Deal Diary

In late March 2015, Schlumberger Oilfield Holdings Ltd. (SOHL), incorporated in the British Virgin Islands, agreed to plead guilty and pay a US$232.7 million penalty to the U.S. government for conspiracy to violate the International Emergency Economic Powers Act (IEEPA) by facilitating transactions in Iran and Sudan and exporting technical services involving these sanctioned countries. The penalty includes a US$155.1 million criminal fine, the largest IEEPA-related fine ever, as well as a US$77.6 million criminal forfeiture. The terms of the plea agreement also impose on SOHL a three-year period of corporate probation.

According to court filings, from 2004 to 2010, SOHL’s Drilling & Measurements (D&M) business segment, a U.S.-based oilfield services provider, facilitated trade with Iran and Sudan from D&M’s Texas office, and D&M employees in the United States made and implemented decisions directly affecting D&M’s Iran and Sudan operations. The court filings also indicate that D&M maintained an illegal process for approving capital expenditure requests for Iran and Sudan. Under this process, D&M personnel operating outside the United States apparently referred to Iran as “Northern Gulf” and Sudan as “Southern Egypt” or “South Egypt” in email communications with D&M personnel in the United States or used incorrect country codes that referred to non-embargoed countries. A U.S. manager then reportedly approved the disguised Iran- and Sudan-related requests.