sec motion for partial summary judgment (facilitating payments)

8/12/2019 SEC Motion for Partial Summary Judgment (Facilitating Payments)

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VII. ARGUMENT ....................................................................................................................... 25

A. Nobles payments to obtain discretionary exemptions from import duties are not

permissible facilitating payments under the FCPA. ............................................................... 25

1. Nigerian law provides that the grant of TIPs and TIP extensions is a discretionary

act. ............................................................................................................................ 28

2. Each of the payments at issue in this case was authorized to obtain discretionary

import duty exemptions. .......................................................................................... 29

B. Nobles payments to obtain illegal exemptions from import taxes are not permissible

facilitating payments under the FCPA. ................................................................................... 29

1. Nobles TIPs based on false paperwork were illegal. .............................................. 30

2. Nobles second, third, and fourth TIP extensions were illegal. ............................... 31

C. The purported existence of rampant bribery and unlawful conduct in Nigeria does not

make Nobles payments for discretionary or illegal exemptions permissible. ....................... 33

VIII. CONCLUSION .................................................................................................................... 36

Case 4:12-cv-00563 Document 142 Filed in TXSD on 03/28/14 Page 3 of 41


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TABLE OF AUTHORITIES

Cases

Celotex v. Catrett, 477 U.S. 317 (1986) ....................................................................................... 24

Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (1986).................................... 24

United States v. Kay, 359 F.3d 738 (5th Cir. 2004) (Kay I) .............................................. passim

United States v. Kay, 513 F.3d 432 (2007) (Kay II) .................................................................. 35

Statutes

Securities Exchange Act of 1934 (the Exchange Act) [15 U.S.C. 78dd-1] ............. 1, 3, 26, 36

Rules

Fed. R. Civ. P. 56(a) ..................................................................................................................... 24



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I. SUMMARY OF ARGUMENTThe SEC seeks partial summary judgment on the limited question of whether the

payments to Nigerian government officials that Defendants authorized to secure Temporary

Import Permits (TIPs) and TIP extensions fit within the narrow facilitating payment

exception under the Foreign Corrupt Practices Act (the FCPA).

The SEC alleges that the Defendants violated the anti-bribery and accounting provisions

of the FCPA by authorizing the payment of bribes on behalf of their employer Noble

Corporation to Nigerian government officials to influence or induce these officials to grant

Noble TIPs and TIP extensions. These TIPs allowed Noble to avoid paying import duties on oil

drilling rigs that it operated in Nigeria. Because TIPs provide only a temporary exemption from

import duties, at the expiration of a TIP and its allowable extension, Noble had an obligation to

either pay the import duties due on the drilling rigs or export them out of Nigeria. Using bribes

and other means, Defendants secured serial TIPs and TIP extensions, which enabled Noble to

keep its rigs operating continuously in Nigeria well beyond the time period allowed under

Nigerian law.

The FCPA broadly prohibits corrupt payments to foreign officials to influence any

official act or induce any official to violate a lawful duty. See15 U.S.C. 78dd-1(a). But there

is a narrow exception to that broad prohibition: Under subsection 78dd-1(b), the FCPA permits

certain facilitating or expediting payments made to expedite or to secure the performance of a

routine governmental action. 15 U.S.C. 78dd-1(b). This so-called facilitating payment

exception does not apply in this case, as a matter of law.



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Summary judgment is appropriate for three reasons:

First, the law of decision is clear and binding. This Court previously held that payments

to government officials for discretionary or illegal TIPs and TIP extensions are not permissible

facilitating payments.

Second, the applicable foreign law is clear and undisputed. As demonstrated in the

SECs Motion for a Determination of Foreign Law Pursuant to Federal Rule of Civil Procedure

44.1 (Rule 44.1 Motion), the relevant provisions of Nigerian law are clear and undisputed.

