The Tenaris Case

The U.S. Securities and Exchange Commission (SEC) announced on May 17 that it has entered into its first-ever deferred prosecution agreement (DPA). The SEC entered into the agreement with Tenaris S.A., a Luxembourg steel pipe supplier, in connection with allegations that Tenaris violated the Foreign Corrupt Practices Act (FCPA) by bribing Uzbekistan government officials.

According to the statement of facts in the DPA, Tenaris allegedly retained the services of a third-party agent to help it bid on pipeline contracts with OAO, a subsidiary of an Uzbekistan state-owned holding company. The third-party agent reportedly obtained confidential information about competitors’ bids from OAO officials, supplied it to Tenaris and arranged for Tenaris to submit revised bids. Tenaris’ sales personnel allegedly understood that the commissions paid to the agent were used, in part, to pay OAO officials for the confidential bid information and the ability to submit revised bids. Tenaris is claimed to have made over $4.7 million in profits in 2006 and 2007 from the pipeline contracts it was awarded by the subsidiary.

Under the DPA, the SEC agreed not to bring an enforcement action against Tenaris arising from its investigation in exchange for Tenaris’ agreement to, among other things, pay approximately $5.4 million in disgorgement and prejudgment interest, and to perform certain undertakings. In a related criminal investigation, Tenaris entered into a non-prosecution agreement with the U.S. Department of Justice and agreed to pay a $3.5 million penalty.