Exterran disclosed in its annual report that it will not be facing an enforcement action following a Foreign Corrupt Practices Act investigation into equipment contracts for desalination plants in the Middle East.
Exterran engages in the compression, production, and processing of various products and services for the production and transportation of oil and natural gas worldwide. In March 2016, the audit committee of Exterran’s board of directors retained legal counsel to conduct an internal investigation “related to the application of percentage-of-completion accounting principles to specific Belleli EPC product sales projects,” the annual report stated. “Our Belleli EPC business had historically been comprised of engineering, procurement and construction for the manufacture of tanks for tank farms and the manufacture of evaporators and brine heaters for desalination plants in the Middle East.”
In April 2016, Exterran filed a Form 8-K reporting the errors and possible irregularities at Belleli EPC. “Contemporaneously with filing the Form 8-K, we self-reported these issues to the SEC,” the annual report stated. That investigation included responding to a subpoena for documents related to the circumstances giving rise to the restatement, as well as documents concerning Exterran’s compliance with the FCPA, which it also provided to the Department of Justice upon request.
In its annual report, filed Feb. 28 for the fiscal year ended Dec. 31, 2017, Exterran said it has been notified by the SEC that they have “concluded their investigation concerning our compliance with the FCPA, and that they do not intend to recommend an enforcement action,” the company stated. The Justice Department also said it does not intend to proceed with any further investigation or enforcement.
“The SEC’s investigation related to the circumstances giving rise to the restatement is continuing,” Exterran added, “and we are presently unable to predict the duration, scope or results or whether the SEC will commence any legal action.”