Last week Baker Hughes Inc. disclosed that it is under investigation by the Securities and Exchange Commission and the Department of Justice regarding bribery-related allegations by a former regional operations manager for the company’s oil and gas drilling operations in Nigeria. Alan Ferguson, a British national who was overseeing a division of Baker Hughes’ operations in Nigeria, filed the lawsuit late last last month, claiming the company fired him for refusing to pay a bribe to a Nigerian oil official.

It is the second federal investigation of Baker Hughes in less than a year. Last September, the company settled federal charges that its managers illegally authorized payments to government officials or company agents in India, Indonesia and Brazil. It paid no fine in the settlement, but agreed to face stiffer penalties for such actions in the future. The company’s shares were off nearly 4% to $36.79 by 2 p.m. Monday. This latest negative news comes on the heels of a downward earnings revision. Last month Baker Hughes cuts its earnings forecast because of the poor drilling environment, particularly in the United States.

According to the Ferguson lawsuit, Baker Hughes was bidding on an oil and gas project with the Shell Petroleum Development Co. of Nigeria in 1999. Ferguson and another Baker Hughes manager in Nigeria were allegedly informed by a manager of Western Geophysical — a company now owned by Baker Hughes — that his company had an inside contact at Shell Nigeria who agreed to give Baker Hughes a two-year contract to drill the wells if he received a percentage of the gross revenue. Ferguson complained to the company’s human resources department about the bribes. He was then transferred to another project in the United States, according to Ferguson’s attorney. Five months later, in October 2001, he was laid off.

Baker Hughes said it started its own investigation into the matter prior to the lawsuit. That investigation is ongoing.

“Baker Hughes’ policy is to provide full cooperation to the government and it is doing so in connection with this matter,” the company said in a statement. “Baker Hughes is committed to integrity in all its activities and will not tolerate improper payments or other improprieties by any employee or in any of its business dealings.”

The company said it would not comment further on the timing or possible outcome of its discussions with the Securities and Exchange Commission or the Department of Justice.

Baker Hughes is a leading provider of drilling, formation evaluation, completion and production products and services to the worldwide oil and gas industry.

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