Weatherford International LLC, an oil services company, has agreed to pay a US$140 million penalty to settle charges it inflated earnings between 2007 and 2012 by using deceptive income tax accounting. The Switzerland-based Weatherford International PLC, the U.S. company’s parent, disclosed that Weatherford will pay US$50 million of the fine within 21 days, followed by three US$30 million installments over the coming year. The Weatherford case is just one of many cases in which the SEC is cracking down on fraud involving financial reporting and disclosures by publicly traded companies.
Weatherford’s former vice president of tax, James Hudgins, and former tax manager Darryl Kitay made numerous adjustments to their final calculations “to fill gaps” to match the average tax rate on pretax profit that Weatherford disclosed to investors, the SEC said.
In 2002, Weatherford changed its place of incorporation from the United States to Bermuda, a zero percent tax jurisdiction. Weatherford used other techniques between 2003 and 2006 to move revenue from higher tax rate jurisdictions, such as the United States and Canada, to lower rate jurisdictions, such as Hungary and Luxembourg, the SEC said.
In 2013, Weatherford agreed to pay more than US $250 million to the SEC, the Department of Justice and the Department of Treasury, among others, to settle charges that it authorized bribes and other kickbacks to foreign officials to win business overseas.
Jeffrey Newman represents whistleblowers.