Cads and CC advise on GE-Vetco scandal

7 February 2007

General Electric (GE)’s recent acquisition of a Vetco International subsidiary threw up an overseas bribery scandal that had to be cleared up before the deal could be completed, it has emerged.

Clifford Chance and Cadwalader Wickersham & Taft are advising the subsidiary on the investigation by the US Department of Justice (DoJ), which meted out a $26m (£13.2m) penalty to Vetco Gray.

This makes it the biggest criminal penalty in US history under overseas bribery laws.

The fine could have been larger but was mitigated by Vetco Gray voluntarily coming forward with information about paying $2.1m (£1.07m) in bribes to Nigerian officials over a three-year period up to 2005.

As well as overseeing advice on the investigation, Clifford Chance advised the consortium comprising Candover, 3i and JPMorgan Partners on the $1.9bn (£970m) sale of Vetco Gray to Weil Gotshal & Manges’ client GE, as reported in The Lawyer (15 January).

GE announced only that resolving the bribery investigation was a pre-condition to the transaction being completed.

It is one of the last deals that private equity partner Ian Bagshaw is working on at Clifford Chance before his move to Linklaters (see The Lawyer, 1 February).

Clifford Chance partner Adam Signy is leading compliance advice while Cadwalader’s Washington head and litigation partner Ray Banoun is heading up all US legal aspects.

Although Vetco International is a UK company, Vetco Gray is a Houston-based oil and gas drilling subsidiary. The DoJ has jurisdiction over its employees’ actions both in the States and overseas under the Foreign Corrupt Practices Act.

Bagshaw told The Lawyer: “Vetco self-disclosed this to the DoJ. Irrespective of the deal, it was something that was being handled.”