First, under Nigerian law, customs officials have discretion to grant or deny TIPs and TIP

extensions; these TIPs and extensions are a discretionary exemption from import duties, not an

entitlement. Second, Nigerian law prohibits both the use of false paperwork to secure TIPs and

payments to government officials to secure TIPs and TIP extensions. Third, Nigerian law

provides that an initial TIP may not exceed twelve months and may only be extended once for up

to an additional twelve months. These provisions of Nigerian law are clear and undisputed, and

must be determined as a matter of law by the Court.

Third, the material facts are not in genuine dispute. The payments to Nigerian

government officials at issue in this case were themselves illegal in Nigeria and were authorized

to obtain import duty exemptions that were (i) discretionary and (ii) in certain cases, illegal under

Nigerian law. Specifically, each of the payments to Nigerian government officials at issue was

authorized in connection with obtaining a valuable and discretionary government benefit i.e.,

import duty exemptions for Nobles rigs. Certain of the payments were made to obtain TIPs on

false pretenses, in violation of Nigerian law. And, some of the payments were authorized to

obtain TIP extensions that exceeded the number and duration of TIP extensions allowed under

Nigerian law.



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For these reasons, the SEC respectfully requests that the Court grant its motion for partial

summary judgment that the facilitating payment exception is not applicable in this case.

II. NATURE AND STAGE OF THE PROCEEDING

This action arises from violations of the anti-bribery and accounting provisions of the

FCPA by the Defendants. The SEC alleges that Defendants, among other things, authorized

payment of the bribes and as a consequence violated the anti-bribery provisions of the Securities

Exchange Act of 1934 (the Exchange Act) [15 U.S.C. 78dd-1]. Fact and expert discovery is

now complete and trial is currently scheduled to commence on July 9, 2014.

III. ISSUES TO BE RULED UPON BY THE COURT

The issue to be ruled upon by the Court is whether the FCPAs facilitating payment

exception, 15 U.S.C. 78dd-1(b), applies to payments to Nigerian government officials

authorized in connection with discretionary and/or illegal grants of TIPs and TIP extensions.

IV. STATEMENT OF APPLICABLE NIGERIAN LAW

As set forth in the SECs Rule 44.1 Motion, the relevant provisions of Nigerian law are

clear and undisputed. Under Rule 44.1 of the Federal Rules of Civil Procedure, the content of

foreign law is a matter for the Court, and the Courts determination of foreign law must be

treated as a ruling on a question of law for purposes of summary judgment and trial. The Courts

determination of foreign law is therefore a legal predicate to this motion. The key provisions of

Nigerian law are reproduced here for the Courts convenience, and these paragraphs are cited in

the argument section of this motion as NL__.

A. Nigerian Law Regarding TIPs

i. Discretion Under CEMA and C&E Notice No. 14

1. The Customs and Excise Management Act No. 55 of 1958 (CEMA) of the



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Laws of the Federation of Nigeria governs the administration and provision of TIPs in Nigeria.

(SeeAff. of Kofo Olugbesan (Olugbesan Aff.) (attached as Exhibit A to the SECs Rule 44.1

Motion, filed contemporaneously herewith) 9.)

2. Section 37(1) of CEMA provides that no imported goods shall be delivered orremoved on importation until the importer has paid to the proper officer any duty chargeable

thereon, and that duty shall, in the case of goods of which entry is made, be paid on delivery of

the entry to the proper officer. (Id. at 10.)

3. Although goods imported into Nigeria are subject to payment of duty at the timeof entry, CEMA provides that goods temporarily imported into Nigeria may be relieved from

payment of such duty at the discretion of the Board of Customs and Excise (the Board). (Id. at

11.) Section 42 of CEMA states that where the Board is satisfied that goods are imported

only temporarily and are intended to be re-exported , it may permit the goods to be delivered

on importation , subject to conditions as it sees fit to impose, without payment of duty. (Id.)

The use of the word may gives the Board discretion to grant or deny TIPs. (Id.)

4. CEMA empowers the President, Minister, and Board to make implementingregulations. (Id. at 14.) Regulations issued by the Board are called Customs and Excise

Notices (C&E Notices) and are publicly available through publication in an official

government gazette called the Federation of Nigeria Official Gazette. (Id.)

