In the U.S. District Court for the Southern District of Texas, the SEC has charged three oil services executives that were allegedly involved in a scam to bribe Nigerian customs officials with Foreign Corrupt Practices Act violations. The men are accused of using these payments to seek illicit permits for oil rigs.
The three men charged are former Noble Corp. controller Thomas F. O’Rourke, ex-CEO Mark Jackson, and former Noble Nigerian subsidiary manager James Ruehlen. Jackson and Ruehlen allegedly are the ones that bribed the officials to get them to process the bogus paperwork that was supposed to demonstrate re-import and export of the oil rigs even though the rigs were “never moved.”
According to the SEC, the purpose of the scam was to prevent Noble from losing business and suffering substantial costs for exporting rigs from Nigeria and requiring new permits to re-import them. O’Rourke, who was also in charge of Noble’s internal audit, is accused of playing a hand in approving the bribes and letting them fall under the area of legitimate operating expenses.
Associate Enforcement Director Gerald Hodgkins, in the SEC’s release, accused the executives of knowingly approving these payments to foreign officials and purposely concealing the scam from Noble’s audit committee. Hodgkins said this type of misconduct not only hurts the reputation of American companies and foreign market integrity, but also, it places the companies involved in such schemes in legal hot water.
Facing FCPA violation charges in 2010, Noble consented to settle criminal and civil cases against it by paying over $8 million. Rourke has also settled the charges against him with a $35,000 penalty and an agreement to be barred from future violations. He has not denied or admitted wrongdoing. Meantime, lawyers for Jackson and Ruehlen deny the SEC charges and they plan to go to trial in their defense.
What types of disclosures should issuers that pay governments for access to natural gas, oil, and minerals have to provide? Senator John Cornyn from Texas and Lisa Murkowski (R-Alaska) recently wrote a letter to SEC Chairman Mary Schapiro calling on the federal regulator to go easy on a proposal mandating enhanced disclosures from such issuers. They believe that the proposal fails to protect US investors, companies, and employees from competitive harm. Their February 28 letter went out on the same day that Secretary of State Hillary Clinton pressed the SEC to “go as far as possible” with this rulemaking.
Per Dodd-Frank Wall Street Reform and Consumer Protection Act’s Section 1504, the SEC is to write rules making sure that resource extraction issuers disclose in their yearly reports any payments issued to governments to advance the commercial development of natural gas, oil, or minerals. While the SEC submitted its proposal in December 2010, it is just now finalizing the requirement after receiving over 100,000 comments on it. Most are calling for a strong rule that champions corporate accountability and transparency.
SEC Charges Oil Services Execs With Bribing Nigerian Customs Officials, SEC, February 24, 2012
Read the Letter to SEC Chairman Schapiro (PDF)
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