May 17, 2011 / 3:18 PM / 8 years ago

UPDATE 3-Global pipe maker Tenaris settles US bribery probe

* Tenaris accused of bribes on pipeline contracts

* Company settles with DOJ, SEC

* SEC makes first use of deferred prosecution agreement

* Shares of Tenaris fall 3.3 pct (Adds details of settlements, DOJ comment, comment by SEC enforcement chief, other details)

By Jonathan Stempel

NEW YORK, May 17 (Reuters) - Tenaris SA, a major provider of steel pipes to the oil and gas industry, agreed to pay $8.9 million to settle U.S. criminal and civil probes accusing it of bribing Uzbekistan government officials to win business.

Tuesday’s settlements with the U.S. Department of Justice and Securities and Exchange Commission resolve allegations that Tenaris, which is controlled by Argentina conglomerate Techint, violated the federal Foreign Corrupt Practices Act.

It also includes the SEC enforcement unit’s first “deferred prosecution agreement,” which is designed to reward cooperation in investigations without the need for civil charges.

Tenaris (TENR.MI) (TS.N) TENA.BA is based in Luxembourg, and its shares are listed in Buenos Aires, Milan and New York. [ID:nN05219700]

Regulators said Tenaris admitted that employees in 2006 and 2007 bribed officials of state-controlled oil and gas production company OJSC O’ztashqineftgaz, sometimes known as OAO, and failed to properly record the payments.

The company also paid an agent a fee to learn rivals’ bids on four contracts, used the information to revise its own bids, and knew or was “substantially certain” that some or all of the fee would go to OAO employees, the Justice Department added.

Tenaris agreed to pay a $3.5 million criminal fine and enter a non-prosecution agreement with the Justice Department. That agency said the “substantially reduced” sum reflects Tenaris’ “extraordinary cooperation” in the case.

Separately, Tenaris agreed to give up $5.4 million of profit plus interest in settling with the SEC. That agency agreed not to bring civil charges if Tenaris took steps in the next two years to improve internal controls and oversight.

“The Tenaris foreign bribery scheme was unacceptable and unlawful, but the company’s response demonstrated high levels of corporate accountability and cooperation,” SEC enforcement chief Robert Khuzami said in a statement.

Tenaris’ cooperation and steps to improve its anticorruption procedures and training made the case “an appropriate candidate for the enforcement division’s first deferred prosecution agreement,” he added.

The company’s shares were down less than 2 percent in afternoon trading in Buenos Aires and New York. They closed down 3.3 percent in Milan.

RANGE OF REGULATORY OPTIONS

In a statement, Tenaris said it cooperated, voluntarily told regulators of the questionable payments, and shared with them the results of its own audit committee’s probe.

“This says that in cases where relatively small infractions took place, the DOJ and SEC will use a range of options that have fewer permanent consequences for the defendants,” said Danforth Newcomb, a lawyer at Shearman & Sterling in New York who specializes in the Foreign Corrupt Practices Act.

“They will be able to better tailor their responses and resources to the seriousness of the cases,” he added.

Khuzami had in January 2010 said the SEC would begin using cooperation agreements, deferred prosecution agreements and non-prosecution agreements to encourage individuals and companies to cooperate more in enforcement actions.

Regulators said the Caspian Sea region, including Uzbekistan, generated 5 percent of Tenaris’ oilfield services sales from 2003 to 2008. (Reporting by Jonathan Stempel in New York; Additional reporting by Anna Driver in Houston, Sarah N. Lynch in Washington, D.C. and Helen Popper in Buenos Aires; Editing by Tim Dobbyn and Matthew Lewis)

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