Halliburton’s $29.2 million settlement with the US Securities and Exchange Commission last week stemmed from a decision by an anonymous whistleblower to report to the company a scheme to secure lucrative contracts in Angola.
After receiving the whistleblower tip, Halliburton disclosed the information to the US Department of Justice, which worked with the SEC to investigate. The whistleblower has remained anonymous since first contacting Halliburton in 2010.
Many FCPA actions result from whistleblowers’ actions, whether it’s internal reporting to a company or reporting directly to the SEC or DOJ. Whistleblower reports to the SEC about FCPA violations have increased every year since 2012, including last fiscal year, when there were 238.
The settlement with Halliburton follows the DOJ announcement in June that it had investigated but declined to prosecute two companies for FCPA violations. However, those companies did disgorge several million dollars in profit from the illegal sales in foreign countries.
The FCPA forbids paying bribes to foreign officials in order to generate or retain business, and requires companies to keep accurate books and records and maintain internal controls.
The SEC accused Halliburton of retaining a local company in Angola to win lucrative oilfield services contracts. The company was owned by a former Halliburton employee who had connections to an official at Angola’s state-owned oil company. That official was responsible for approving the contracts between Halliburton and Sonangol, the state oil company.
Halliburton won contracts that generated profits of over $14 million, while it directed more than $13 million in business to the local company.
A former vice president of Halliburton, Jeannot Lorenz, agreed to pay a $75,000 penalty to the SEC for his central role in evading Halliburton’s internal controls and falsifying books and records. According to the SEC, Lorenz took the lead in securing the cooperation of the local Angolan company, failed to bid out the contracts competitively, and did not have the contracts reviewed and approved by a special committee, as Halliburton’s policies required.
There have been far fewer FCPA enforcement actions so far this year compared to last year. By this time in 2016, there had already been 19 FCPA enforcement actions for a total of $1.6 billion in sanctions. The nine enforcement actions this year, including the two declination letters and disgorgements, have collected $301 million in sanctions.