Netherlands-based oil and gas services provider Frank’s International NV agreed Wednesday to pay the SEC $8m to resolve Foreign Corrupt Practices Act (FCPA) violations for bribing Angolan officials through a sales agent.

Frank’s, now known as Expro Group Holdings NV, was charged by the SEC in an administrative order with violating the FCPA’s anti-bribery, books and records, and internal accounting controls provisions.

The company settled without admitting or denying the SEC’s findings, paying a civil penalty of $3m and approximately $5m in disgorgement and pre-judgment interest.

Facts

According to the SEC, from 2008 through 2014, Frank’s paid commissions to a sales agent in Angola when employees knew there was a high probability that the agent would use the commissions to bribe Angolan government officials.

The SEC said Frank’s retained the agent “without conducting due diligence and without a contract in place”.

The agent didn’t have “the relevant technical background to advocate on the company’s behalf before [state-owned] Sonangol and, in fact, did not attend technical meetings with Sonangol,” the SEC said. “However, he had personal relationships with [an Angola official] and other Sonangol employees.”

Between 2008 and 2014, the company paid the agent about $5.5m. During that time, it won four new contracts in Angola, the SEC said.

Certain executives hid these actions from Frank’s chief financial officer and chief accounting officer when they were asked questions about the commission payments. To satisfy these requests for supporting documentation, Frank’s Regional COO and its VP of Africa & the Middle East approved an agency agreement with one of the Angola agent’s companies that was backdated, the SEC said.

Although some of Frank’s leadership and oversight of West Africa operations was located abroad, the SEC said, many senior executives, including the general counsel and CFO, were located in Houston, Texas.

FCPA applicability

In August 2013, Frank’s successfully completed its initial public offering, and became an issuer for purposes of the FCPA, when its shares began trading on the New York Stock Exchange.

Frank’s Angolan Operations continued paying the Angola agent commissions pursuant to the third agency agreement and continued to record the suspect payments as “commissions” after its IPO.

The SEC considered Frank’s self-reporting, remedial actions, and cooperation it extended the Commission staff in deciding to offer the cease-and-desist order.

The company’s cooperation included bringing witnesses from outside the United States for interviews, voluntarily producing relevant documents, and sharing facts uncovered during its internal investigation – including facts relating to conduct that occurred before becoming an issuer.

Its remediation included terminating the involved employees, terminating the relationship with the Angola agent, improving its internal accounting controls, and making further enhancements to its internal controls environment and compliance program following its merger with Expro Group.