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Baker Hughes pleads guilty in Kazakh oil bribery case
AFP
WASHINGTON
Petroleumworld.com 04 27 07US oilfield service firm Baker Hughes pleaded guilty Thursday to criminal charges that it bribed a Kazakh official while seeking to win a major contract tied to the giant Karachaganak oil field, US prosecutors said.
Justice Department officials said Baker Hughes had agreed to pay a criminal fine of 11 million dollars in one of the biggest sanctions ever brought under the Foreign Corrupt Practices Act.
"Today's announcement demonstrates that the Department of Justice will continue to hold US companies and their subsidiaries accountable for foreign bribery," said assistant attorney general Alice Fisher.
Aside from the 11 million dollar penalty, Baker Hughes also agreed to pay civil fines of over 34 million dollars in a separate settlement with the US Securities and Exchange Commission.
The case revolved around Baker Hughes Services International Inc., a subsidiary of Baker Hughes Inc. The firm entered its guilty plea at a Texas court hearing earlier Thursday before District judge Gray Miller.
Baker Hughes said in a statement that the accords resolved "previously disclosed" probes into its business practices.
"These parallel settlements resolve the investigations, disclosed in 2002 and 2003, into Baker Hughes' operations in Angola, Kazakhstan and Nigeria," the company said.
The company admitted it had violated the anti-bribery act by paying 4.1 million dollars in bribes over a two-year period to an unnamed "intermediary."
Prosecutors said the "intermediary" was a Kazakh official and that Baker Hughes "believed (the individual) would transfer all or part the corrupt payments to an official of Kazakhoil, the state-owned oil company."
The illicit payments were processed through a London bank account controlled by "a consulting firm" based on the Isle of Man. Investigators did not identify the consulting group, but said the bribes were made in part at the behest of Kazakh officials.
The US firm, after signing off on the corrupt payments, was subsequently awarded a lucrative oilfield services contract tied to the huge Karachaganak crude field in northwest Kazakhstan.
"The record penalties leveled in this case leave no doubt that foreign bribery is bad for business," Fisher warned, adding that the government brought the case in part to ensure a level "playing field" for US firms operating overseas.
Chad Deaton, Baker Hughes's chief executive, said: "Since the commencement of these investigations in 2002, we have cooperated fully with the SEC and DOJ."
The firm also entered into a deferred prosecution accord with the government as part of its settlement, as well as agreeing to adopt a "comprehensive anti-bribery compliance program."
AFP 26 2146 GMT 04 07
Copyright© 2007 AFP. All Rights Reserved.
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