Weatherford International Ltd. OFAC Settlement: $91M

Weatherford, together with subsidiaries Weatherford Oil Tool Middle East Ltd., Weatherford Production Optimisation (UK) Ltd. (formerly eProduction Solutions U.K. Ltd.), eProduction Solutions, LLC (formerly eProduction Solutions, Inc.), Precision Energy Services ULC (formerly Precision Energy Services Ltd.), and Precision Energy Services Colombia Ltd., committed 586 apparent violations across three sanctions programs.

Between 2005 and 2008, Weatherford conducted 441 transactions totaling $69,268,078 that provided oilfield equipment and services in which the government of Cuba and/or blocked Cuban nationals had an interest, including travel-related transactions by Weatherford employees to and from Cuba, in apparent violation of the Cuban Assets Control Regulations, 31 C.F.R. part 515. Between 2003 and 2007, Weatherford conducted extensive oilfield services business in Iran, including 100 transactions totaling $23,001,770, which involved the direct or indirect exportation of goods, technology, and/or services to Iran, and/or the facilitation of those transactions by U.S. persons, in apparent violation of the Iranian Transactions and Sanctions Regulations, 31 C.F.R. part 560. Between 2005 and 2006, Weatherford conducted oilfield services business in Sudan, including 45 transactions totaling $295,846, which involved the direct or indirect exportation of goods, technology, and/or services from the United States to Sudan, in apparent violation of the Sudanese Sanctions Regulations, 31 C.F.R. part 538.

OFAC determined that the apparent violations were egregious and not voluntarily self-disclosed. The base penalty for the 586 apparent violations of the CACR, ITSR, and SSR totals $107,089,941. The settlement amount of $91,026,450 reflects OFAC's consideration of aggravating and mitigating circumstances under the General Factors in OFAC's Economic Sanctions Enforcement Guidelines, 31 C.F.R. part 501, app. A.

Mitigation was extended because Weatherford has not been the subject of prior OFAC penalties or other administrative action; Weatherford undertook significant remedial steps to ensure future compliance; and Weatherford substantially cooperated with OFAC's investigation of the apparent violations. Specifically, Weatherford retained outside counsel to conduct a comprehensive internal investigation and submitted extensive documentation and reports regarding potential sanctions violations. In addition, Weatherford agreed to toll the statute of limitations.

Weatherford's $91,026,450 settlement with OFAC will be deemed satisfied by the $50 million in criminal fines and monetary penalties paid by Weatherford International Ltd. and two of its subsidiaries pursuant to their agreements with the USAO, as well as the $50 million civil penalty paid to BIS. No direct payment to OFAC was required. Pursuant to the global settlement, Weatherford has also agreed to external audits of its efforts to comply with the relevant U.S. sanctions and export control laws for calendar years 2012, 2013, and 2014.

Weatherford's OFAC settlement is part of a global settlement also involving the Department of Commerce's Bureau of Industry and Security and the U.S. Attorney's Office for the Southern District of Texas. Simultaneous with the civil settlement agreements with OFAC and BIS, Weatherford International Ltd. entered into a Deferred Prosecution Agreement with the USAO, and two of its subsidiaries entered into plea agreements with the USAO. A related Foreign Corrupt Practices Act investigation, led by the Department of Justice's Fraud Section, and a related Securities and Exchange Commission case, were resolved at the same time as the criminal and civil sanctions and export matters.

Weatherford's $91,026,450 OFAC settlement was deemed satisfied by the $50 million in criminal fines and monetary penalties paid pursuant to the USAO agreements and the $50 million civil penalty paid to BIS.

Weatherford's compliance program at the time of the apparent violations was substantially deficient, a factor OFAC identified as aggravating. Knowledge of the violative conduct by executives and senior management was also treated as an aggravating factor. In response to the investigation, Weatherford retained outside counsel to conduct a comprehensive internal investigation and submitted extensive documentation and reports regarding potential sanctions violations — cooperation credited as mitigating. As part of the global settlement, Weatherford agreed to external audits of its efforts to comply with relevant U.S. sanctions and export control laws for calendar years 2012, 2013, and 2014.

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