5. C&E Notice No. 14 of 1959 concerns the temporary importation of goods intoNigeria without the payment of duty. (Id. at 15.) This Notice states that the Board is prepared

to remit or repay Customs duty on specified goods where they are satisfied that there are

special reasons why, with a view to promoting the interests of trade, duty should not be

charged. (Id.) Specifically with respect to goods such as oil drilling rigs, Section 27 in Part



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III.A. of C&E Notice No. 14 states:

27. Special Provisions.Prior written application must be made tothe Board of Customs and Excise, Lagos, for permission to importtemporarily any goods (other than commercial samples, advertising

materials and motor vehicles which are dealt with in Parts I and IIof this notice) without payment of import duty. The conditions,and the Boards requirements will be advised to the importer.

(Id.) This written application for a temporary exemption from payment of import duties takes

the form of an application for a TIP or TIP extension.

6. Section 6 of CEMA provides that [a]nything done or required to be done by theBoard in pursuance of any of its powers or duties under the customs and excise laws may be

delegated to the Comptroller-General [of the NCS] or other officer authorized by the Board

to act on its behalf. (Id. at 16.) The Comptroller General is the head of the Nigeria Customs

Service (NCS) and is the Vice Chairman of the Board. (Id.) Pursuant to the authority in

CEMA Section 6, the Board has delegated to NCS the administration of TIP applications and the

grant or denial of TIPs and any related extensions. (Id.) Written applications for TIPs for goods

such as oil rigs are sent to the Comptroller General and, if TIPs are granted, NCS advises

importers of its requirements and conditions in official correspondence and in TIP approval

letters (TIP grants). (Id.)

7. Under CEMA and C&E Notice No. 14, a TIP or extension is not automaticallyavailable as of right upon application. (Id. at 17.) Rather, the Comptroller General may grant a

TIP to an importer subject to conditions it sees fit to impose and only if satisfied, after review of

the documents or information available, that the goods are imported only temporarily and are

intended to be immediately re-exported. (Id.at 11-13, 15-17, 25.) If satisfied, the

Comptroller General may then exercise discretion to grant or deny the TIP, weighing the

competing government interests involved. (Id.)



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8. In sum, NCS has discretion to grant or deny TIPs or TIP extensions. (Id.) TIPsare not an entitlement. (Id.)

ii. The TI Codes Limitation on Serial TIPs and TIP Extensions

9. In addition to CEMA and C&E Notice No. 14, NCS is bound by certainprocedures and instructions that are issued by the Board. (Olugbesan Aff. at 19.) These

instructions are called Codes. (Id.) Each aspect of NCS is governed by a specific Code, which

prescribes the particular steps to be taken by NCS officers in the proper discharge of their duties.

(Id.) As Board-issued instructions, NCS officers must strictly adhere to the provisions in the

Codes at all times and read the Codes in conjunction with the C&E Notices. (Id.) NCS officers

have no discretion to ignore or modify the provisions of the Codes. (Id.) Any changes to these

Codes can be made only by the Board. (Id.) Any internal NCS circulars or memos to further

guide NCS officers in the performance of their duties must be issued by the Comptroller General

of NCS at the direction of the Board. (Id.) Circulars and internal memos also cannot contradict

the Codes. (Id.)

10. The Temporary Import Code (TI Code) is one such Code that was issued by theBoard. (Id. at 20.) The TI Code provides specific instructions relating to the importation of

goods for a temporary and specific use or purpose. (Id.) Section 1 of the TI Code refers to

CEMA and C&E Notice No. 14, and states: [t]he requirements of the Nigeria Customs Service

in respect of temporary importation and exportation is contained in Customs and Excise Notice

No. 14 of 1959. (Id. at 21.) It further states: [a]ll officers are to familiarize themselves with

this Customs Notice which is to be read in conjunction with the following paragraphs. (Id.)

