Baker Hughes Under SEC Investigation

Baker Hughes Incorporated disclosed that the company has been advised that the Securities and Exchange Commission and Department of Justice are conducting investigations into allegations of violations of law relating to Nigeria and other related matters.

Last week, a former region operations manager for the company's oil and gas drilling operations in Nigeria filed a lawsuit against his former employer, claiming the company fired him for refusing to pay a bribe to a Nigerian oil official. Alan Ferguson, a British national who was overseeing a division of Baker Hughes' operations in Nigeria, filed the lawsuit. He said he lost his job five months after refusing to give a share of the company's contract revenues to the Nigerian official. According to Ferguson's lawsuit, Baker Hughes was bidding on an oil and gas project with the Shell Petroleum Development Co. of Nigeria in 1999. Ferguson and another Baker Hughes manager in Nigeria were allegedly informed by a manager of Western Geophysical, a company now owned by Baker Hughes, that his company had an inside contact at Shell Nigeria who agreed to give Baker Hughes a two-year contract to drill the wells if he received a percentage of the gross revenue. Ferguson complained to the company's human resources department about the bribes. He was then transferred to another project in the United States, according to Ferguson's attorney. Five months later, in October 2001, he was laid off.

Prior to filing the complaint, the company had independently initiated an investigation regarding its operations in Nigeria and that investigation is ongoing. Baker Hughes' policy is to provide full cooperation to the government and it is doing so in connection with this matter.

Baker Hughes said it is committed to integrity in all its activities and will not tolerate improper payments or other improprieties by any employee or in any of its business dealings. The company said it would not comment further on the timing or possible outcome of its discussions with the Securities and Exchange Commission or the Department of Justice.