A Closer Look At the Description of Parker Drilling’s Proposed Settlement with DOJ, SEC

 

Parker Drilling will pay a bunch of money, promise to be good and tattle on itself for three years. If not, all bets are off and DOJ and SEC can still unleash the hounds.

Parker Drilling Company (PKD) announced today that it had reached a proposed settlement with the Justice Dept. relating to foreign bribery allegations involving violations of the SEC related to parallel investigations that they conducted regarding possible violations of U.S. law, including the Foreign Corrupt Practices Act (FCPA).  The foreign areas where violations were alleged include Kazakhstan and Nigeria.  It appears they hired someone in Nigeria for “certain customs-related issues,” which sounds like code for “paying off Nigerian customs agents to let our stuff in and out of the country, which is probably ordinary course of business there but is illegal in the U.S. if an American company does it there.”

Parker Drilling refers to a resolution with DOJ, but the reality is that the resolution is “proposed” and subject to an actual agreement and court approval.

Furthermore, rather than settling and moving on, Parker Drilling would become subject to a deferred prosecution agreement (DPA).  Basically, DOJ does not “settle,” but promises to leave them alone if Parker Drilling:

  • accepts responsibility for, and agreement not to contest or contradict the truthfulness of, the allegations [Translation:  Agrees not to defend itself];
  • forks over $11.76 million;
  • reaffirms its commitment to compliance with the FCPA and other applicable anti-corruption laws in connection with the Company’s operations, and continuing cooperation with domestic and foreign authorities in connection with the matters that are the subject of the DPA [Translation:  Drafts a bunch of compliance policies, distributes FCPA memos and has employees sign acknowledgements of receipt and reading];
  • commits to continue to address any identified areas for improvement in the Company’s internal controls, policies and procedures relating to compliance with the FCPA and other applicable anti-corruption laws if, and to the extent, not already addressed [Translation:  See above]; and
  • agrees to self-report misconduct to the DOJ.

If Parker Drilling remains in compliance with the terms of the DPA throughout its effective period, the charge will be dismissed with prejudice.

As for the SEC, Parker Drilling will:

  • consent to the entry of a final judgment of permanent injunction barring future violations of the anti-bribery, books and records and internal controls provisions of the FCPA [Translation:  “We promise not to break the law.”]; and
  • pay various fines of $4.09 million, characterized in a bunch of different ways.

Parker Drilling recognized a charge of $15.85 million, or $0.13 per diluted share, for the fourth quarter of 2012 associated with the proposed settlement.

Speaking of drilling, enjoy Benny Benassi’s ‘Satisfaction.’ The models certainly seem to enjoy their work.

Links:
Parker Drilling Form 8-K

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