Baker Hughes pays $44 million in plea deal on foreign bribes

Houston Chronicle:

A unit of oil-field services company Baker Hughes has agreed to pay $44 million to end federal investigations into alleged violations of the Foreign Corrupt Practices Act.

This marks the largest penalty agreed to in a series of recent cases brought under the act, according to the Securities and Exchange Commission and the Department of Justice.

The company, the world's third-largest oil-field services firm, had disclosed in 2002 and 2003 that it was in talks with government officials about settling cases related to the investigations.

The commission claimed Baker Hughes Services International paid money to middlemen in Kazakhstan knowing that it would be used as bribes to win business.

It also alleged violations of the act in other countries.

Separately, the Justice Department brought criminal charges against the company related to is operations in Kazakhstan.

The settlement includes payment of a criminal fine of $11 million, a $10 million civil penalty, and more than $23 million in profit the company made in Kazakhstan.

The fine was especially high, commission officials said, because the company violated a related 2001 cease-and-desist order.

...
The Foreign Corrupt Practices Act has been around since the 1970's. Initially the SEC brought cases for failure to disclose the payment of bribes after then SEC Enforcement Chief Stanley Sporkin raised questions about how the payments could be made and not show up on company books. Businesses had justified the payments as the cost of doing business in certain countries and felt that the restrictions put them at a competitive disadvantage.

Bribes are inherently anti capitalistic. Rather than giving the business to the guy with the best product and service at the market is distorted by payments or kickbacks to corrupt officials. It is in fact a corruption of the marketplace. To engage in this type of conduct while already under a cease and desist order is more than dumb.

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