This week’s Department of Justice “catch of the week” goes to Schlumberger Oilfield Holdings Ltd. (SOHL), a wholly-owned subsidiary of Schlumberger Ltd. On Wednesday, the oil services company agreed to enter a guilty plea and pay a $232,708,356 penalty for violating the International Emergency Economic Powers Act (IEEPA) by willfully facilitating illegal transactions and engaging in trade with Iran and Sudan. The monetary penalty includes a $77,569,452 criminal forfeiture and a $155,138,904 criminal fine. The criminal fine represents the largest criminal fine in connection with an IEEPA prosecution. See DOJ Press Release
According to court documents, from early 2004 through June 2010, Drilling & Measurements (D&M), a US-based Schlumberger business segment, provided oilfield services to Schlumberger customers in Iran and Sudan through non-US subsidiaries of SOHL. Although SOHL, as a subsidiary of Schlumberger, had policies and procedures designed to ensure D&M did not violate US sanctions, SOHL failed to train its employees to ensure compliance with these policies. As a result, D&M violated US sanctions against Iran and Sudan by: (1) approving and disguising the company’s capital expenditure requests from Iran and Sudan for the manufacture of new oilfield drilling tools and for the spending of money for certain company purchases; (2) making and implementing business decisions specifically concerning Iran and Sudan; and (3) providing certain technical services and expertise in order to troubleshoot mechanical failures and to sustain expensive drilling tools and related equipment in Iran and Sudan.
In announcing the settlement, Assistant Attorney General for National Security John P. Carlin, commented on the severity of SOHL’s transgressions and the importance of complying with US sanctions laws:
Over a period of years, Schlumberger Oilfield Holdings Ltd. conducted business with Iran and Sudan from the United States and took steps to disguise those business dealings, thereby willfully violating the U.S. economic sanctions against those regimes. The International Emergency Economic Powers Act is an essential tool that the United States uses to address foreign threats to national security through the regulation of commerce. Knowingly circumventing sanctions undermines their efficacy and has the potential to harm both U.S. national security and foreign policy objectives. The guilty plea and significant financial penalty in this case underscore that skirting sanctions for financial gain is a risk corporations ought not take.
U.S. Attorney Ronald C. Machen Jr. of the District of Columbia and Under Secretary Eric L. Hirschhorn of the U.S. Commerce Department’s Bureau of Industry and Security put out a similar warning to multi-nationals operating in the US. “This is a landmark case that puts global corporations on notice that they must respect our trade laws when on American soil,” said US Attorney Machen. And according to Under Secretary Hirschorn,“today’s criminal guilty plea demonstrates the Commerce Department’s commitment to aggressively prosecute multinational corporations for violations involving embargoed destinations. We will continue to pursue violators wherever they are located and whatever their size.”
* * *If you would like more information or would like to speak to a member of Constantine Cannon’s whistleblower lawyer team, please click here.