” regarding the underlying conduct detailed in the agreement. As part of the agreement Tenaris will continue to cooperate with the SEC. The company also agreed to: 1) provide the Commission with a written certification of compliance prior to the end of the agreement in 2013; 2) annually review and update its Code of Conduct; 3) require that each director, officer and management level employee certify compliance with the Code of Conduct on an annual basis; and 4) conduct FCPA training and supervision for all officers and managers, finance employees, and others working in areas implicated by its anticorruption and compliance policies and future employees. Tenaris resolved possible charges with DOJ by entering into a nonprosecution agreement. The company also agreed to pay a criminal fine of $3.5 million.
The underlying case: Tenaris is a Luxembourg based international seller of steel pipe products and related services to the oil and gas industry. In 2006 and 2007 Tenaris bid on contracts with OJSC O’ztashqineftgaz (“OAO”) to supply pipeline for the development and production of oil and natural gas in Uzbekistan. OAO was a subsidiary of Uzbekneftegaz, a state owned holding company of Uzbekistan’s oil and gas industry.
To facilitate the bidding process the company retained a local agent who provided the company with confidential information about the bidding process. As a result, it was successful in obtaining contracts during the time period which generated almost $5 million in profits. The agent was paid a commission, portions of which went to state officials as bribes.
Cooperation: Tenaris learned of the bribes in March 2009. The audit committee immediately retained counsel who launched an internal investigation. In a filing with the SEC on 30 June 2009 Tenaris disclosed the customer allegations that lead to the inquiry and the investigation, noting that it had self-reported to DOJ and the SEC. The next month counsel for the company briefed DOJ and SEC officials, promising to conduct a more detailed investigation and report again.
Subsequently, the company conducted a worldwide inquiry of its business operations and controls. It also provided DOJ and the SEC what the latter called “extensive, through, real-time cooperation . . .“ making full voluntary disclosure of the underlying conduct. The company also enhanced its compliance measures. The steps taken include the adoption of a strengthened Code of Conduct, Business Conduct Policy and Agent retention Procedure that addresses anticorruption and compliance with the FCPA.