SEC Accuses US Firm Of Bribing Nigerian Tax Officials

by Glen Shapiro, LawAndTax-News.com, New York

01 October 2007

The US Securities and Exchange Commission has announced the institution of a settled enforcement action against Houston Bristow Group Inc, which is accused of bribing Nigerian tax officials in return for reducing tax payments in the country.

According to the SEC, Bristow Group, a helicopter transportation services and oil and gas production facilities operation company listed on the New York Stock Exchange, violated the Foreign Corrupt Practices Act (FCPA) which, among other things, prohibits bribery of foreign government officials.

The Commission's Order found that a Nigerian affiliate of Bristow Group made improper payments to Nigerian state government officials in return for the officials' reduction of the employment taxes owed by the affiliate to the Nigerian state. The Order also found that the same affiliate and another Nigerian affiliate of Bristow Group also under-reported their expatriate payroll expenses in Nigeria.

"The Foreign Corrupt Practices Act makes it unlawful for public companies to make improper payments to foreign government officials," explained David Nelson, Director of the Commission's Miami Regional Office. "Illicit payments to foreign government officials violate US law and detract from the legitimate results of fair and merit-based competition."

Bristow Group consented to the entry of an Administrative Order that requires Bristow Group to cease and desist from committing violations of the antibribery, internal controls and books and records provisions of the Securities and Exchange Act of 1934 (Exchange Act), but the company has neither admitted or denied the allegations.

From 2003 until approximately the end of 2004, Bristow Group's Nigerian affiliate Pan African Airlines Nigeria Ltd. (PAAN) is accused of making improper payments totaling approximately $423,000 to employees of the governments of two Nigerian states in order to influence them to improperly reduce the amount of expatriate employment taxes payable by PAAN to the respective Nigerian state governments.

PAAN was responsible for paying an annual expatriate "Pay As You Earn" (PAYE) tax to the Nigerian state governments in each state in which PAAN operated. At the end of each year, the government of each Nigerian state assessed a tax on the salaries of PAAN employees in that state, and sent PAAN a demand letter. The SEC believes that PAAN then negotiated with the government tax officials to lower the amount assessed. In each instance, it is said that the PAYE tax demand amount was lowered, and a separate cash payment amount for the tax officials was negotiated. Once PAAN paid the state government and the tax officials, each state government provided PAAN with a receipt reflecting only the amount payable to the state government, according to the Order.

Additionally, the SEC alleges that during the same time period, Bristow Group under-reported PAAN and another Bristow Group Nigerian affiliate's payroll expenses to certain Nigerian state governments. As a result, Bristow Group's periodic reports filed with the Commission did not accurately reflect certain of the company's payroll-related expenses.

During the same time period, the SEC argued that Bristow Group lacked sufficient internal controls.

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