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Extractive Industries/Mining/Oil & Gas
Houston, Texas, United States
Nationality of Foreign Officials: Angola, Iraq
Summary of Allegations:
In December 2010, Halliburton received an anonymous email alleging that certain current and former personnel violated the company's Code of Business Conduct ("COBC") and the U.S. Foreign Corrupt Practice Act ("FCPA"), principally through the use of an Angolan vendor. The email also alleged conflicts of interest, self-dealing and the failure to act on alleged violations of Halliburton's COBC and the FCPA. Halliburton initiated an internal investigation into payments made to third-party agents relating to certain customs matters in Angola. Later, Halliburton expanded its investigation into payments made to third-party agents relating to certain customs and visa matters in Iraq.
In its July 2017 cease-and-desist order, the Securities and Exchange Commission summarized the allegations as follows:
"From April 2010 through April 2011, Halliburton paid USD 3,705,000 to a local Angolan company that Halliburton had proposed to a Sonangol Official to fulfill local content obligations. The local Angolan company was owned by a former Halliburton employee and a friend and neighbor of the Sonangol government official and some of the payments were made in advance of Halliburton obtaining lucrative oilfield services contracts. The Sonangol official, who had authority to veto or reduce subcontracts awarded to Halliburton by large international oil companies, approved Halliburton’s local content proposal.
"The payments to the local Angolan company were made under two contracts arranged and negotiated by [former Halliburton Vice-President Jeannot] Lorenz and others: (i) a September 2009 Interim Consulting Agreement, and (ii) a May 2010 Real Estate Transaction Management Agreement. Halliburton entered into these contracts in violation of its own internal accounting controls and did not record the true nature of the transactions in its books and records. Specifically, the two contracts were entered into for the purpose of paying the local Angolan company to satisfy local content requirements, not for the stated scope of work set forth in each contract. In addition, Halliburton entered into the contracts without following all of the terms of its internal accounting controls governing such transactions.
"Lorenz negotiated and entered into the agreements with the local Angolan company while knowingly circumventing certain Halliburton internal accounting controls. Also, Lorenz falsified books and records by knowingly providing inaccurate scopes of work and other information contained in the agreements. Lorenz, therefore, personally violated provisions that prohibit knowingly circumventing internal accounting controls and falsifying books and records, and also caused Halliburton’s violations of the books and records and internal accounting controls provisions of the FCPA."
Approximate Alleged Payments to Foreign Officials: Unspecified
Business Advantage Allegedly Obtained: Approximately USD 14 million
Nationality of Foreign Officials: Cyprus
Summary of Allegations:
On 23 October 2016, allegations that Aradhippou municipalities granted Halliburton building permits just two days before a new bill was passed relating to environmental studies for such facilities emerged. Halliburton allegedly bribed Aradhippou municipality officials when it was looking to set up its base of operations in Larnaca a couple of years ago.
Approximate Alleged Payments to Foreign Officials: Unspecified
Business Advantage Allegedly Obtained: Unspecified
Agencies: Cyprus: Ministry of Justice and Public Order
Results:
Year Resolved:
Compliance Monitor:
Ongoing: Yes
Details:
In August 2016, Cyprus Justice Minister Ionas Nicolaou confirmed a criminal investigation into allegations that Halliburton bribed public officials when it was setting up its operations in Larnaca in the past. The investigation was launched after Paphos Mayor Phedonas Phedonos alleged that state and local officials demanded kickbacks from Halliburton. Phedonos claimed that he did not go to the police because, when he did so in the past, the authorities only arrested the people named without looking into the allegations further to identify other suspects and those named discovered what he reported to the authorities within minutes.
On 2 September 2016, Cyprus police collected files regarding Halliburton as part of the corruption investigation from the Aradhippou town hall in Larnaca, Cyprus.
Agencies: United States: Department of Justice, United States: Securities and Exchange Commission
Results: Cease-and-Desist Order, Civil Penalty, Disgorgement
Year Resolved: 2017
Compliance Monitor: 18 months
Ongoing: No
Details:
In its Form 10-Q filed with the SEC on 21 October 2011, Halliburton disclosed that it was conducting an internal investigation of its operations in Angola, focusing on compliance with certain company policies, including its Code of Business Conduct ("COBC"), and the FCPA and other applicable laws. Halliburton disclosed that it contacted the DOJ to advise them of initiating the internal investigation with the assistance of outside counsel and independent forensic accountants. During the third quarter of 2011, Halliburton met with the DOJ and the SEC to brief them on the status of its investigation and provided them documents.
In the Company's 10-K filed with the SEC on 16 February 2012, Halliburton announced that the company met with the DOJ and the SEC to brief the agencies on the status of the internal investigation and provided documents during the third quarter of 2011. It also stated that the company was currently responding to a subpoena from the SEC regarding the matter and was producing all relevant documents. Furthermore, Halliburton disclosed its understanding that one of its employees had also received a subpoena from the SEC regarding the same matter.
In a Form 10-Q filed with the SEC on 27 July 2012, Halliburton noted that its activities in Iraq were also under investigation, that it expects to continue to have discussions with the DOJ and the SEC regarding the Angola and Iraq matters, that it has engaged outside counsel and independent forensic accountants to assist in its internal investigations, and that it intends to continue to cooperate with the authorities' investigation.
In its Form 10-K filed with the SEC on 7 February 2017, Halliburton disclosed that its counsel has engaged in discussions with the SEC concerning a potential resolution of the investigation.
Discovery Method: Voluntary Disclosure
Details:
In December 2010, Halliburton received an anonymous email alleging FCPA violations in Angola. The company contacted the DOJ and informed the DOJ that the company was initiating an internal investigation. During the third quarter of 2011, the Company met with the DOJ and the SEC to brief them on the status of the investigation.
Country: Angola, Iraq
Discovery Method: Media or Investigative Report
Details:
In an exposé published on 9 November 2014, the Sunday Mail reported how both local Aradhippou officials as well as state authorities in Cyprus appeared to have granted permits to Schlumberger N.V. in record time, allegedly bending the rules. Halliburton was also implicated in the same investigation.
Country: Cyprus