The U.S. Securities and Exchange Commission (SEC) has settled violations of the Foreign Corrupt Practices Act (FCPA) with Frank's International, a global oil services company. Between January 2008 and October 2014, Frank's paid commissions to a sales agent in Angola, knowing there was a high probability the agent would use the funds to bribe Angolan government officials on behalf of the company. Some of the funds were diverted to an Angolan government official to influence the award of oil and natural gas services contracts.
Angolan state-owned oil company, Sonangol, awarded concessions to major international oil companies for the exploration and production rights of onshore and offshore areas. Frank's sought to provide tubular services and technology to support the drilling of primarily deep water wells in Angola's offshore blocks. Sonangol blocked Frank's hiring, and the company was informed that it could regain favor by establishing a consulting company and paying 5% of the contract value to the consulting company for the benefit of high-ranking Sonangol officials.
Instead, Frank's retained an Angolan agent with close ties to the Angolan government. The company continued to make payments to the agent without conducting due diligence or having a contract in place. The agent funneled a portion of the money received from Frank's to the Angolan government official, securing new contracts for Frank's in the process.
Frank's recorded these illicit payments as "business expenses," "entertainment and meals," and "commissions" in its books and records. The company continued to use the agent and provide benefits to the Angolan official even after becoming a public company. Between 2008 and 2014, the agent's businesses received approximately $5.5 million from Frank's, a portion of which was paid to the Angolan official. Some of the funds were diverted to an Angolan government official to influence the award of oil and natural gas services contracts.
Angolan state-owned oil company, Sonangol, awarded concessions to major international oil companies for the exploration and production rights of onshore and offshore areas. Frank's sought to provide tubular services and technology to support the drilling of primarily deep water wells in Angola's offshore blocks. Sonangol blocked Frank's hiring, and the company was informed that it could regain favor by establishing a consulting company and paying 5% of the contract value to the consulting company for the benefit of high-ranking Sonangol officials.
Instead, Frank's retained an Angolan agent with close ties to the Angolan government. The company continued to make payments to the agent without conducting due diligence or having a contract in place. The agent funneled a portion of the money received from Frank's to the Angolan government official, securing new contracts for Frank's in the process.
Frank's recorded these illicit payments as "business expenses," "entertainment and meals," and "commissions" in its books and records. The company continued to use the agent and provide benefits to the Angolan official even after becoming a public company. Between 2008 and 2014, the agent's businesses received approximately $5.5 million from Frank's, a portion of which was paid to the Angolan official.
In settling the FCPA violations, the SEC has required Frank's to address its internal controls and conduct a thorough internal investigation to identify all individuals involved in the corrupt practices. The Settlement includes disgorgement of $4,176,858 and prejudgment interest of $821,863 and a civil money penalty in the amount of $3,000,000 to the Securities and Exchange Commission.
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