The methods that Halliburton used to secure lucrative oilfield services contracts in Angola violated the Foreign Corrupt Practices Act, according to the SEC, which instituted cease and desist proceedings against the company. Without admitting or denying the findings, Halliburton and a former vice president consented to the cease and desist order, and the company agreed to pay $15.2 million in disgorgement and prejudgment interest and a $14 million penalty.
Allegations. The SEC’s order claims that officials at Angola’s state oil company told Halliburton management in 2008 that the company was required to partner with more local Angolan-owned businesses to satisfy local regulations for foreign firms operating in the country. When a new round of oil company projects came up for bid, the former company vice president attempted to retain a local Angolan company owned by a former Halliburton employee.
The former Halliburton employee was a friend and neighbor of the oil company official who would ultimately approve the award of the contracts, according to the Commission. After three attempts, Halliburton outsourced more than $13 million worth of business to the local Angolan company.
The SEC alleges that Halliburton entered into contracts with the local Angolan company that were intended to meet local content requirements rather than the stated scope of work. In addition, the SEC charged the former vice president with violating Halliburton’s internal accounting controls by starting with the local Angolan company and then backing into a list of contract services rather than first determining the services and then selecting an appropriate supplier.
Accounting controls. The former vice president also failed to conduct competitive bidding or substantiate the need for a single source of supply, the SEC said, and avoided an internal accounting control that required contracts of more than $10,000 in countries like Angola with high corruption risks to be reviewed and approved by a special committee within Halliburton. The company paid $3.7 million to the Angolan firm, and the state oil company approved the award of seven subcontracts to Halliburton.
Sanctions. According to a news release, in addition to the disgorgement and monetary penalty, Halliburton agreed to retain an independent compliance consultant for 18 months to review and evaluate its anti-corruption policies and procedures, particularly in regard to local content obligations for business operations in Africa. The company’s former vice president agreed to pay a $75,000 penalty for causing the company’s violations, circumventing internal accounting controls, and falsifying books and records.
Companies: Halliburton Co.
MainStory: TopStory FraudManipulation Enforcement AccountingAuditing
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