Texas shipper to pay $100 million for U.S. export violations
Weatherford International Ltd. in Houston and four of its subsidiaries have agreed to pay a $50 million civil penalty following allegations that the company illegally exported oil and gas equipment to Iran, Syria and Cuba, said the U.S. Commerce Department's Bureau of Industry and Security.
In specific, the company violated the Export Administration Regulations (EAR) and the Iranian Transactions and Sanctions Regulations (ITSR). BIS also alleged Weatherford exported items controlled for nuclear non-nonproliferation reasons to Venezuela and Mexico.
The fine is the largest civil penalty ever levied by BIS, according to the Commerce agency.
In a related action, the Department of Justice also said Tuesday it has imposed a $48 million monetary penalty on Weatherford pursuant to a deferred prosecution agreement. Justice is also imposing $2 million in criminal fines pursuant to guilty pleas by two of Weatherford's subsidiaries, for a combined total penalty of $100 million from the U.S. government.
"Serious consequences ensue when companies evade U.S. sanctions and export controls," said Under Secretary for Industry and Security Eric L. Hirschhorn, in a statement.
The case was investigated by BIS's Dallas Field Office and the Office of Chief Counsel, along with the Office of Foreign Asset Control (OFAC) and the U.S. Attorney's Office for the Southern District of Texas.
The other Weatherford subsidiaries charged as a result of the investigation were Weatherford Oil Tool Middle East Ltd., Weatherford Production Optimisation (U.K.) Ltd., Precision Energy Services ULC, and Precision Energy Services Colombia Ltd.
According to BIS, between 2004 and 2007, Weatherford transferred oil and gas equipment for drilling operations, valued in total at as much as $12 million, for export from the United States to Iran, via Weatherford's Dubai-based subsidiary, with knowledge that a violation would occur. BIS also charged that between 2005 and 2007, Weatherford transferred oil and gas equipment from the United States to Cuba via Canada with knowledge that a violation would occur. The items included essential oil and gas equipment such as mud motors, measuring-while-drilling orientation modules, and drill collars, and stabilizers which were valued in total at as much as $20 million.
In addition, the agency charged that between 2002 and 2007, Weatherford International Ltd. violated the regulations by exporting pulse neutron decay tools, which are controlled for reasons of nuclear non-proliferation, to Venezuela and Mexico without the required Department of Commerce licenses.
BIS said Weatherford agreed, as part of the settlement agreement, to hire an unaffiliated third-party expert in U.S. export control laws to audit its compliance with the regulations with respect to all exports or re-exports to Cuba, Iran, North Korea, Sudan, and Syria for the calendar years 2012, 2013 and 2014.