Houston oil company settles SEC investigation over West Africa payments

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Houston-based oil company Hyperdynamics will pay a $75,000 penalty to resolve a U.S. Securities and Exchange Commission investigation into improper payments made by a subsidiary working in Guinea.

The independent exploration and production company which has been hunting for oil and gas offshore the West African nation announced the settlement with the SEC on Wednesday. Hyperdynamics did not admit fault as part of the agreement.

According to the SEC, the company’s Guinea-based subsidiary paid $130,000 between 2007 and 2008 to two entities for public relations and lobbying services but did not keep sufficient documentation to determine whether those services were rendered nor did it identify who received the money.

Hyperdynamics later discovered that its own Guinean employee controlled the firms that received the payments nor was there evidence that the funds were spent legitimately, the SEC said in its order. But the company never revised its books or records, the SEC found. Hyperdynamics was unable to recover the money paid.

The company failed to properly account for funds disbursed by its Guinean subsidiary and did not do a good enough job vetting third-party vendors, which led to a violation of the Exchange Act that requires companies to keep detailed records of all transactions, the SEC said in its order.

The company received subpoenas from the US. Department of Justice in September 2013 regarding possible violations of the Foreign Corrupt Practices Act. In February 2014, the SEC issued a separate subpoena requesting documents related to the Guinea concession.

In agreeing to the settlement deal, the SEC took into consideration moves by Hyperdynamics beginning in 2009 to replace its senior management team and entire board of directors, overhaul its policies and implement new training programs. The company also beefed up its legal and accounting staff and implemented more stringent procedures to identify and control fund transfers to Guinea.

The justice department dropped its investigation in May, the company said. No charges were filed against Hyperdynamics.

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