Section 3 of the TI Code further provides that [w]hen documents are presented requesting

temporary admission of goods, great care is to be taken to ensure that the transaction qualifies for



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concession (See Customs and Excise Notice No. 14). (Id.)

11. The TI Code includes instructions for each stage of the TIP life cycle, fromapplication, to grant or denial, to extension of a TIP, and through exportation of the goods out of

Nigeria. (Id. at 22.)

12. Annex C of the TI Code addresses the temporary importation of goods related tooil exploration and drilling contract operations. (Id. at 23.) Annex C of the TI Code provides

that the Comptroller General of Customs may discretionally on advise grant or deny TIPs for

equipment and machinery that fulfil the following conditions, viz:- (a) They are equipments and

machines that are acquired on lease basis ONLY; (b) They are solely intended for the execution

of major Government Contracts and are for immediate re-exportation at the completion of the

contract[; and] (c) Priority attention is granted to oil exploration and drilling contract operation

Particularly the offshore deep sea oil drilling exploration and operation. (Id.)

13. Annex C of the TI Code further provides:PROCEDURE:

The importer who is a party to the contract makes a formal

application to Headquarters Comptroller General of Customs

(CGC), asking for authority to import a specific equipment or

machinery.

Attached to the application are the following documents, viz:-

(a) Contract Agreement;(b) Specific type of equipment and brochure of such

equipment;(c) Lease Agreement;(d) Photocopy Certificate of Registration and License to

operate as an oil operator or Drilling Company asapplicable.

(e) After consideration of the merits, approval may be grantedfor a period of twelve (12) months or less depending on theduration of the Contract.

(f) Concession granted here must not be renewed more than



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once and the duration of the renewal must not exceedtwelve months.

(Id. at 24.)

14.

The limit on the number of permissible extensions for TIPs granted on oil drilling

rigs stated in item (f) of Annex C to the TI Code is also stated in Section 16 of the TI Code. (Id.

at 25.) Section 16 concerns extension of period of temporary importation and provides:

In the event of the importer of ordinary trade goods requiring an

extension of the period of three or six months or one year, he

may apply for such extension to the Customs Area Controller, and

produce with his application, the relevant Form Sale 33

Application for Delivery without Payment of Duty on Goods

Temporarily Imported (Other than motor vehicles) and attach

documents. If satisfied that an extension is reasonable and

necessary, the Customs Area Controller showing the new date on

which exportation is to be effected. He is also, where applicable,

to notify details of the extension granted to the proper officer at the

place of importation who is to note the extension on the duplicate

Form Sale 33 and the Continuous Record of Deposits, or on the

Record of Bonds in Force. In the case of Oil rigs, an

application for extension can only be approved by the Comptroller

General of Customs. For both cases extension is only allowedonce.

(Id.)

15. In summary, the Comptroller General has discretion under TI Code Section 16 togrant an extension if he is satisfied that an extension is reasonable and necessary. (Id.) But

that discretion is limited by a prohibition on serial extensions. Under item (e) of Annex C, an

initial TIP may only be granted for a period of twelve (12) months or less depending on the

duration of the contract. (Id.) And under item (f) and Section 16, a TIP must not be renewed

more than once and the duration of the renewal must not exceed twelve months. (Id. at 24-

25, 27.) These rules result in a total allowable maximum period under a TIP and any extension



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of 24 months or the term of the contract, whichever is less. (Id. at 27.)

16. If a drilling rig is not exported out of Nigeria within the time period set by theinitial TIP and one extension (if granted), Section 22 of the TI Code states that NCS is to

request the Principal or the surety to the Bond to enter the goods for home consumption and pay

the import duty thereon. (Id. at 26.) The process of paying the import duty and entering for

home consumption goods that had originally been brought into Nigeria under a TIP is called

conversion to home use. (Id.)

iii. Other TIP Procedures

17.

TIP applications are processed by NCS without charge or fee to the applicant.

(Olugbesan Aff. at 17.) The Nigerian government does not charge any fees to those who apply

for a TIP. (Id.)

