Iran General NewsNorway's Statoil is fined by SEC over Iran affair

Norway’s Statoil is fined by SEC over Iran affair

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Wall Street Journal: The Securities and Exchange Commission and Justice Department levied a $21 million fine against Norwegian oil company Statoil ASA for a payment it made in 2002 to win development of a critical Iranian petroleum project. The Wall Street Journal

By IAN TALLEY
October 14, 2006; Page A8

The Securities and Exchange Commission and Justice Department levied a $21 million fine against Norwegian oil company Statoil ASA for a payment it made in 2002 to win development of a critical Iranian petroleum project.

State-controlled Statoil has already paid Norwegian authorities $3 million for the affair, which involved a $15.2 million consultancy contract with Horton Investment Ltd. — a consultancy that also had links to the state-owned National Iranian Oil Co. — and led to the ouster of several top executives.

Norwegian investigators said the deal was illegal and meant to influence officials for entry into the South Pars project petroleum project in Iran. In October 2002, Statoil was awarded the development contract.

Statoil acknowledged making the payment and said it would accept the penalties. Statoil Chairman Jannik Lindbaek said the incident occurred under the company’s previous management and that the company has “long deplored” it.

The sanction is among the largest under the Foreign Corrupt Practices Act, a 1970s law that prohibits bribes to foreign officials. In the largest fine under the act, Titan Corp. last year agreed to pay $28.5 million to settle SEC allegations it covered up payments in six countries.

The SEC, which has been ratcheting up pressure on U.S. corporations to disclose any questionable payments they may have made overseas, said it wanted to make the Statoil fine high to send a clear signal to other companies.

“It was important for us to not just make this violation just another cost of doing business for the company,” said Helene T. Glotzer, SEC associate regional director.

The SEC said it would require Statoil to pay $10.5 million of any future profit from the Iranian project currently under construction. The Justice Department said it would accept the $3 million penalty levied against Statoil by Norwegian authorities as part of its $10.5 million penalty.

An official Iranian investigation last year found there had been no wrongdoing by any Iranian officials or companies.

In January, Statoil wrote down the South Pars project by $335 million following three years of delays, poor pre-engineering plans and higher commodity prices.

Separately, Norwegian safety officials upheld an order to shut down two offshore oil platforms, owned by Statoil and Norske Shell ASA, the Norwegian branch of Royal Dutch Shell PLC, because of defects in their lifeboat systems. The order will delay production of about 280,000 barrels per day of oil, or some 10% of the production that makes Norway the world’s third-largest oil exporter after Saudi Arabia and Russia.

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