KPMG affiliate settles SEC bribe charges

KPMG affiliate settles SEC bribe charges

WASHINGTON (Reuters): Baker Hughes Inc. and an Indonesian affiliate of U.S. accounting giant KPMG have settled charges of bribing a local government official to reduce the oil services firm's tax liability in the Asian country, U.S. regulators said on Wednesday.

"In March 1999, the chief financial officer of Baker Hughes Inc. ... and its controller authorized the payment of a bribe of US$75,000, through KPMG-Siddharta Siddharta and Harsono, its agent in Indonesia, to a local government official," the Securities and Exchange Commission in a statement.

The complaint alleged that senior managers from the Houston- based firm authorized similar pay-offs in India and Brazil, the SEC said, all of which were recorded as routine business expenditures in its books and records.

Baker Hughes and KPMG Siddharta Siddharta and Harsono, an affiliate firm of KPMG International, have settled the complaint without admitting or denying the charges, the SEC said. No monetary charges were levied.

An Indonesian tax official, who was not named in the complaints, told the finance manager of Baker Hughes' Indonesian unit in that the firm owed $3.2 million in tax liabilities.

The official said he would be willing to reduce the liability to $270,000 in exchange for an illicit payment of $75,000, the complaints alleged.

Sonny Harsono, a senior partner at the KPMG affiliate, told Baker Hughes officials it would not only make the payment to the Indonesian official, but also disguise the money in an fake invoice as "professional services rendered," the complaint alleged.

Harsono's lawyers did not immediately return calls for comments.

The attorney representing the KPMG affiliate said his client settled without admitting or denying the charges.

"My client settled to put the matter behind it and to avoid the additional time and expense of disputing the charges," said Chicago lawyer Williams Linklater.

Baker Hughes' chief financial officer, Eric Mattson, and its controller, James Harris, acted against the advice of the firm's general counsel and advisers, the statement alleged. Both resigned from the firm in 1999.

Once Baker Hughes discovered the bribe had been paid, it attempted to stop the payment and disclosed the incident to the U.S. Justice Department, the SEC said.

Lawyers for Baker Hughes, Harris and Mattson did not immediately return calls for comment.