October 16, 2006
Statoil ASA, an international oil company headquartered in Norway and majority-owned by the Government of Norway, has agreed to pay a total of $21 million to settle criminal and administrative charges for violating the anti-bribery and books-and-records provisions of the U.S. Foreign Corrupt Practices Act (“FCPA”). Statoil, which was subject to U.S. jurisdiction in this case because it is listed on the New York Stock Exchange, acknowledged paying bribes to an Iranian official in order to secure oil and gas rights in Iran. Pursuant to the terms of a deferred prosecution agreement, Statoil agreed to a penalty of $10.5 million. It also agreed to the appointment of an independent compliance consultant who will review and report on Statoil’s compliance during the three-year term of the agreement. Statoil also consented to the entry of an administrative order requiring the company to cease and desist from committing any future violations of the FCPA and to pay an additional $10.5 million in disgorgement.
The charges that led to the settlement arose from efforts by Statoil in 2001 and 2002 to focus on the Iranian market in its efforts to expand its business internationally. Statoil developed contacts with an Iranian government official who it believed had influence over the award of contracts for one of the largest natural gas fields in the world. Statoil entered into a "consulting contract" with an offshore intermediary company, the purpose of which was to induce the Iranian official to use his influence to assist Statoil in obtaining a contract to develop portions of the field and to develop prospects for future contracts involving Iranian oil and gas projects. Two bribes totaling over $5 million were made via wire transfers through a New York bank account and Statoil was awarded the sought after contract. Statoil falsified its books and records by recording the bribes as consulting fees.
This case serves as a reminder that both foreign and domestic public companies are subject to the FCPA if their stock trades on American exchanges. It also serves to highlight the fact that companies that are lawfully conducting business in Iran under U.S. sanctions laws must nevertheless be wary of the risks associated with corruption in the Iranian government.
© 2006 Gibson, Dunn & Crutcher LLP
The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.