Washington, U.S. | – A subsidiary of US oil services giant Schlumberger will pay nearly $233mn and plead guilty to a charge it conspired to violate sanctions barring business with Iran and Sudan, the US Justice Department said yesterday.
Under a plea agreement that will conclude a six-year criminal investigation, Schlumberger subsidiary Schlumberger Oilfield Holdings will pay a $155.1mn criminal fine and forfeit another $77.6mn for violating the International Emergency Economic Powers Act, which allows the US government to block commerce with countries deemed a threat to the US. The criminal fine is the largest ever assessed in connection with a violation of that law.
Schlumberger Oilfield Holdings will plead guilty to one count of conspiring to violate that law by facilitating illegal transactions and engaging in illicit trade with Iran and Sudan.
“The guilty plea and significant financial penalty in this case underscore that skirting sanctions for financial gain is a risk corporations ought not to take,” US assistant attorney general John Carlin said.
The plea agreement calls for Schlumberger to be on probation for three years, during which time it must hire an independent consultant to review its sanctions procedures and compliance.
Schlumberger said it “has reviewed its long-standing compliance and accountability protocols and made appropriate enhancements to address the issues discovered through the investigation.”
Schlumberger halted oilfield operations in Iran in June 2013 and has now ceased activity in Sudan.
Schlumberger noted that Schlumberger Oilfield Holdings is a non-US subsidiary. That operation is based in the British Virgin Islands.
According to court documents, US business segment Drilling & Measurements (D&M) provided oil services to customers in Iran and Sudan from 2004-2010 through non-US subsidiaries of Schlumberger Oilfield Holdings.
The Justice Department said D&M employees in the US disguised capital expenditure requests from Iran and Sudan for the manufacture of new oilfield drilling tools and other expenses.
D&M personnel outside the US would frequently send emails to the D&M Global Asset Manager in the US regarding capex requests submitted on behalf of customers in Iran and Sudan. The workers outside of the US would refer to Iran as “Northern Gulf,” and Sudan as “Southern Egypt” or “South Egypt,” the Justice Department said.
The Justice Department said D&M workers would use a country code indicating a warehouse in the United Arab Emirates rather than the country codes for Iran and Sudan.
They also provided technical services to troubleshoot mechanical failures and sustain drilling tools, and the headquarters staff implemented business plans related to Iran and Sudan.
The announcement comes as the US and other global powers are trying to reach a political agreement with Iran regarding its nuclear program before the end of the month. US secretary of state John Kerry is scheduled to resume talks tomorrow with Iran’s foreign minister Mohammad Javad Zarif tomorrow in Lausanne, Switzerland.
In those talks, Iran has been pushing for all of the sanctions to be lifted. US officials have said that if the negotiations are successful the US and other members of the international community will provide Iran phased and proportionate sanctions relief, which could be reversed if Iran were to violate its commitments.
US lawmakers had threatened to push forward with new Iran sanctions if the parties had not reached an agreement by 24 March. Members of the Senate Foreign Relations Committee agreed to hold off on any action until 14 April, when the committee will consider a bill sponsored by committee chairman Bob Corker (R-Tennessee) and the panel’s ranking Democrat, Robert Menendez (New Jersey) that would allow Congress to review any deal with Iran before it could be implemented.
Iran was OPEC’s third largest oil producer in February, with output of 2.9mn b/d, up from 2.85mn b/d in January. While the nuclear talks are ongoing, Iran’s oil exports are limited to about 1.1mn b/d, not including condensate.