BASEL: The Securities and Exchange Commission hit Weatherford International with its biggest financial penalty of the year, alleging that deceptive accounting practices used by the oilfield services company to inflate profits extended beyond gross negligence to outright fraud.
Weatherford, which has its main operations in Houston, agreed to pay $140 million to settle charges that it overstated its earnings by nearly $1 billion between 2007 and 2012 and had virtually no oversight over its tax department, where the deceptive practices were centered.
Over the past decade, only two other companies paid bigger penalties over allegations of financial fraud: BP, which paid $525 million in 2012 for misleading investors during the Deepwater Horizon tragedy, and Computer Sciences Corp. of Tysons, Va., which paid $190 million last year to settle charges that it manipulated financial data to boost its profits.
“Weatherford denied its investors accurate and reliable financial reporting by allowing two executives to choose their own numbers when the actual financial results fell short of what was previously disclosed to analysts and the public,” Andrew Ceresney, director of the SEC’s enforcement division, said in a statement.
The settlement does not claw back incentive bonuses that top executives received based on the falsified earnings. The SEC said it is continuing the investigation, but would not provider further details.
Weatherford declined comment Tuesday, except to confirm the matter is resolved. In an SEC filing, Weatherford said it agreed to settle without admitting or denying the charges. Weatherford acknowledged the investigation last year in regulatory filings,The SEC said its investigation into Weatherford’s accounting practices coincided with a separate investigation into allegations that Weatherford bribed Middle Eastern and African officials several years ago to win business. In 2013, the company paid more than $250 million to settle the bribery charges brought by several federal agencies, including $65 million to the SEC.
