Parker Drilling Company: Entertainment for Officials, Relief for the Company

In the Parker Drilling Company FCPA case, Parker agreed to pay $3,050,000 in disgorgement to settle Securities and Exchange Commission allegations that it authorized payments for a Nigerian agent to entertain officials handling its customs disputes. The Commission’s action under the Foreign Corrupt Practices Act reached inside the company: former senior executives allegedly knew how the agent intended to use the money. For someone who saw the payment requests or the approvals, that connection between the agent’s assignment and management’s knowledge is the heart of the case.

The Commission announced the proposed settlement on April 16, 2013. It described Parker as a worldwide drilling services and project management firm, and the benefit at issue went beyond a customs bill. The release also reported that the Justice Department entered into a deferred prosecution agreement with Parker in parallel criminal proceedings.

A Customs Fine and the Right to Sell the Rigs

The customs bribery allegations concerned money authorized to influence the people resolving Parker’s customs problems. The Commission alleged that Parker authorized $1.25 million in payments to the Nigerian agent in 2004, despite former senior executives knowing that the intended use included entertaining the officials involved. The agent had been retained to help resolve the company’s customs disputes.

The Commission described an unexplained reduction in a previously assessed Nigerian customs fine after the agent’s work. That reduction was the same amount Parker later agreed to surrender as disgorgement, and it exceeded the payments authorized for the agent.

According to the Securities and Exchange Commission, Parker also received permission to nationalize and sell its Nigerian rigs after the agent’s work. In the agency’s account, the official decision affected what Parker could do with its equipment, as well as what it owed. That is why the customs correspondence belongs beside the agent’s payment requests: one describes the decision the company wanted, while the other can explain what management was prepared to fund to obtain it.

We see the absurdity in calling the expense entertainment when the people to be entertained are deciding the company’s customs dispute. The Commission’s allegation tied the proposed hospitality to officials with influence over an immediate company problem. The useful question inside the business is what the payment was meant to buy.

The Agent’s Assignment and the Approvals Behind It

In Parker’s case, the Securities and Exchange Commission connected the company’s authorization to the agent’s intended entertainment of officials and to former senior executives’ knowledge of that purpose. For a customs employee or finance specialist, the agent’s assignment supplies the business context. An engagement letter can describe the dispute the agent was hired to resolve, while payment requests and messages can show what the agent said would be needed. Comparing those records with the approvals and customs decision connects the expense to the result the company wanted.

The commercial reason for hiring an agent matters as much as the invoice description. In the published 2015 speech FCPA, Disclosure, and Internal Controls Issues Arising in the Pharmaceutical Industry, the Commission’s enforcement director emphasized understanding that business rationale and checking whether payments to agents were legitimate business expenses. Although the speech addressed pharmaceuticals, its discussion of customs clearance, government contact and expense controls speaks directly to the questions a customs intermediary raises.

The business purpose behind hospitality becomes clearer when the invitation sits beside the official’s pending decision. In the separate accounting-controls action involving BHP Billiton, the Commission found that some hospitality applications omitted an invitee’s government role or pending business involving that official. In either setting, who receives the benefit and what that person can decide give the expense its meaning.

What an Insider Can Connect

The evidence of a payment’s purpose can run across customs, operations and finance. A customs specialist may understand the disputed assessment and the decision needed to resolve it. Someone in finance may know what the payment request said, who approved it and how it was recorded. An employee working with the agent may know which officials the agent intended to entertain.

Those perspectives answer different parts of the same question. We connect the assignment and the government’s pending decision with the payment authorization, the explanation given for the spending and the people who knew its purpose.

For someone inside a drilling business, the most useful account may begin with a familiar expense and the conversation that explained it. You may know why an agent was selected, what changed in a customs dispute or why a payment needed senior approval. Our work starts with that knowledge and develops the connection between the business decision and the money.

What Money Determines the Reward?

Under the Securities and Exchange Commission whistleblower program, eligible whistleblowers can receive an aggregate 10% to 30% of qualifying money the government collects. The value of the information lies in how it contributes to a successful enforcement action. We assess that contribution with you, including what your knowledge of an agent, an approval or a customs decision adds to the payment story.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. That is a separate program, and our whistleblower experts match the conduct you know to the right one.

You Know Why the Agent Was Paid

If you saw customs payments approved with an understanding that officials would benefit, talk with our whistleblower experts about the decisions behind those payments. We build the case with you and bring in foreign bribery whistleblower lawyers who understand customs intermediaries and payments inside an international business. We stay beside you through the decisions that follow, from assessing the payment trail to building your strongest foreign bribery whistleblower case.