18. TIPs are granted only for goods that are outside of Nigeria. Only after the TIP isgranted may the goods enter the country. (Id. at 18.)

B. Nigerian Law Prohibiting the Use of False Paperwork

19. CEMA also prohibits the making of false declarations and the falsification ofdocuments. (Olugbesan Aff. at 28.) Section 161(1) of CEMA states that if any person

makes or signs, or causes to be made or signed, or delivers or causes to be delivered, to the

Board or an officer, any declaration, notice, certificate or other document whatsoever which is

untrue in any material particular, he shall be guilty of an offence under this section. (Id.)

Section 161(3) further provides that any person who makes such false declarations either

knowingly or recklessly shall be liable to a fine of one thousand naira or to imprisonment for two

years or to both, and the goods shall be forfeited. (Id.) Similarly, Section 161(4) provides that

where any person commits an offence under this section in such circumstances that he is not



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liable under [Section 161(3)] of this section, he shall be liable to a fine of six hundred naira.

(Id.)

20. Section 162 of CEMA provides:If any person

(a)counterfeits or falsifies any document which is required by orunder the customs and excise laws or which is used for thetransaction of any business relating to customs and excise; or

(b)knowingly accepts, receives or uses any such document socounterfeited or falsified; or

(c)alters any such document after it is officially issued; or(d)counterfeits any seal, signature, initials or other mark of, or used

by, any officer for the verification of such document or for thesecurity of goods or for any other purpose relating to customs andexcise,

he shall be liable to a fine of one thousand naira or to imprisonment for

two years, or to both.

(Id. at 29.)

21. Section 164 of CEMA also states that anyone who is knowingly concerned inany fraudulent evasion or attempt at evasion of any duty chargeable shall be liable to a fine of

six times the value of the goods or four hundred naira, whichever is the greater, or to

imprisonment for two years, or to both. (Id. at 30.)

V. STATEMENT OF UNDISPUTED FACTS

Pursuant to Rule 56 of the Federal Rules of Civil Procedure, the SEC sets forth the

following undisputed facts in support of its request for partial summary judgment. Documents

and testimony cited in this Statement of Undisputed Facts are attached as exhibits and referenced

herein as Exh. __. The following paragraphs are cited in the argument section of this motion

as UF__.



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A. Background

1. Noble Corporation (Noble) is an international provider of offshore drillingservices and equipment to oil companies throughout the world, including Nigeria. (SeeJackson

Answer [Dkt. #107] at 1; Ruehlen Answer [Dkt. #108] at 1.) Noble Drilling (Nigeria) Ltd.,

(Noble-Nigeria or West Africa Division) is the wholly-owned subsidiary of Noble that

conducts Nobles operations in Nigeria. (SeeJackson Answer [Dkt. #107] at 18; Ruehlen

Answer [Dkt. #108] at 18.) Its financial results are consolidated into the financial statements of

Noble. (SeeJackson Answer [Dkt. #107] at 18.)

2.

Defendant Mark A. Jackson (Jackson) was: Nobles Chief Financial Officer

(CFO) from September 1, 2000 to September 26, 2005; Chief Operating Officer (COO)

from March 1, 2005 to April, 2007; Acting CFO from March 2006 to November 2006; President

from February 10, 2006 to September 20, 2007; and Chief Executive Officer (CEO) from

October 30, 2006 to September 20, 2007. (SeeJackson Answer [Dkt. #107] at 5; Jackson Dep.

(Exh. 1) at 57:7-19.) Jackson also served as Chairman of Nobles Board of Directors from April

30, 2007 to September 20, 2007. (SeeJackson Answer [Dkt. #107] at 5.)

3. Jackson resigned from Noble and his positions as President, CEO and Chairmanof the Board of Directors of Noble on September 20, 2007. (SeeJackson Answer [Dkt. #107] at

8.)

4. Defendant James J. Ruehlen (Ruehlen) was the Division Manager of NoblesWest Africa Division and a member of Noble-Nigerias Board of Directors from September

2004 to June 2011. (Ruehlen Answer [Dkt. #108] at 14-16.) In June 2011, Ruehlen became

the Vice President and Division Manager of Nobles Mexico Division, a position he still holds

today. (Id. at 14.)



