The FCPA Blog | By: Steven Smart | August 07, 2017:
Halliburton’s recent decision to enter into a $29.2 million settlement with the SEC over alleged FCPA violations in Angola illustrates the challenges faced by corporate compliance officers in designing and implementing an effective FCPA compliance program.
Halliburton had a sophisticated FCPA compliance program at the time of the incidents that gave rise to the recent settlement. That’s no doubt due in part to the $579 million FCPA enforcement action against it and its former subsidiary KBR in 2009 for conduct in Nigeria, and the subsequent monitorship requirement with the DOJ.
How did Halliburton become an FCPA repeat offender? I think any company would have had difficulty preventing the incidents described in the SEC’s cease and desist order (see pdf) on the Angola matter.
Most third party due diligence programs would not have weeded out the local partner whose hiring created the problem.
Angola has a law requiring the use of local suppliers for a minimum percentage of contract value. Halliburton needed a local partner, and the solution in this case was a former employee who apparently was a local resident and in a position to provide real estate maintenance, travel and ground transportation services.
There appears to have been a legitimate business purpose to the engagement, despite an initial attempt to set the local company up as a commissioned sales agent (which was abandoned due to Halliburton’s strict requirements around agents).
Even if this local company would not have been engaged but for the Angolan local content requirements, it still looks like services were going to be provided and the “legitimate business purpose” test for due diligence would have been met.
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