Schlumberger Rod Lift OFAC Settlement: $160K (2021)

In August 2014, SLS acquired the assets of another Texas-based company and hired a number of employees as part of the acquisition. Between December 2015 and April 2016, three of these employees, who were U.S. persons, facilitated the sale and shipment of oilfield equipment from a Canadian subsidiary of Schlumberger to a Chinese joint venture, in which Schlumberger held a 50% interest, for onward delivery to Sudan. Two of the employees were members of SRL management: a Vice President and an Operations Manager.

The conduct began in December 2015, when the U.S. employees received an email from the Schlumberger joint venture in China requesting a price quote for oilfield equipment from Schlumberger's Canadian subsidiary, for delivery to a customer in Sudan. In arranging the sale and shipment, the SRL employees assisted in the management of customer requirements and helped arrange shipment of the goods to China. Each employee had attended a 6-hour training on Schlumberger's Trade and Customs Compliance program that included a section on U.S. person restrictions with respect to sanctioned countries, including the prohibition of facilitation, and a case study of a past Sudan facilitation violation. Shortly after the initial email request, the employees also received internal communications clearly stating that Sudan was a sanctioned country. Despite this awareness, on or around April 8, 2016, the Canadian subsidiary, at the request of SRL, transferred the goods for export to the Chinese joint venture, for ultimate delivery to Sudan.

The facilitation constituted an apparent violation of 31 C.F.R. § 538.206 of the Sudanese Sanctions Regulations (SSR), 31 C.F.R. part 538, which prohibited U.S. persons from facilitating the exportation or reexportation of goods, technology, or services to Sudan from any location unless authorized or exempt. The activities did not qualify for the general license at 31 C.F.R. § 538.507 for reexports by non-U.S. persons to Sudan.

The statutory maximum civil monetary penalty applicable in this matter is $307,922. OFAC determined that SRL did not voluntarily self-disclose the Apparent Violation and that the Apparent Violation constitutes a non-egregious case. Accordingly, under OFAC's Economic Sanctions Enforcement Guidelines, the base civil monetary penalty amount applicable in this matter is the Applicable Schedule Amount, which in this case is $200,000. The settlement amount of $160,000 reflects OFAC's consideration of the General Factors under the Enforcement Guidelines.

This enforcement action highlights the importance of implementing effective compliance programs for multinational corporations operating across multiple global subsidiaries and employing diverse workforces. Companies with integrated operations, particularly those involving or requiring participation by their U.S.-based headquarters, locations, or personnel, should ensure that global activities they engage in are compliant with OFAC's regulations. Businesses should anticipate and account for this challenge also in the context of conducting acquisitions, including when integrating acquired companies that themselves share similar characteristics. When the relevant industry is one that may pose elevated sanctions risk, the need for an effective compliance program becomes increasingly important.

In implementing compliance controls in such contexts, companies are encouraged to take steps to ensure that all relevant personnel receive and understand existing sanctions prohibitions and the company's compliance program. Effective training might include communicating the sanctions compliance responsibilities for each employee, and ongoing training may be prudent to ensure procedures are followed properly. Companies are encouraged to further ensure their compliance program procedures are followed and concerns are escalated appropriately, including through risk-based audits and testing.

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