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B. Nobles Rigs in Nigeria

5. From January 2003 through approximately October 2004, Noble had six rigs inNigeria: the Noble Don Walker, the Noble Tommy Craighead, the Noble Percy Johns, the Noble

Lloyd Noble, the Noble Roy Butler, and the Noble Ed Noble. (Exh. 2 at 10; Exh. 3 at 10; Exh.

4; Exh. 5; Strikwerda Dep. (Exh. 6) at 15:14-23; Dowden Dep. (Exh. 7) at 126:19-127:18.)

6. Noble imported a seventh rig, the Noble Homer Ferrington, into Nigeria in aboutNovember 2004. (Ruehlen Dep. (Exh. 8) at 238:1-10; Exhs. 9, 10; Exh. 11 at 3, 10.)

7. From January 2003 through May 2007, these rigs were located in Nigeria to drilloil wells offshore pursuant to contracts with oil companies. (SeeJackson Answer [Dkt. #107] at

19; Ruehlen Answer [Dkt. #108] at 19; Exh. 3 at 10; Exh. 11 at 10; Hilhorst Dep. (Exh. 12) at

25:16-27:3; Strikwerda Dep. (Exh. 6) at 15:1-16:25; Arthur Dep. (Exh. 13) at 24:13-25.)

8. In late 2005, Noble exported the Noble Don Walker to perform a contract inBenin. (Exh. 14.) By early 2006, Noble had reimported the Noble Don Walker into Nigeria.

(Exh. 15.)

9. Other than the export and re-import of the Noble Don Walker in 2005/2006,Noble did not export and re-import any rig that was in Nigeria between 2003 and 2007. (See,

e.g., Ruehlen Dep. (Exh. 8) at 71:17-72:4, 83:10-14, 85:2-21, 160:22-25, 161:21-25; Middleton

Dep. (Exh. 16) at 35:18-36:4, 37:11-17; Strikwerda Dep. (Exh. 6) at 23:12-15; Arthur Dep. (Exh.

13) at 62:1-13; Hilhorst Dep. (Exh. 12) at 104:8-22; Dowden Dep. (Exh. 7) at 126:19-127:18,

146:3-9, 147:1-18.)

10. Noble did not pay the duties to convert any of its rigs to home use from 2003 to2007. (Dowden Dep. (Exh. 7) at 129:4-18; Strikwerda Dep. (Exh. 6) at 37:7-12, 59:11-14;

Ruehlen Dep. (Exh. 8) at 102:25-103:3.)



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11. Instead, Noble obtained from NCS additional new TIPs and TIP extensions for itsrigs between 2003 and 2007. (Dowden Dep. (Exh. 7) at 129:4-18, 146:3-9, 147:1-18; Ruehlen

Dep. (Exh. 8) at 61:7-10, 71:17-72:4, 83:10-14, 85:2-21, 102:25-103:3.)

12. Noble obtained TIPs for its rigs already operating in Nigeria with paperworkrepresenting that the rigs had been exported out of Nigeria and then imported back into Nigeria,

when in fact the rigs had not moved. (Ruehlen Dep. (Exh. 8) at 71:17-72:4, 83:10-14, 85:2-21;

Dowden Dep. (Exh. 7) at 146:3-9, 147:1-18, 148:11-149:6; Arthur Dep. (Exh. 13) at 63:9-64:1;

Strikwerda Dep. (Exh. 6) at 49:16-50:9; Middleton Dep. (Exh. 16) at 34:16-37:16.)

13.

Noble also authorized its agent to pay government officials for TIPs and TIP

extensions it received for its rigs in Nigeria. (Jackson Dep. (Exh. 1) at 264:6-9; Ruehlen

Investigative Testimony (Exh. 17) at 45:4-10, 158:6-9, 192:20-24, 312:7-13, 314:13-25, 315:11-

316:9, 317:7-12; Ruehlen Dep. (Exh. 8) at 85:2-21.)

