Helmerich & Payne Inc: What the Customs Broker’s Invoice Left Out

In the Helmerich & Payne Inc FCPA case, the company agreed to return $320,604, the Securities and Exchange Commission’s estimate of avoided costs, to settle allegations that its subsidiaries hid improper customs payments inside brokerage expenses. The agency’s order described approximately $185,673 in payments to move drilling equipment without required certifications, bring in prohibited materials and obtain partial inspections. If you worked with the shipments or approved the invoices, the telling detail was the gap between the expense description and what the customs official did.

H&P was a Tulsa-based holding company whose subsidiaries supplied oil drilling rigs, equipment and personnel to national and international oil companies. Its stock traded on the New York Stock Exchange, and the financial results of its Argentine and Venezuelan drilling subsidiaries flowed into its consolidated financial statements. A charge in a local broker’s bill could therefore become an entry in the accounts of a U.S. public company.

The Securities and Exchange Commission resolved this Foreign Corrupt Practices Act enforcement action on July 30, 2009. Its order addressed inaccurate books and records and inadequate internal accounting controls.

Two Subsidiaries, Two Customs Systems

The Commission alleged that H&P’s Argentine and Venezuelan subsidiaries used customs payments to avoid delays in moving drilling parts across borders. Both operations imported and exported equipment and materials for their rigs, and both dealt with customs inspections and duties. The operational pressure was to get the equipment through, but the official decisions described in the order differed by country.

For a drilling contractor, the shipment serves an operating rig. H&P’s business supplied the equipment and people oil companies needed under contract, so customs clearance was part of delivering that service. The agency’s account connects the payment to that practical pressure: moving parts through a border without incurring the expenses of proper import and export treatment.

Argentina and the Missing Certifications

In Argentina, the Commission alleged that the subsidiary paid approximately $166,000 to customs officials from 2004 through 2008, avoiding more than an estimated $186,000 in expenses. The payments allegedly bought clearance without required certifications, faster import processing and permission to bring in materials that Argentine law prohibited from being imported.

Most of those payments allegedly passed through customs brokers. The broker paid the officials and then billed H&P Argentina for brokerage services, including the improper payment in the amount invoiced.

That account gives a logistics employee something specific to recognize. The shipment’s missing certification or prohibited material explains what the payment bought. The broker’s invoice explains how the company reimbursed it. We would connect those records because either one alone leaves out a substantial part of the transaction.

Venezuela and the Partial Inspection

In Venezuela, the Securities and Exchange Commission alleged approximately $19,673 in payments to customs officials from 2003 through 2008. Those payments allegedly secured import or export clearance for noncompliant equipment and materials, or a partial inspection of imported goods instead of a full one.

The Venezuelan subsidiary also allegedly paid through customs brokers, who included the payments in their service invoices. The agency estimated more than $134,000 in avoided expenses. Here the difference between a full inspection and a partial one was part of the alleged benefit, making the inspection record as important as the invoice.

The two accounts show why customs bribery needs to be understood shipment by shipment. In Argentina, an employee might know that the required certification was missing. In Venezuela, an employee might know why a particular load received only a partial inspection. That knowledge gives the expense entry a meaning its label does not disclose.

What the Broker Invoices Called the Payments

In Venezuela, the descriptions included “urgent processing,” “urgent dispatch” and “customs processing.” According to the Commission, none of the improper payments was accurately reflected in H&P’s books and records.

The order makes the Argentine documentation problem particularly clear:

We see the absurdity in calling an expense extraordinary while leaving out what made it extraordinary. The Commission alleged that the descriptions concealed payments to government officials, yet the bill presented them as part of the broker’s service. Someone who knew the customs problem being solved could see what the accounting description had removed.

The allegedly false entry also traveled beyond the subsidiary. Both subsidiaries’ results formed part of H&P’s financial statements filed with the Commission, connecting the local bill to the parent’s reporting.

What Conduct Can Violate the FCPA?

Concealing improper payments in company accounts and failing to maintain adequate accounting controls can violate the Foreign Corrupt Practices Act. In H&P’s enforcement action, those were the two grounds of the Commission’s settled order. The agency alleged both that the books misrepresented the customs payments and that the controls failed to ensure the subsidiaries’ payments were properly recorded.

The books-and-records and internal-controls issues ask different questions. What did the entry say the company bought, and what did it actually buy? What controls governed the payment and its recording? That is why the invoice, the approval and the ledger belong in the same account of events. The person who knows the entries or approvals may hold a different part of the story from the person who dealt with the broker.

How an Employee’s Disclosure Reached the Accounts

According to the Securities and Exchange Commission, an employee disclosed potentially improper Argentine customs payments during a Foreign Corrupt Practices Act training session in May 2008. The information reached headquarters in Oklahoma, and the company commissioned an internal investigation involving independent forensic accountants. That review examined subsidiaries’ customs-payment practices in several Latin American countries. The agency said it uncovered fifty improper payments in Argentina and Venezuela.

The employee’s account concerned payments through an Argentine customs broker. The resulting investigation reached the Venezuelan operation too. That is the value of specific operational knowledge: it can identify the practice hidden inside a familiar expense category and give investigators something concrete to compare across subsidiaries.

H&P voluntarily reported its initial findings to the Commission’s staff in October 2008. In accepting the settlement, the agency credited the company’s prompt remedial acts, voluntary disclosure and cooperation.

The Same Disguise in a Different Supply Chain

A study of Fresenius Medical Care describes a similar separation between a customs payment and its expense label. The Journal of Forensic and Investigative Accounting published Fresenius Medical Care: A Case Study on the FCPA in 2022. Its account of the Saudi operation describes payments through a freight company to clear shipments faster or avoid penalties and fees, recorded as handling charges or miscellaneous expenses.

We see the same concealment problem across the two businesses. A drilling contractor’s broker and a medical supplier’s freight company occupied similar positions between the goods and the officials controlling their passage. In each account, an ordinary service description obscured what the payment was intended to accomplish.

What an Insider May Recognize

H&P’s case connects the shipment, the customs decision, the broker’s bill and the company’s accounts. We examine whistleblower evidence through those connections: what needed clearance, what changed at the border, who approved the expense and how it was recorded. A familiar invoice category becomes useful evidence when someone can explain the transaction underneath it.

A logistics employee may recognize the kind of certification or inspection issue alleged here. Someone in accounts payable may understand the broker’s billing, and an accountant may see how that charge reached the subsidiary’s ledger and the parent’s reporting. We bring those perspectives together around the particular payment and the official decision it was meant to influence.

The SEC whistleblower program addresses information about securities-law violations. Separately, a whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. We work through which program fits your information with you, keeping the opportunity tied to the conduct you actually know.

You Know What the Broker Was Paid to Do

If you know why a shipment cleared or what a vague brokerage charge covered, speak with our whistleblower experts. We work with you to build your strongest case from the payment and the records behind it, bring in Foreign Corrupt Practices Act whistleblower lawyers who understand overseas intermediaries and company accounts, and stay beside you as the case develops.