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Thursday, March 28, 2024 | Back issues
Courthouse News Service Courthouse News Service

Shareholders Say Oil Firm Paid Bribes

HOUSTON (CN) - Parker Drilling Co. bribed officials in Kazakhstan and Nigeria, and subsequent investigations by the SEC and Department of Justice cost the company $20 million, shareholders say in derivative complaint in Harris County Court.

The amount that Parker allegedly paid in bribes is not detailed in the complaint. But shareholders say company directors' failure to ferret out the corruption violated the Foreign Corrupt Practices Act.

Directors breached their fiduciary duty to Parker shareholders "by conducting Parker's business in countries with higher than normal risk of corruption, such as Kazakhstan and Nigeria, without implementing internal controls in compliance with the FCPA," according to the complaint.

In the May 2008 quarterly report, Parker's directors announced that the SEC and Department of Justice were conducting "parallel investigations" for the company's use of "customs and freight forwarding agents in countries where the company currently operates or formerly operated, including Kazakhstan and Nigeria," the shareholders say.

Over the next 20 months the directors did not provide Parker shareholders with additional information about these investigations, but made "boilerplate disclosures" concerning the DOJ and SEC inquiries, the complaint states.

Then in March this year, directors disclosed for the first time that the company had made "potentially illegal payments" to a government official in Kazakhstan, shareholders say.

"To date, the company has incurred more than $20 million in costs and expenses related to the ongoing investigations," the class claims.

Led by named plaintiff Mohamed Kassamali, the class accuses these Parker directors of breach of fiduciary duty, abuse of control, gross mismanagement and wasting corporate assets: Robert Parker Jr., Robert Parker, John Gibson, Roger Plank, Robert McKee, George Donnelly, Robert Goldman, Gary King, Rudolph Reinfrank and David Mannon.

"Parker describes itself as one of the leading providers of on-land and offshore drilling services, including drilling rigs, project management and rental tools to the energy industry," according to the complaint.

The shareholders are represented by Joe Kendall of Dallas.

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