Nabors Industries Ltd. Under Investor Investigation Over Possible Foreign Bribery

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Company Name(s): 
Nabors Industries
Affected Securities: 
NYSE: NBR

After the U.S. Department of Justice begun looking into allegations against Nabors Industries Ltd. as a customer of Panalpina Group in connection with possible foreign bribery an investigation on behalf of current long term investors in Nabors Industries Ltd. (NYSE:NBR) was announced.

The investigation by a law firm on behalf of current long term investors in Nabors Industries Ltd. (NYSE:NBR) concerns whether certain officer and directors of Nabors Industries Ltd. possibly violated the U.S. Foreign Corrupt Practices Act (“FCPA”), which prohibits companies from making improper payments to foreign officials for the purpose of obtaining or keeping business.

Nabors Industries Ltd. is a drilling contractor that conducts oil, gas and geothermal land drilling operations in the United States Lower 48 states, Alaska, Canada, South America, Mexico, the Caribbean, the Middle East, the Far East, Russia and Africa. Nabors Industries Ltd. reported in 2006 $4.829billion in 12 months total revenue, in 2007 $4.94billion, in 2008 $5.303billion, and in $3.503billion. Its Net Income went from $1.02billion in 2006 to a Net Loss of $85.55million.

In 2007, Nabors Industries received an inquiry from the United States Department of Justice relating to its investigation of one of its vendors, Panalpina group, and their compliance with the U.S. Foreign Corrupt Practices Act. According to the Justice Department “the Foreign Corrupt Practices Act was enacted for the purpose of making it unlawful for certain classes of persons and entities to make payments to foreign government officials to assist in obtaining or retaining business. Specifically, the anti-bribery provisions of the FCPA prohibit the willful use of the mails or any means of instrumentality of interstate commerce corruptly in furtherance of any offer, payment, promise to pay…to a foreign official to influence the foreign official in his or her official capacity … to secure any improper advantage in order to assist in obtaining or retaining business for or with, or directing business to, any person.”

Panalpina Group, which has 14,000 employees and branches in more than 80 countries, is a supplier of forwarding and logistics services, specializing in end-to-end supply chain management solutions and intercontinental air freight and ocean freight shipments. The inquiry has focused on transactions in Kazakhstan, Saudi Arabia, Algeria and Nigeria with and involving Panalpina. The investigation includes a review of certain amounts paid to and by Panalpina in connection with obtaining permits for the temporary importation of equipment and clearance of goods and materials through customs.

In 2009 a court in Algeria entered a judgment of approximately $19.7 million against Nabors Industries Ltd. related to alleged customs infractions.

The Wall Street Journal recently reported that Panalpina is expected to pay around $85 million in fines to settle charges that it violated the U.S. Foreign Corrupt Practices Act.

Shares of Nabors Industries Ltd. traded during 2006 and 2007 at roughly $30 per share, before NBR shares climbed to as high as almost $50 per share in mid 2008. Since its all time High in mid 2008 NRB share lost significantly value and traded in March 09 as low as $8.58 per share. Since its more than 10 year low NRB shares were able to regain some value and traced currently under $20 per share.