Schlumberger Limited. Under Investor Investigation Over Possible Foreign Bribery

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Recently the Wall Street Journal said that new documents have emerged relating possible foreign bribery in Yemen by Schlumberger Ltd. Meanwhile the investigation on behalf of current long term investors in shares of Schlumberger Limited. (NYSE:SLB) in effort to hold certain officers and directors liable is ongoing.

The Wall Street Journal reported on November 18, 2010 that additional documents have emerged relating additional concerns in relation possible foreign bribery by Schlumberger.

Several years ago the U.S. Department of Justice begun already looking into allegations against Schlumberger Ltd over possible bribery in Yemen. Nearly a decade ago Schlumberger Limited planned a Data Bank Development Project of seismic information on oil exploration in Yemen, a joint project with the government.

In addition to the probe by the Justice Department an investigation by a law firm on behalf of current long term investors in Schlumberger Limited. (NYSE:SLB) concerning whether in connection with this project certain officers and directors of Schlumberger 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, was announced.

The Wall Street Journal reported in October that allegations by the U.S. Department of Justice concern contract payments Schlumberger Ltd. made to Yemen based Zonic Invest Ltd. when Schlumberger sought approval from Yemen's Petroleum Exploration and Production Authority to create the oil-exploration databank in Yemen. At that time Zonic Invest Ltd 's general director was Tawfik Saleh Abdullah Saleh, a nephew of Yemeni President Ali Abdullah Saleh. The Wall Street Journal said Schlumberger Ltd. documents reveal that in 2002 before signing off on the project the Petroleum Exploration and Production Authority urged Schlumberger Ltd to hire Zonic Invest Ltd. Schlumberger Ltd. then agreed to hire Zonic Invest and pay it a $500,000 signing bonus and then project went forward, so the Wall Street Journal. Schlumberger paid Zonic Invest Ltd. the signing bonus in late 2003 and the companies' dealings spanned several years even though they had yet to sign a contract, so the Wall Street Journal. Then in May 2004 a Schlumberger manager reportedly "resisted signing a contract with Zonic, but he started receiving threatening calls", which stopped after the contract was signed. Further more the Wall Street Journal reports that people familiar with the matter said some services Zonic Invest Ltd. provided from 2001 to 2007 were done at above-market rates or were unnecessary. One document, so the Wall Street Journal, shows Zonic Invest billed Schlumberger Ltd more than $200,000 for certain computer hardware, although Schlumberger Ltd. itself was among the leading providers of such hardware. In total Schlumberger Ltd reportedly paid Zonic Invest $1.38 million from 2003 to 2007, but the deal fell apart after Zonic demanded more money. The Schlumberger Ltd. compliance officers became aware of the matter in 2008 and carried out investigations.

According to the recent report by the Wall Street Journal additional documents show that Schlumberger employees raised concerns in 2008 also about payments for cars Schlumberger Ltd rented for years at above-market rates. The documents reportedly say that Schlumberger rented between 2005 and 2007 a Toyota Camry and two Toyota Corollas for a total of $6,000 a month, the local market rate for renting the cars was about $950 each per month, from Ahmad Abdul Jaleel Al-Shameeri, a member of Yemen's Petroleum Exploration and Production Authority, which approves crucial permits, contracts and activities of foreign oil companies.
The Wall Street Journal said the documents say that for four years starting in 2004, Schlumberger also rented three Toyota Land Cruisers for $2,700 a month each, the local market rate for Land Cruisers rentals is $1,600 each a month, from Abdul Hameed Al-Miswari, a Yemen's Petroleum Exploration and Production Authority general manager of materials who was responsible for permitting and signing off on imports of equipment by oil-services companies.
Schlumberger employees also reportedly cited a contract from 2003 with customs broker Dhakwan Management Petroleum Co., whose chairman then was identified as Major Gen. Ali-Mohsen Al-Ahmar, who reportedly is a political ally and close friend of the Yemeni president. Dhakwan Management Petroleum Co. prepares and processes customs exemptions and re-export permits at Yemen’s Petroleum Exploration and Production Authority. According to company documents Schlumberger paid Dhakwan Management Petroleum Co. $280,000 between 2004 and 2007, so the Wall Street Journal.
Company emails and other documents reveal, so the Wall Street Journal, that when Schlumberger attempted to cancel its contract with Dhakwan Management Petroleum Co it found its imports stalled, and decided to reinstate the broker. But other documents indicate that Schlumberger canceled the rental contracts out of concerns they might be violating U.S. foreign-bribery laws but sometimes faced “retribution”. Documents reveal that in 2007, after Schlumberger canceled a car-rental contract with one government official, a Schlumberger truck packed with three tons of explosives, which are commonly used in the oil-services industry, was hijacked in a volatile area of Yemen, so the Wall Street Journal. Even though no one reportedly was hurt in the incident, and the truck and explosives were recovered, Schlumberger managers suspected the incident was tied to the contract's cancellation, but didn't cite any conclusive evidence, so the documents.
Then according to company documents, so the Wall Street Journal, two weeks after Schlumberger managers canceled the contract with Abdul Hameed Al-Miswari on Jan. 26, 2008 "Al-Miswari apparently stopped two [Schlumberger] imports into the country".