Last week, oil and gas giant Schlumberger plead guilty to facilitating trade with Iran and Sudan, in violation of U.S. sanctions. The parent company’s Schlumberger Oilfield Holdings Ltd. (SOHL), which is a wholly-owned subsidiary of Schlumberger Ltd., agreed to a guilty plea for conspiring to violate the International Emergency Economic Powers Act (IEEPA) by willfully facilitating illegal transactions and engaging in trade with Iran and Sudan.
SOHL will pay more than $232 million in penalties, which is the largest criminal fine in connection with an IEEPA prosecution in history. The company will also undergo a three-year period of corporate probation.
“Over a period of years, Schlumberger Oilfield Holdings Ltd. conducted business with Iran and Sudan from the United States and took steps to disguise those business dealings, thereby willfully violating the U.S. economic sanctions against those regimes,” said Assistant Attorney General Carlin.
According to federal prosecutors, a Schlumberger business unit called Drilling & Measurements (D&M), located in the United States, violated U.S. sanctions by approving and disguising capital expenditure requests from Iran and Sudan, making and implementing business decisions specifically concerning those countries, and providing technical services and expertise in order to troubleshoot mechanical issues for equipment located there.
Furthermore, the government cited email communications from D&M employees, which referred to Iran as “Northern Gulf” and Sudan as “Southern Egypt” or “South Egypt.” D&M personnel also apparently used other tactics and processes to disguise the identities of embargoed locations in order to obtain approval for more work in Iran and Sudan. No doubt the federal prosecutors used evidence like this to suggest a “willful” (i.e., “criminal”) intent, which goes a long way towards explaining the hefty price tag on Schlumberger’s penalty.
You can read more about this case at the Department of Justice press release here.
Tom Reynolds is the Vice President of Operations for Export Solutions, a consultancy firm which specializes in ITAR and EAR compliance.