14. Noble employees, including Jackson and Ruehlen, used the term specialhandling to refer to unreceipted payments to one or more government officials to obtain a TIP

or TIP extension. (Exh. 18 at Response #5; Ruehlen Investigative Testimony (Exh. 17) at 45:4-

10, 158:6-9, 192:20-24, 312:7-13, 314:13-25, 315:11-316:9, 317:7-12.)

15. Nobles agent invoiced Noble for services rendered to obtain the TIPs and TIPextensions, including payment of special handling to government officials. (Ruehlen

Investigative Testimony (Exh. 17) at 45:4-48:11, 158:6-21, 192:20-24, 250:22-251:5, 312:7-13,

314:13-25, 315:11-316:9, 317:7-12.) Nobles payment of the invoice reimbursed the agent for

special handling payments already made pursuant to Nobles prior authorization. (Ruehlen

Investigative Testimony (Exh. 17) at 45:4-48:11, 158:6-21, 192:20-24, 193:7-194:15, 197:6-11,

312:7-13, 314:13-25, 315:11-316:9, 317:7-12.)



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C. Noble Obtained TIPs and TIP Extensions Using False Paperwork and

Payments to Government Officials

1. Drilling Rig Noble Don Walker

16.

Noble Don Walker Second Extension dated August 5, 2005. By application

dated May 18, 2005, Noble applied for a second extension to a TIP originally granted on January

30, 2004, for the Noble Don Walker. (Exh. 19.) To obtain this extension, Noble authorized its

agent, I.C. Network (ICN) to pay 1,600,000 (approximately $12,120) in special handling to

government officials. (Exhs. 20, 21.) NCS granted that second TIP extension for a period of six

months on August 5, 2005. (Exh. 22.) ICN invoiced Noble 1,862,500 for services rendered in

obtaining this extension, including 1,600,000 in special handling to procure the 2nd

extension. (Exh. 23.)

17. Noble Don Walker TIP dated January 24, 2006. In December 2005, Nobleapplied for a new TIP for the Noble Don Walker. (Exh. 24.) To obtain this TIP, Noble

authorized ICN to pay 5,000,000 (approximately $38,462) in special handling to government

officials. (Exhs. 25, 26.) NCS granted the TIP for a period of twelve months on January 24,

2006. (Exh. 27.) ICN invoiced Noble 28,065,940 for services rendered in obtaining this TIP,

including 5,000,000 in special handling. (Exhs. 28, 29, 30, 31.)

18. Noble Don Walker First Extension dated March 6, 2007. In February 2007,Noble applied for an extension to the TIP for the Noble Don Walker. (Exh. 32.) To obtain this

extension, Noble authorized ICN to pay 1,600,000 (approximately $12,500) in special handling

to government officials. (Exh. 33, 34.) NCS granted the TIP extension for a period of six

months on March 6, 2007. (Exh. 35.) ICN invoiced Noble 1,862,500 for services rendered in

obtaining this extension, including 1,600,000 in special handling. (Exh. 36.)



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2. Drilling Rig Noble Ed Noble

19. Noble Ed Noble Second Extension dated December 7, 2004. In November 2004,Noble applied for a second extension to a TIP that it had received in 2003 for the rig Noble Ed

Noble. (Exh. 37.) To obtain this extension, Noble authorized ICN to pay 1,600,000

(approximately $12,500) in special handling to government officials. (Exhs. 38, 39, 40.) NCS

granted the TIP extension for a period of six months on December 7, 2004. (Exh. 41.) ICN

invoiced Noble 1,862,500 for services rendered in obtaining this extension, including

1,600,000 in special handling. (Exh. 42.)

20.

Noble Ed Noble Third Extension dated June 13, 2005. In May 2005, Noble

applied for a third TIP extension to the TIP it had received in 2003 for the rig Noble Ed Noble.

