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Monday
Nov182013

Hyperdynamics under investigation for Guinea oil and gas rights

Houston-based oil and gas company Hyperdynamics Corporation said it received a subpoena from the DOJ in September requesting documents relating to its business in the African country of Guinea.

The company said it believes the investigation is focused on whether its ‘activities in obtaining and retaining the Concession rights and [its] relationships with charitable organizations potentially violate the FCPA and anti-money laundering statutes.’

Charitable contributions can violate the FCPA if they benefit foreign officials personally and are intended to obtain or retain business or gain an unfair advantage.

Hyperdynamics said it has hired lawyers and is cooperating with the government.

It made the disclosures in its latest quarterly report filed with the SEC last week.

The company is an independent oil and gas exploration and production company. It's currently exploring offshore areas near the Republic of Guinea.

Hyperdynamics' holds a 37% non-operator interest covering approximately 25,000 square kilometers of acreage located offshore Guinea, ‘one of the largest exploration and production licenses in West Africa,’ it said.

Its partners in the Guinea project are Tullow Oil Plc and Dana Petroleum E&P Ltd.

‘We are unable to predict when the investigation will be completed, what outcome will result and what costs we will incur in the course of the investigation,’ the company said.

Hyperdynamics Corporation was founded in 1996 and is traded on the NYSE under the symbol HDY.

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Here's the full FCPA disclosure from Hyperdynamics' Form 10-Q filed with the SEC on November 12:

The U.S. Department of Justice (DOJ) is investigating potential violations of the Foreign Corrupt Practices Act (FCPA) and anti-money laundering statutes. If an action is commenced or we are found to have violated the FCPA or other legal requirements, our business and financial condition could be adversely affected.

In September 2013 we received a subpoena from the DOJ requesting that we produce documents relating to our business in Guinea. We understand that the DOJ is investigating whether our activities in obtaining and retaining the Concession rights and our relationships with charitable organizations potentially violate the FCPA and anti-money laundering statutes. We have retained legal counsel to represent us in this matter, and we are fully cooperating with the government. We are unable to predict when the investigation will be completed, what outcome will result and what costs we will incur in the course of the investigation.

The DOJ and the SEC have a broad range of criminal and civil sanctions under the FCPA and other laws and regulations, which they may seek against corporations and individuals, including injunctive relief, monetary penalties and compliance programs, based on alleged improper payments and deficiencies in books and records and internal controls.

In addition, any such allegations or findings could adversely affect our business relationships and materially impact our financial condition and results of operations.

Legal fees and associated costs in connection with legal proceedings and the DOJ investigation will likely be significant in the next several months and are expected to adversely affect our liquidity and financial condition and results of operations. The pendency of those matters, and the related legal fees and associated costs, could also adversely affect our business relationships.

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Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.