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Weatherford to pay $140M for accounting fraud

Jaclyn Jaeger | September 29, 2016

Switzerland-based oilfield services giant Weatherford International has agreed to pay a $140 million penalty to settle charges that it inflated earnings by using deceptive income tax accounting. Two of the company’s senior accounting executives at the time have agreed to settle charges that they were behind the scheme.

According to the Securities and Exchange Commission’s order, Weatherford fraudulently lowered its year-end provision for income taxes by $100 million to $154 million each year so the company could better align its earnings results with its earlier-announced projections and analysts’ expectations. James Hudgins, who served as Weatherford’s vice president of tax, and Darryl Kitay, who was a tax manager, made numerous post-closing adjustments to fill gaps and meet its previously disclosed effective tax rate (ETR), which is the average rate that a company is taxed on pre-tax profits. 

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