(Adds criminal charges, paragraphs 3-5)
WASHINGTON, Nov 26 (Reuters) - Oilfield services firm Weatherford International will pay $253 million in fines to the U.S. government to settle charges that ranged from flouting sanctions against Iran and Syria to sending business partners on World Cup soccer junkets, officials said on Tuesday.
Weatherford was charged with exporting oil and gas equipment to Iran, Syria, Sudan and Cuba in violation of sanctions, and exporting items controlled for nuclear nonproliferation reasons to Venezuela and Mexico.
Three of the company’s subsidiaries pleaded guilty to the conduct. Prosecutors also filed criminal charges against Weatherford itself for failing to establish a compliance program, but they agreed to defer and drop them if the company improves its controls.
The charges against Weatherford, the smallest of the four main oilfield services firms, also include Foreign Corrupt Practices Act (FCPA) breaches and violations of export laws.
It also faced civil charges from the U.S. Securities and Exchange Commission (SEC) and the Departments of Treasury and Commerce.
While the federal investigations go back as far 2007, the SEC said certain misconduct started in 2002 and occurred as recently as 2011.
“Whether the money went to tax auditors in Albania or officials at the state-owned oil company in Angola, bribes and improper payments were an accustomed way for Weatherford to conduct business,” Kara Brockmeyer, chief of the FCPA unit of the SEC’s Enforcement Division, said in a statement.
The SEC said Weatherford employees placed key transaction documents in mislabeled binders and used code names like “Dubai across the water” to conceal references to Iran in correspondence.
According to the SEC complaint filed in federal court in Houston, Weatherford paid an executive $250,000 to win approval of a contract in Angola in late 2005 or 2006, which led to a profit of more than $11 million for the company.
Weatherford also provided improper travel and entertainment to officials from Sonatrach, the state-owned Algerian oil company. Gifts included a June 2006 trip for two Sonatrach officials to the FIFA World Cup soccer tournament in Germany and a 2006 honeymoon for the daughter of a Sonatrach official.
The company, based in Switzerland but with substantial operations in Houston, has had a tough few years facing charges from multiple U.S. agencies while also absorbing in its accounts adjustments of more than $500 million due to “material weakness” in its tax reporting. The CEO has repeatedly sought to draw a line under the probes as he tries to get the company back on track.
“This matter is now behind us,” Chief Executive Bernard Duroc-Danner said in a statement on Tuesday about the settlement that the company had said early this month would cost about $250 million.
“We move forward fully committed to a sustainable culture of compliance.”
Regulators accuse Weatherford employees of hindering their probe of violations of the United Nations oil-for-food program in Iraq. The SEC said its staff once sought information on the company’s Iraq country manager who signed letters agreeing to bribe an Iraqi official, and they were informed he was missing or dead when he actually remained employed by Weatherford.
The SEC complaint also details how Weatherford did not perform due diligence on a distributor suggested by an official at a national oil company in the Middle East. Then from 2005 to 2011, the SEC added, Weatherford and subsidiaries awarded the distributor $11.8 million in “volume discounts” intended for the creation of a slush fund to pay foreign officials.
The company had estimated the settlement fine earlier this month. The settlement includes $100 million for the sanctioned countries penalty and $153 million for the FCPA and oil-for-food issues.
As part of the settlement, the company agreed to hire an outside auditor to ensure compliance in its dealings with Cuba, Iran, North Korea, Sudan and Syria from 2012 to 2014. (Reporting by Anna Yukhananov and Aruna Viswanatha in Washington, Braden Reddall in San Francisco and Anna Driver in Houston; Writing by Terry Wade; Editing by Vicki Allen and David Gregorio)