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Parker Drilling unit settles Scotland enforcement action for Kazakhstan bribes

An oil and gas services firm based in Scotland was fined £170,000 ($267,000) after admitting that a former Kazakhstan-based employee paid bribes to win work.

International Tubular Services (ITS) admitted benefiting from corrupt payments, Scotland’s prosecution service said Wednesday.

The payments were made to secure work from a customer in the Central Asian republic. The customer wasn’t named in the reports.

ITS provides drilling and pressure control equipment to oil companies.

The corruption was discovered after Parker Drilling Company bought the company.

Aberdeen-based ITS self reported the payments in November 2013, the prosecution service said. The report led to the funds being claimed by the prosecution’s civil recovery unit under proceeds of crime legislation.

Houston-based Parker Drilling Company itself paid nearly $16 million to resolve Foreign Corrupt Practices Act charges in April 2013. The company bribed Nigerian officials through an agent to circumvent customs and tax laws.

Parker paid the DOJ a criminal penalty of $11.7 million. It also resolved civil charges with the SEC by paying $4.1 million.

The case arose from the investigation of global logistics firm Panalpina.

In 2010, Panalpina and five of its oil-and-gas services customers resolved FCPA offenses with the DOJ and SEC for a combined $236.5 million.

Parker acquired privately held ITS and some of its affiliates in April 2013. In the year before the acquisition, ITS had revenues of $119 million.

Linda Hamilton, head of Scotland’s civil recovery unit, said: “Bribery and corruption undermines legitimate businesses and can harm economic development, and we are committed to tackling it wherever it is found.”

She said factors in a settlement can include self-reporting, putting in place effective systems to prevent corruption from recurring, and repaying the “illegitimate profits.”

“In this case,” Hamilton said, “we have recovered over £170,000 from ITS, which will be transferred to the Scottish government to be reinvested back into Scottish communities.”

The prosecution service said, “In view of any criminal investigation of others that may follow, it is not possible to provide any further details of the corrupt payments.”

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Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.

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