Expro Group has settled with the SEC over allegations that Frank’s International paid bribes to Angolan officials between 2008 and 2014. Expro merged with Frank’s in 2021 in a deal that valued Frank’s at $742 million.
Expro has agreed to pay $4.2 million which represents the profits made by Frank’s on the Angolan contracts after Frank’s completed its IPO in 2013. In addition, Expro will pay $0.8 million in interest and $3 million in penalties.
Frank’s primarily supplied tubular services and technology used in deepwater drilling. Starting in 2007, it tried to increase its business with the ultimate end customer, Sonangol, the state-owned Angolan oil producer. Initially, Sonangol directed Frank’s customer to use a competitor to Frank’s that made a bigger investment in Angola. But a senior Sonangol executive said they could change its mind if Frank’s established a consulting company and paid five percent of the value of the contract to the consulting company for the benefit of high-ranking Sonangol officials.
Instead of creating a consulting company, Frank’s hired an agent in Angola in November 2007 without a contract in place. The first payment was made in January 2008. Towards the end of 2008, the Frank’s CFO and Chief Accounting Officer started asking questions about the commission payments, which, at that point, amounted to $688,000. The regional senior management then approved a back-dated contract.
In 2011, a new agency agreement was created. This provided for a 10% sales commission, although only 2.2% was actually paid in commissions, with the rest being used for bribes.
Between 2008 and 2014, Frank’s paid the Angolan agent approximately $5.5 million from Frank’s Angolan Operations, a portion of which was paid to the senior Sonangol executive. Frank’s received at least $4,176,858 in post-IPO net profits from its contracts with oil companies where Sonangol was the ultimate customer and for which the Sonangol executive possessed decision-making authority.
Frank’s self-reported the issue to the SEC and Department of Justice in 2016 and Expro made a reserve of $8 million, that was recorded as an additional liability on the acquisition of Frank’s.
https://www.sec.gov/litigation/admin/2023/34-97381.pdf