Enforcement Action

 

Docket or Case Number:    N/A

Court:    N/A

Initiation Date:    05/17/2011  Information

Prosecuting Agency:    US Securities and Exchange Commission

Name of Prosecuting Attorneys:   

  • Cheryl J. Scarboro, SEC Headquarters

Assisting Agencies:    U.S. Department of Justice , Federal Bureau of Investigation

Type of Action:    N/A

Origin of the Proceeding:    Voluntary disclosure

Whistleblower:    Unknown

Case Status:    Resolved


Summary

Tenaris S.A., headquartered in Luxembourg, was a global manufacturer and supplier of steel pipe products and related services to the oil and gas industry throughout the world.

OJSC O'ztashqineftgaz ("OAO") was a wholly owned subsidiary of Uzbekneftegaz, the state holding company of Uzbekistan's oil and gas industry.

According to the Non-Prosecution Agreement, from April 2006 to May 2007, Tenaris bid on a series of contracts with OAO to supply OAO with steel pipe for use in the development and production of oil and natural gas in Uzbekistan. In December 2006, Tenaris was introduced to an OAO agent to help Tenaris bid on additional contracts with OAO. As an incentive to retain the OAO agent, the agent offered Tenaris access to confidential bidding information of competitors obtained from officials in OAO's tender department, who would allow Tenaris to submit revised bids after reviewing this confidential information. Tenaris used the confidential competitor bid information to submit revised bids in order to increase the likelihood of being awarded contracts. Tenaris agreed to pay the OAO agent approximately 3 to 3.5% of the awarded contracts in exchange for OAO agent's services, knowing that all or a portion of the money would be given by the OAO agent to one or more OAO employees.

On July 2, 2007, Tenaris wired approximately $32,140.67 to the OAO agent through an intermediary bank. In total, OAO paid Tenaris approximately $8,934,573 for pipeline under the awarded contracts, and Tenaris profited by approximately $4,786,438 from those contracts.

On May 17, 2012, Tenaris entered into the SEC's first-ever Deferred Prosecution Agreement, agreeing to pay $4,786,438 in disgorgement, plus prejudgment interest of an estimated $641,900 for a total of$5,428,338. The Agreement allowed Tenaris to “neither admit nor deny” the allegations with only the provison that it could not dispute the facts in any subsequent SEC proceeding.

In a related action, Tenaris entered into a Non-Prosecution Agreement with the DOJ, agreeing to pay a $3,500,000 criminal penalty.

Country(ies) involved:    Uzbekistan

Sanction to Bribe Ratio:    N/A

Sanction to Revenue Ratio:    $5,428,338 / $8,934,573 = 60.76 %

Sanction to Profit Ratio:    $5,428,338 / $4,786,438 = 113.41 %

Number of Related Enforcement Actions (Including This Enforcement Action):    2

Country(ies) involved:    Uzbekistan

Total $ Bribery Payments:    N/A

Total $ Revenue Generated from Bribery:    $8,934,573

Total $ Profit Earned or Expenses Avoided from Bribery:    $4,786,438

Total $ Monetary Sanctions:    $8,928,338

Sanction to Bribe Ratio:    N/A

Sanction to Revenue Ratio:    $8,928,338 / $8,934,573 = (99.93 %)

Sanction to Profit Ratio:    $8,928,338 / $4,786,438 = (186.53 %)

Name:    Tenaris S.A.

Place of Incorporation:    Luxembourg

HQ Country(ies):    Luxembourg

Entity Type:    Public Company

FCPA Claims:    Books & Records, Primary, Issuer (15 U.S.C. § 78m (b)(2)(A)) ; Internal Controls, Primary, Issuer (15 U.S.C. § 78m(b)(2)(B)) ; Anti-Bribery, Primary, Issuer (15 U.S.C. § 78dd-1)

Related Claims:    N/A

Statutory Basis for FCPA Jurisdiction:    Issuer

Period of Bribery:   2006 - 2007

Total Bribery Payments:    N/A

Total Revenue Generated from Bribery:    $8,934,573

Total Profit Earned or Expenses Avoided from Bribery:    $4,786,438

Country(ies) involved:    Uzbekistan

Officials Potentially Influenced (Name; Title; Organization): 

  • Name N/A, Employees; OJSC O'ztashqineftgaz ("OAO")
  • Name N/A, Employees; Uzbekexpertiza JSC ("Uzbekezpertiza")

Defendant-Related Entities Involved in the Misconduct:    N/A

Third-Party Intermediary:   

  • OAO Agent , Agent/Consultant/Broker

Type of Bribe:   Money

Cash, Wire or Check:    Wire Transfer

Purpose of Bribe:    Influence the adjudication of disputes, lawsuits, or enforcement actions, Obtain/retain business, Prevent/reduce competition

TRANSACTION OVERVIEW
Bribes to OAO employees

Period of Bribery:   2006 – 2007

Total Bribery Payments:    $32,141

Total Revenue Generated from Bribery:    $8,934,573

Total Profit Earned or Expenses Avoided from Bribery:    $4,786,438

Country(ies) involved:    Uzbekistan

Officials Potentially Influenced (Name; Title; Organization):  

  • Name N/A, Employees; OJSC O'ztashqineftgaz ("OAO");
  • Name N/A, Employees; Uzbekexpertiza JSC ("Uzbekezpertiza");

Defendant-Related Entities Involved in the Misconduct:    N/A

Third Party Intermediary:    OAO Agent - Agent/Consultant/Broker

Type of Bribe:   Money

Cash, Wire or Check:    Wire Transfer

Purpose of Bribe:    Influence the adjudication of disputes, lawsuits, or enforcement actions, Obtain/retain business, Prevent/reduce competition

Misconduct by Subsidiary?  No


M&A Negotiated or Completed During Misconduct, Investigation, or Resolution?     No

Re: Tenaris S.A.

  • Inadequate internal controls or auditing

Mitigating Factors Referenced by the Government (Company Defendants):

Defendant Self-Report Cooperation Voluntary Remedial Measures Misconduct Limited to Low Level Individuals Other factors
Tenaris S.A.    

Aggravating Factors Referenced by the Government (Company Defendants):

Defendant Insufficient Cooperation Insufficient Remedial Measures
Tenaris S.A.    

Total Monetary Sanctions for the Action:    $5,428,338

Case Status:    Resolved


Disposition:    Deferred Prosecution Agreement

Date of Disposition:    05/17/2011

Tenaris S.A.

—  Total Monetary Sanctions for Defendant:    $5,428,338

—  Compliance Obligation:    Yes

—  Reporting Obligation:    No reporting

—  Admission of Guilt/Acceptance of Responsibility:    No

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