FCPA Scorecard Blog

SEC declines enforcement against Cobalt in FCPA investigation for second time

Houston-based Cobalt International Energy, Inc. announced in a January 29, 2018 8-K filing that the SEC had concluded its second investigation relating to the company’s operations in Angola, and that SEC staff did not intend to recommend an enforcement action. The SEC’s investigation began in March 2017. As detailed in previous FCPA Scorecard posts, this follows the DOJ’s February 2017 declination and the SEC’s January 2015 declination following other investigations of the company’s Angola operations.

SEC Cobalt International Energy Angola

DOJ Declines FCPA Action Against Cobalt International Energy

Houston-based Cobalt International Energy, Inc. announced in a February 9, 2017 press release that the DOJ had formally closed its FCPA investigation into Cobalt’s oil exploration operations in Angola and would not prosecute the Company.  The press release noted that the DOJ’s investigation “was the last remaining FCPA investigation by any U.S. regulatory agency into Cobalt’s Angolan operations.”  The DOJ’s declination letter came more than two years after the SEC closed its own FCPA investigation and declined to bring an enforcement action.

As detailed in a previous FCPA Scorecard post, the parallel investigations began in 2011, and were prompted by allegations concerning the connection between senior Angolan government officials and Nazaki Oil and Gáz, S.A., the local partner in a Cobalt-led deepwater oil venture.  According to Cobalt’s 10-K filing for FY 2012, the Company had voluntarily contacted the DOJ when the SEC launched its initial inquiry and “offered to respond to any requests the DOJ may have.”

DOJ SEC Cobalt International Energy Angola

SEC Declines Enforcement Against Cobalt in FCPA Investigation

Houston-based Cobalt International Energy, Inc. announced in a January 28, 2015 press release that it has received a termination letter from the SEC advising the company that the SEC’s FCPA investigation relating to operations in Angola has concluded and agency staff did not intend to recommend any enforcement action. This notice formally concludes the SEC's investigation which began in response to allegations concerning the connection between Angolan officials and Nazaki Oil and Gáz, the local partner in a Cobalt-led deepwater oil venture. The government officials admitted owning shares in the joint venture but denied using their influence to award Cobalt oil-exploration rights in Angola.  The SEC's inquiry, which began in 2011, was later joined by the Department of Justice.  The company had previously "strongly refuted" allegations of wrongdoing and had said it was forced to enter into a joint venture with two Angolan-based oil exploration and production companies as part of its deal with the Angolan government. While the SEC has concluded its investigation, the DOJ's parallel investigation is ongoing.

Cobalt International Energy Angola

Cobalt International Energy Targeted in SEC FCPA Inquiry

Houston-based Cobalt International Energy, Inc. said in an August 5, 2014 securities filing that it received a Wells Notice in connection with the Securities and Exchange Commission's investigation of its oil-exploration operations in Angola. The Company stated in its filing that due to the SEC's investigation and recommendation, it may be "exposed to liabilities under the U.S. Foreign Corrupt Practices Act." Wells Notices indicate that the staff of the SEC has made a preliminary determination to recommend an enforcement action alleging violations of certain federal securities laws. According to Cobalt's 2013 10-K filing, the SEC first began an informal inquiry of the company in March 2011 which was later joined by the Department of Justice. In April 2012, as first reported by the Financial Times, allegations surfaced that three Angolan officials, including the head of the country's state-owned oil company and two military generals, held shares in Nazaki Oil and Gáz, the local partner in a Cobalt-led deepwater oil venture launched in early 2010. The government officials admitted owning shares in the joint venture but denied using their influence to award Cobalt oil-exploration rights in Angola. The company has previously "strongly refuted" allegations of wrongdoing and has said it was forced to enter into a joint venture with two Angolan-based oil exploration and production companies as part of its deal with the Angolan government.

Cobalt International Energy Angola