Schlumberger Fined for Violating Iran Sanctions
Schlumberger Oilfield Holdings has agreed to plead guilty to U.S. Department of Justice charges that the company willfully violated trading sanctions imposed on Iran and Sudan.
The company, SOHL, is a wholly-owned subsidiary of oil and gas services provider Schlumberger Ltd, and it has also agreed to pay a $232,708,356 penalty. The plea agreement, which is contingent upon the court’s approval, also requires the company to submit to a three-year period of corporate probation.
SOHL’s monetary penalty includes a $77,569,452 criminal forfeiture and an additional $155,138,904 criminal fine. The criminal fine represents the largest to date imposed in connection with an International Emergency Economic Powers Act prosecution.
In addition to SOHL’s commitments, Schlumberger has agreed to maintain its cessation of all operations in Iran and Sudan and to hire an independent consultant to review the company’s sanctions policies and procedures.
The guilty plea concludes a joint investigation commenced in 2009. “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,” said Assistant Attorney General for National Security John P. Carlin.
“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.”
“This is a landmark case that puts global corporations on notice that they must respect our trade laws when on American soil,” said U.S. Attorney Ronald C. Machen Jr. of the District of Columbia. “Even if you don’t directly ship goods from the United States to sanctioned countries, you violate our laws when you facilitate trade with those countries from a U.S.-based office building. For years, in a variety of ways, this foreign company facilitated trade with Iran and Sudan from Sugar Land, Texas. Today’s announcement should send a clear message to all global companies with a U.S. presence: whether your employees are from the U.S. or abroad, when they are in the United States, they will abide by our laws or you will be held accountable.”
According to court documents, starting on or about early 2004 and continuing through June 2010, Drilling & Measurements (D&M), a United States-based Schlumberger business segment, provided oilfield services to Schlumberger customers in Iran and Sudan through non-U.S. subsidiaries of SOHL. Although SOHL had policies and procedures designed to ensure that D&M did not violate U.S. sanctions, SOHL failed to train its employees adequately to ensure that all U.S. persons, including non-U.S. citizens who resided in the United States while employed at D&M, complied with Schlumberger’s sanctions policies and compliance procedures.
As a result D&M violated U.S. 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
(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.
Although CAPEX approvals were ordinarily sought through an automated computer system, D&M personnel outside the United States frequently sent emails to the United States justifying particular requests, many of which related to requests submitted by or on behalf of Iran and Sudan. In these email communications, Iran was referred to as “Northern Gulf” and Sudan as “Southern Egypt” or “South Egypt”.
In 2009, in consultation with the U.S. Department of State, Schlumberger agreed to no longer pursue new oilfield contracts in Iran. In 2011, Schlumberger voluntarily decided to cease providing oilfield services in Iran and the Republic of the Sudan (North Sudan). As of June 30, 2013, Schlumberger ceased providing oilfield services in Iran, and presently, Schlumberger has ceased providing oilfield services in North Sudan as well.