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SEC Asks Total, Hydro To Disclose Iran Payments –Source

THE WALL STREET JOURNAL: SEC Asks Total, Hydro To Disclose Iran Payments –Source

Posted 5 May 05

By BENOIT FAUCON Of DOW JONES NEWSWIRES 

LONDON — The U.S. Securities and Exchange Commission has asked oil companies, including Total SA (TOT) and Norsk Hydro ASA (NHY), to disclose the commissions they may have paid while doing business in Iran, a person familiar with the inquiry said.

That person told Dow Jones Newswires this week that a letter from the SEC highlights concern that companies have worked with regimes that may have financed terrorism by doing business in Syria, Iran and Libya.

Its main focus, however, is Iran. The letter tells companies: “We have looked at your disclosures over the past two to three years and you have disclosed operations in Iran”.

It continues: “We want to know if you have paid commissions on contracts to the Iranian government…the object of this inquiry is to help you to improve your disclosures” in SEC filings.

The person said the letter from the SEC was sent to a number of oil and oil services companies between December 2004 and February this year.

The letter, seen by the person, emphasizes Iran’s embargoed status under the the U.S. Iran and Libya Sanctions Act of 1996, though the SEC’s primary goal appears to be a check on whether companies have breached anti-corruption regulations.

It was sent by the SEC’s Corporate Finance department, which has a special unit in charge of monitoring activities in risky countries.

The SEC in 2004 was ordered by the U.S. Congress to set up the unit to monitor companies that have operations in Iran and other countries under U.S. sanction.

“The SEC is looking at this”, confirmed Kathryn Cameron Atkinson, a Washington lawyer with Miller and Chevalier Chartered, who has advised the SEC on anti-corruption investigations.

Corporate activity in countries with embargoes in place “is something considered material for the investor”, she said, speaking Tuesday at a London conference on legal issues related to corruption.

Total, Hydro Confirm Letter

Spokespeople for Norsk Hydro and Total said their respective companies had received the letter but they didn’t provide details on its content.

Norsk Hydro is operator of the Anaran block in Iran in cooperation with the National Iranian Oil Co. (NIO.YY). It has submitted bids for the massive Yadavaran fields, as well as other onshore blocks.

Total has a license for the South Pars offshore gas field.

Royal Dutch/Shell Group (RD, SC), which has two concessions in Iran’s northern Persian Gulf concessions, has previously said it received an SEC letter in 2003 on its activities in the republic but said it didn’t receive the latest letter.

BP PLC (BP) couldn’t immediately comment.

A spokesman for the SEC declined to comment. A person close to the U.S. regulator said the Commission is in constant correspondence with filers on the compliance of their disclosures.

Though the letter is only a request for information, foreign companies can be investigated for alleged bribes outside the U.S. if they are listed in New York through American Depository Receipts.

If wrongdoing is proved, a company faces the risk of fines from the courts and the Securities and Exchange Commission.

In July, the SEC settled for $16.4 million of penalties against Swiss automation technologies company ABB Ltd. (ABB), which didn’t acknowledge guilt. The Commission alleged that ABB made illicit payments to government officials in Nigeria, Angola and Kazakhstan.

The reason for these increasingly severe punishments is that the impact of the U.S. Foreign Corrupt Practises Act, passed in 1977, was extended through the Sarbanes-Oxley law in 2002 to help prevent corporate fraud.

Undisclosed foreign payments made in violation of the FCPA count as improper accounting, according to a report on the enforcement of the law posted on the SEC Web site.

Non-U.S. companies making $20 million or more of investments in the Iranian oil and gas industry are liable to sanctions by Washington under the U.S. Iran and Libya Sanctions Act of 1996. The act isn’t administered against Libya while it undergoes reform.

According to a person familiar with the matter, heavy pressure from the U.S. has in recent days deterred Shell from selling its Basell petrochemical joint venture to Iran’s National Petrochemical Co. (NPC.YY).

But a lawyer familiar with the SEC said the standardized letter may be an attempt to uncover wrongdoing similar to those found in a recent lawsuit against Statoil ASA (STO) of Norway.

The 71% state-owned company is still under investigation for allegations of a $15 million bribe to the son of an ex-Iranian president.

The company accepted a fine by the Norwegian government last year for the bribery charges.

A Statoil spokesman said he wasn’t aware the company had received the SEC letter.

Some leading investor groups in the U.S. have pressed for tighter oversight on so-called “assymetrical investments” that may involve small amounts of money with disproportionate political risk.

BP said recently it wouldn’t seek business in Iran because of U.S. concerns.

Halliburton Co. (HAL) announced a similar policy this year, but the effect of the change isn’t clear because it only takes effect after the company completes existing work in Iran, which could be years away.

-By Benoit Faucon, Dow Jones Newswires; +44 207 842 92 66; [email protected] (David Gauthier-Villars in Paris, Ian Talley in Oslo and John Biers in Houston contributed to this story.)

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