Violation of Iran sanctions nets largest fine in history for oil field service company

Fuel Fix:

A unit of oil field services firm Schlumberger is planning to pay about $232.7 million in U.S. penalties as part of a guilty plea for illegally conducting business with the sanctioned Iran and Sudan, the Justice Department said Wednesday.

The deal marks the end of a six-year federal probe into the company’s activities in those two Middle Eastern countries, which found the subsidiary “took steps to disguise” its overseas dealings for several years.

Schlumberger’s $155.1 million criminal fine is the largest penalty ever billed for violating U.S. sanctions set by the International Emergency Economic Powers Act. The firm, which has its main offices in Houston, Paris and the Hague, will also forfeit $77.6 million in profits to U.S. authorities.

“This is a landmark case that puts global corporations on notice that they must respect our trade laws when on American soil,” U.S. attorney Ronald Machen Jr. said in a written statement. Schlumberger wound down its business in Iran in the second quarter of 2013 and exited Sudan before the plea deal.

As part of the plea agreement, unit Schlumberger Oilfield Holdings Ltd. will serve three years of probation and continue cooperating with the government.

The parent Schlumberger won’t be allowed to restart its operations in Iran and Sudan and will be required to report on its compliance with U.S. sanctions during that time. It also agreed to hire an outside consultant to review its sanctions policies and procedures, the Justice Department said. The deal is pending approved by a federal court.
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The facts alleged suggest an internal compliance problem.  Empowering a compliance officer to reject business in countries under sanctions would have saved the company significant dollars.  It also appears that for this company, a lifting of sanctions in Iran and Sudan will not result in a return to business as usual.