As announced by the US Department of Justice on Wednesday, Schlumberger Oilfield Holdings Ltd. agreed to plead guilty and pay over $232.7 million for violating US sanctions by facilitating trade with Iran and Sudan.
The plea agreement also includes a three year probationary period for the company and represents the largest ever criminal fine in connection with IEEPA. The company established a business segment in the US (D&M) which provided oilfield services to Schlumberger customers in Iran and Sudan through non-U.S. subsidiaries. Internal company processes were designed to disguise the identities of the embargoed locations in the automated computer system in order to obtain approval from the D&M Global Asset Manager in the United States. D&M was illegally involved in the day-to-day operations in Iran and Sudan, including through U.S. persons working at D&M headquarters, and this involvement occurred with D&M’s knowledge and understanding of the applicability of U.S. sanctions laws to the company.
In sum the company violated U.S. sanctions against Iran and Sudan by:
- Approving and disguising the company’s capital expenditure requests from Iran and Sudan for the manufacture of new oilfield drilling tools and for the spending of money for certain company purchases
- Making and implementing business decisions specifically concerning Iran and Sudan
- Providing certain technical services and expertise in order to troubleshoot mechanical failures and to sustain expensive drilling tools and related equipment in Iran and Sudan
“This is a landmark case that puts global corporations on notice that they must respect our trade laws when on American soil,” said U.S. Attorney Machen. “Even if you don’t directly ship goods from the United States to sanctioned countries, you violate our laws when you facilitate trade with those countries from a U.S.-based office building. For years, in a variety of ways, this foreign company facilitated trade with Iran and Sudan from Sugar Land, Texas. Today’s announcement should send a clear message to all global companies with a U.S. presence: whether your employees are from the U.S. or abroad, when they are in the United States, they will abide by our laws or you will be held accountable.”
“Today’s criminal guilty plea demonstrates the Commerce Department’s commitment to aggressively prosecute multinational corporations for violations involving embargoed destinations,” said Under Secretary Hirschhorn. “We will continue to pursue violators wherever they are located and whatever their size. I commend the Office of Export Enforcement and the Department of Justice for their outstanding efforts to investigate and prosecute this case.”
Let this hefty, record-setting fine, be an example to all global companies considering themselves insulated from prosecution simply by implementing policies and hiring compliance personnel without proper ongoing training. The plea agreement specifically states that it was Schlumberger’ s failure to train its employees adequately to ensure that all U.S. persons, including non-U.S. citizens who resided in the United States while employed at D&M, complied with Schlumberger’s sanctions policies and compliance procedures, which contributed to the violations.