© 2011 Weatherford. All rights reserved. 11
TRADE COMPLIANCE IN THE OILFIELD SERVICES SECTOR:
ASSESSING THE RISKS & CALIBRATING THE PROGRAMOctober 7, 2013
Natalia Shehadeh, Associate General Counsel for Trade Compliance
Weatherford International
&
Dan Fisher-Owens, Partner
Berliner, Corcoran & Rowe LLP
&
© 2011 Weatherford. All rights reserved.
INDUSTRY IMPORT/EXPORT
COMPLIANCE RISKS
• Classification
• Licensing
• Valuation
• Country of Origin
• Division of import/export responsibility (e.g., Incoterms)
• Preferential Trade Programs Application
• Use of agents in support of the import/export business
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© 2011 Weatherford. All rights reserved.
IMPORT/EXPORT COMPLIANCE STRATEGY
• Questions to help assess risk & calibrate the program:
– Is our equipment, software and technology classified?
– Are competent controls in place to ensure the accuracy of the classifications?
– Are Finance, Logistics and Tax aware of the commonalities and differences between goods value for accounting and customs purposes?
– Does a process exist for country of origin evaluation – preferential and non-preferential?
– Is the company aware of its customer demands regarding preferential trade agreement application and internal opportunities?
– Are the company’s customs brokers & freight forwarders aware of the company’s compliance policies?
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© 2011 Weatherford. All rights reserved.
INDUSTRY EXPORT CONTROL
COMPLIANCE RISKS
• Novel technical developments
• Increasing use of military technologies
• End-use, end-user, end-destination diligence
• Increase in diversion risks and related scrutiny
• Heightened responsibilities with distributor sales
4
© 2011 Weatherford. All rights reserved.
EXPORT CONTROL COMPLIANCE STRATEGY
• Questions to help assess risk & calibrate the program:
– What is the company’s export & reexport control licensing
outlook?
– Are we aware of the company’s latest tech developments?
– Are we asking vendors for the export control classification of
procured items, technology and software?
– Do we have a process for evaluating deemed exports and
reexports?
– How are end-user, end-use and end-destination risks
evaluated, by whom and at what point in the transaction?
– Has the company had compliance failures in the EUD space?
– Do we sell to distributors?
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© 2011 Weatherford. All rights reserved.
INDUSTRY SANCTIONED COUNTRY & PARTY
COMPLIANCE RISKS
� Volatile geographic environments & increase in
multilateral sanctions
� Competing bilateral sanctions programs & related conflicts
� Increasing indirect sanctioned country risks
– Venezuela, Turkmenistan, Angola, Oman, Azerbaijan,
Pakistan, China, South Korea, Vietnam, UAE – all
countries with sanctioned-country dealings
– Transshipments
� Daily sanctioned party additions
� Growing money laundering risks
6
© 2011 Weatherford. All rights reserved.
INDUSTRY SANCTIONED COUNTRY & PARTY
COMPLIANCE RISKS
• Questions to help assess risk & calibrate the program:
– What is the nationality of our company?
– What sanctions regimes – comprehensive and partial –
apply?
– How are we managing indirect sanctions and
transshipment risks?
– What screening mechanisms (i.e., manual or
automated or both) are in place?
– Have we considered the prevalence of denied and
restricted parties in our industry?
– Did we manage past temporary sanctions programs
well (i.e., Libya)?7
© 2011 Weatherford. All rights reserved.
INDUSTRY SANCTIONED COUNTRY & PARTY
COMPLIANCE RISKS
• Questions to help assess risk & calibrate the program:
– Are we in partially sanctioned countries (e.g., South
Sudan)?
– Is the company aware of all concession
owners/lessors/participants in its project
– Have the downstream beneficiaries of the extracted
resource been identified?
– Is the supply chain free of sanctioned-country nexus or
taint? Does it need to be 100% sanctions-taint free?
– Does our company employ sanctioned-country
nationals?
8
© 2011 Weatherford. All rights reserved.
INDUSTRY ANTIBOYCOTT
COMPLIANCE RISKS
• EAR and IRC jurisdiction
• Still active in our sector
• Increasing requests from non-IRC countries:
– Bangladesh
– Pakistan
• Continued difficulty with local law compliance
requirements in IRC countries
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© 2011 Weatherford. All rights reserved.
ANTIBOYCOTT COMPLIANCE STRATEGY
• Questions to help assess risk & calibrate the program:
– Jurisdictionally, are we subject to the EAR and the
IRC?
– Do we have controls in place to review and respond
to boycott requests?
– If not, who is best able to handle this – contracts,
legal, logistics, all?
– If subject to the IRC is tax preparing the Form 5713?
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© 2011 Weatherford. All rights reserved.
Coalition for Excellence in Export Compliance
www.ceecbestpractices.orgMISSION:
Identify and recommend export compliance best practices that provide practical
guidance to better detect and prevent violations of law. Specifically, reevaluate
the Nunn-Wolfowitz report, identify gaps, and update with a “deeper dive” into
global best practices with published standard.
PARTICIPANTS:
James Bartlett (fmrly. NorthropGrumman) Jeff Merrell (Rolls Royce)
Carol Fuchs (GE) Phil Poland (DHL)
Aaron Gothelf (GE) Stephanie Reuer (Boeing)
Jahna Hartwig (Sikorsky) Jeff Schwartz (Alston Bird)
David Hayes (UK Consultant) Natalia Shehadeh (Weatherford)
Doug Jacobson (Jacobson Law) Scott Sullivan (Flowserve)
John Pisa-Relli (Accenture)
© 2011 Weatherford. All rights reserved.
Thank you
Natalia Shehadeh
&
Dan Fisher-Owens
12
