The U.S. Justice Department and the Commerce Department's Bureau of Industry and Security are examining allegations Weatherford improperly sold products and services in sanctioned countries, the company said in a Securities and Exchange Commission filing this week.
Weatherford did not identify the nations in question.
"We are cooperating fully with this investigation," the company said in the filing. The company has hired legal counsel, which will report to Weathford's audit committee, to look into the matter.
"We cannot anticipate the timing, outcome or possible financial impact of the investigation," the company said.
Weatherford Chief Financial Officer Andrew Becnel could not be reached for comment on Friday. Justice Department spokeswoman Jaclyn Lesch declined to comment, while a Commerce spokesman could not be reached. Under U.S. law, American companies cannot do business with sanctioned countries, which include Sudan, Iran and Cuba, among others. A foreign subsidiary of a U.S. company is permitted to do business in such countries as long as the foreign entity is not controlled by the American parent.
But that kind of total separation can be difficult for a U.S.-based multinational to achieve, said Washington attorney Clif Burns, a partner in Powell Goldstein's export controls practice group.
For example, a company might run its human resources or accounting functions out of the United States, and those operations might approve a salary or travel voucher connected to the foreign entity. "At that point, it's not just a subsidiary doing business," Burns said.
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