Dutch oilfield services provider Frank’s International agreed to pay nearly $8 million as part of a settlement with the Securities and Exchange Commission (SEC) for allegedly paying bribes to influence oil drilling contracts in Angola.
Now known as Expro Group Holdings N.V., Frank’s violated the Foreign Corrupt Practices Act (FCPA) when it paid commissions to an Angolan sales agent from 2008-14, the SEC alleged. Company employees knew the agent was likely to use the funds to bribe Angolan officials to secure contracts for Frank’s, the agency said Wednesday in an administrative proceeding.
Without admitting or denying the SEC’s allegations its actions violated the anti-bribery, books and records, and internal accounting controls provisions of the FCPA and SEC regulations, the company agreed to pay disgorgement plus prejudgment interest totaling $4,998,721, a $3 million civil penalty, and to cease and desist from future violations.
Frank’s self-reported the apparent FCPA violation to the SEC and Department of Justice (DOJ) in 2016, conducted an internal investigation, and cooperated with the agency’s investigation.
The details: Frank’s sought to influence Angola’s state-owned oil company, Sonangol, to allow Frank’s products to be purchased by international oil companies in the drilling of deep water wells off Angola’s coast, according to the SEC’s order. The oil companies purchased Frank’s products in the past, but Angolan officials ordered the companies to purchase a competitor’s products instead because that competitor had “purportedly made a superior financial investment” in Angola, the SEC said.
To facilitate a scheme to influence Angolan officials, Frank’s hired the Angolan agent without conducting due diligence, without a contract, and despite his lacking technical experience to represent Frank’s interests, per the SEC. The agent would serve as a “bribe conduit” to Angolan officials and received approximately $5.5 million from Frank’s from 2008-14, the agency alleged.
Frank’s recorded the payments to the agent as “business expenses-entertainment and meals,” the SEC said. The company received at least nearly $4.2 million in net profits from its sales to the international oil companies where Sonangol was the ultimate customer, per the order.
Compliance considerations: Frank’s “lacked adequate internal accounting controls related to the retention and payment of agents that interacted with foreign government officials on behalf of the company,” the order said.
As part of its remediation of the alleged issues, Frank’s terminated the employees involved, terminated its relationship with the Angola agent, and improved its internal accounting controls.
Company response: In a regulatory filing, Expro said the DOJ declined to prosecute the company as a result of the settlement of the civil claims against it.
“In accepting the company’s offer, the SEC noted the company’s self-reporting; cooperation afforded to the SEC staff; and remedial action, including improving the company’s internal accounting controls and further enhancements to its internal controls environment and compliance program following the merger in 2021 of Frank’s International and Expro Group Holdings International,” the company said in the filing.