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Noble Execs Charged By SEC

Three executives from oil services firm Noble Corporation were charged today by the Securities and Exchange Commission with bribing officials in Nigeria in exchange for illegal import permits for drilling rigs.

The SEC filed a civil complaint in federal court in Houston alleging violations of the Foreign Corrupt Practices Act against former Noble CEO Mark A. Jackson and James J. Ruehlen, the current head of Noble’s subsidiary in Nigeria.

Thomas F. O’Rourke, a former controller and head of internal audit at Noble, was charged in a separate complaint with violating the FCPA. He agreed to settle by paying a $35,000 civil penalty.

According to the SEC, the defendants 'bribed customs officials to process false paperwork purporting to show the export and re-import of oil rigs, when in fact the rigs never moved.' The bribes were paid through a customs agent for Noble’s Nigerian subsidiary with Jackson and Ruehlen’s approval.

Nigeria limits the time imported drilling rigs can work in the country or its territorial waters. If the rigs stay longer, the owner becomes liable for full import duties and other taxes. The SEC alleged that the defendants bribed customs officials to obtain eleven illegal import permits and twenty-nine illegal extensions.

In 2010, Noble Corporation paid $8.1 million to settle FCPA offenses. It was one of seven oil and gas services companies caught in the industry sweep following revelations about Panalpina's practices in Nigeria and other countries. The DOJ and SEC said Noble paid $74,000 to a Nigerian freight forwarding agent, knowing that some of the payments would be passed on as bribes to Nigerian customs officials. Noble falsely recorded the bribes as legitimate business expenses.

The company paid a criminal penalty of $2.6 million and entered into a non-prosecution agreement with the DOJ. In its SEC settlement, Noble paid $5.5 million in disgorgement of profits and prejudgment interest.

In connection with the 2010 settlement, the DOJ said Noble's non-prosecution agreement recognized the company's "early voluntary disclosure, thorough self-investigation of the underlying conduct, full cooperation with the department and extensive remedial measures undertaken by the company. As a result of these factors, among others, the department agreed not to prosecute Noble or its subsidiaries for the bribe payments, provided that Noble satisfies its ongoing obligations under the agreement."

The SEC alleged today that Jackson and Ruehlen paid 'hundreds of thousands of dollars in bribes' to Nigerian customs officials. 'Jackson approved the bribe payments,' the SEC charged, 'and concealed the payments from Noble’s audit committee and auditors. Ruehlen prepared false documents, sought approval for the bribes, and processed and paid the bribes.'

The SEC’s complaint alleged that Jackson and Ruehlen violated the antibribery provisions of the FCPA and its internal controls and false records provisions, and that they aided and abetted Noble’s violations of the books and records and internal controls provisions.

Jackson was also charged with misleading auditors by signing false certifications of Noble’s financial statements. The SEC alleged that he's also liable as a 'control person' for violations of the antibribery, books and records, and internal controls provisions by Noble, Ruehlen, and O’Rourke.

The complaint against O’Rourke alleged that he aided and abetted Noble’s violations of the FCPA and directly violated the internal controls and false records provisions.

View the SEC's February 24, 2012 release here.

Download the civil complaint in SEC v. Mark A. Jackson and James J. Ruehlen here.

Download the civil complaint in SEC v. Thomas F. O’Rourke here.

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