A U.S. company and its former vice-president have agreed to pay civil penalties to settle charges that they violated the books and records and internal accounting controls provisions of the Foreign Corrupt Practices Act while selecting and making payments to a local company in Angola in the course of winning lucrative oilfield services contracts.
According to a press release from the Securities and Exchange Commission, officials at Angola’s state oil company advised the company in 2008 that it was required to partner with more Angolan-owned businesses to satisfy local content regulations for foreign firms operating in Angola. When a new round of oil company projects came up for bid, the former VP retained a local Angolan company owned by a friend and neighbor of the official who would ultimately approve the award of the contracts. The company eventually received seven contracts.
The SEC finds that the U.S. company entered into contracts with the Angolan company that were intended to meet local content requirements rather than the stated scope of work. The SEC also charged the former VP with violating the company’s internal accounting controls by starting with the Angolan company and then backing into a list of contract services, failing to conduct competitive bidding or substantiate the need for a single source of supply, and avoiding an internal accounting control that required contracts of more than $10,000 in countries with high corruption risks to be reviewed and approved by a special company committee.
According to the press release, the company will pay a $14 million penalty, $14 million in disgorgement, and $1.2 million in prejudgment interest. The company also 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. In addition, the company’s former VP has agreed to pay a $75,000 penalty.
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