Schlumberger Ltd. (NYSE:SLB), the world's largest oil-field services company, has agreed to pay $232.7 million for violating U.S. sanctions in Iran and Sudan, part of the government's extended crackdown on companies doing business with countries the U.S. has declared off limits.
The U.S. Justice Department is expected to announce the plea agreement Wednesday afternoon, according to a person familiar with the situation. As part of the agreement, Schlumberger is expected to pay a $155.1 million criminal fine--the biggest criminal fine ever imposed for a U.S. sanctions violation--and forfeit $77.6 million in illegally obtained profits, according to the person.
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Schlumberger Oilfield Holdings Ltd., a Schlumberger subsidiary, is expected to plead guilty to conspiring to violate the International Emergency Economic Powers Act, or IEEPA, which allows the government to block transactions with countries under sanctions.
The agreement caps a six-year investigation by the Justice Department and the U.S. Commerce Department. Details of the deal between government lawyers and Schlumberger were completed on Wednesday, according to the person familiar with the situation.
A spokesperson for Schlumberger couldn't be immediately reached for comment on Wednesday.
The penalty comes at a tough time for Schlumberger. The company's share price has dropped almost 20% in the past six months as a global oil glut has pushed crude prices to multiyear lows and reduced demand for Schlumberger's services, which include drilling and fracking oil and gas wells. In January, Schlumberger announced 9,000 job cuts after the firm's profit in the last three months of 2014 fell 82% from the previous year.
Schlumberger has one of its headquarters in Houston and does business in more than 85 countries.
Multinational companies and banks have become an increasingly frequent target for U.S. authorities, who have ramped up financial penalties for sanctions violations. Two weeks ago, Commerzbank AG agreed to pay $342 million for moving dollars through the U.S. on behalf of clients in countries such as Iran and Sudan. In recent years, other banks that have paid sanctions-related fines include HSBC PLC, Barclays PLC and Standard Chartered PLC.
The criminal fine against Schlumberger is the biggest so far under the IEEPA, according to the Justice Department.
Other companies have paid much costlier settlements, but their size reflected large forfeitures of illegal profits. BNP Paribas SA forfeited a record $8.8 billion in profits last June. The French bank's criminal fine, however, was $140 million.