Among recent enforcement actions by the SEC were charges against a French oil and gas company for bribery; against a Dallas-based trader for front-running; and against proxy advisor ISS for confidentiality violations. Also, a former Goldman Sachs vice president agreed to settle earlier pay-to-play charges.
Oil Company Total to Pay $398 Million for Bribery of Iranian Official
The France-based oil and gas company Total has been charged by the SEC with violating the Foreign Corrupt Practices Act (FCPA) by paying $60 million in bribes to intermediaries of an Iranian government official for his help in securing valuable contracts to develop significant oil and gas fields in Iran.
The company has agreed to pay disgorgement of $153 million in illicit profits, and to retain an independent compliance consultant to review and report on Total’s compliance with the FCPA. It also agreed to pay a $245.2 million penalty as part of a deferred prosecution agreement.
The SEC said that Total negotiated a development contract in 1995 with the National Iranian Oil Company (NIOC) for the country’s Sirri A and E oil and gas fields. Before it did so, however, the company met with the Iranian official. It agreed to enter into a purported consulting agreement with an intermediary designated by the official.
The company also agreed that Total would make payments to the intermediary, disguising them as payments in the “consulting agreement,” when the money was really intended to convince the Iranian official to help obtain NIOC’s approval of the development agreement. Once the contract was executed, Total made the bribery payments; as a result, NIOC allowed Total to develop the Sirri A and E oil and gas fields and make more than $150 million in profits.
Total tried to disguise the bribes via that sham consulting agreement, and others, with intermediaries of the Iranian official and recorded the bribes in its books and records as legitimate “business development expenses” related to the consulting agreements. Total had inadequate systems to properly review the consulting agreements and lacked sufficient internal controls to comply with federal laws prohibiting bribery, the SEC said.
Total was charged not just by the SEC, but also in criminal proceedings by the Justice Department. It has also been charged by the prosecutor of Paris, François Molins.
Former Goldman Sachs VP Agrees to Settlement in Pay-to-Play Scheme
The SEC announced that former Goldman Sachs investment banker Neil Morrison agreed to pay $100,000 and be barred from the securities industry for five years. The measures are to settle charges for Morrison’s role in a pay-to-play scheme that involved undisclosed campaign contributions to then-Massachusetts State Treasurer Timothy Cahill while he was a candidate for governor.
As previously reported by AdvisorOne, Morrison was the vice president in Goldman’s Boston office who solicited underwriting business from the Massachusetts treasurer’s office beginning in July 2008. He was also “substantially engaged,” according to the SEC, in working on Cahill’s political campaigns from November 2008 to October 2010, and at times conducted campaign activities from the Goldman Sachs office during work hours, using the firm’s phones and email.
Goldman had already agreed to settle the charges in September, by paying $12 million—$7,558,942 in disgorgement, $670,033 in prejudgment interest and a $3.75 million penalty.
Elaine Greenberg, chief of the SEC Enforcement Division’s municipal securities and public pensions unit, said of the settlement, “This is the largest penalty ever imposed by the SEC against an individual for violations of the MSRB pay-to-play rules, and the first time an individual is barred from the securities industry for these violations. These tough sanctions against Morrison show that we take abuses of the pay-to-play rules in the municipal securities industry very seriously and will hold individuals accountable for their violations.” Senior Equity Trader Charged with Fraud in Front-Running