(Exh. 43.) To obtain this extension, Noble authorized ICN to pay 5,000,000 (approximately

$37,900) in special handling to government officials. (Exhs. 44, 45.) NCS granted the TIP

extension for a period of six months on June 13, 2005. (Exh. 46.) ICN invoiced Noble

5,367,500 for services rendered in obtaining this extension, including 5,000,000 in special

handling. (Exh. 47.)

21. Noble Ed Noble False Paperwork TIP dated January 24, 2006. In December2005, Noble applied for a new TIP for the rig Noble Ed Noble. (Exh. 48.) The application

indicated that Noble was seeking approval to import the rig into Nigeria. (Id.) In truth, the rig

was already in Nigeria. (Exh. 14, Fleet Status Update at 3; Exh. 15.) On January 16, 2006, NCS

cancelled the bond securing the prior TIP granted in 2004 based on evidence of re-exportation

of the vessel. (Exh. 49.) On January 24, 2006, NCS granted the new TIP for a period of twelve

months. (Exh. 50.) To obtain this TIP, Noble authorized ICN to pay 7,200,000 (approximately

$55,384) in special handling to government officials. (Exhs. 51, 52, 53.) ICN invoiced Noble



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more than 26,056,275 for services rendered in obtaining the TIP, including 2,200,000 in

special handling outwards/inwards and 5,000,000 in special handling to procure the TIP.

(Exhs. 54, 55, 56, 57.)

22. Noble Ed Noble First Extension dated March 6, 2007. In February 2007, Nobleapplied for an extension to the TIP for the Noble Ed Noble. (Exh. 58.) To obtain this extension,

Noble authorized ICN to pay 1,600,000 (approximately $12,500) in special handling to

government officials. (Exh. 59, 60.) NCS granted the TIP extension for a period of six months

on March 6, 2007. (Exh. 61.) ICN invoiced Noble 1,862,500 for services rendered in

obtaining this extension, including


3. Drilling Rig Noble Roy Butler

23. Noble Roy Butler First Extension dated February 1, 2005. In December 2004,Noble applied for a first extension to the TIP obtained on January 30, 2004 for the rig Noble Roy

Butler. (Exhs. 63, 64.) To obtain this extension, Noble authorized ICN to pay 1,600,000 in

special handling to government officials. (Exhs. 65, 66.) NCS granted the TIP extension for a

period of six months on February 1, 2005. (Exh. 67.) ICN invoiced Noble 1,862,500 for

services rendered in obtaining this extension, including 1,600,000 in special handling

payments. (Exh. 68.)

24. Noble Roy Butler Second Extension dated August 5, 2005. By application datedMay 18, 2005, Noble applied for a second extension to the TIP obtained on January 30, 2004 for

the rig Noble Roy Butler. (Exh. 69.) To obtain this extension, Noble authorized ICN to pay

1,600,000 (approximately $12,120) in special handling to government officials. (Exhs. 70, 71.)

NCS granted the TIP extension for a period of six months on August 5, 2005. (Exh. 72.) ICN




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17


25. Noble Roy Butler False Paperwork TIP dated March 7, 2006. By applicationdated January 4, 2006, Noble applied for a new TIP for the rig Noble Roy Butler. (Exh. 74.)

The application indicated that Noble was seeking approval to import the rig into Nigeria. (Id.)

In truth, the rig was already in Nigeria. (Exh. 15.) On February 10, 2006, NCS cancelled the

bond securing the prior TIP granted in 2004. (Exh. 75.) On March 7, 2006, NCS granted the

new TIP for a period of twelve months. (Exh. 76.) To obtain this TIP, Noble authorized ICN to

pay 7,200,000 (approximately $55,384) in special handling to government officials. (Exh. 77,

78.) ICN invoiced Noble more than

25,054,112 for services rendered in obtaining the TIP,

including 2,200,000 for special handling outwards/inwards and 5,000,000 in special handling

to procure the TIP. (Exhs. 55, 56, 79, 80.)

26. Noble Roy Butler First Extension dated May 10, 2007. In or about March 2007,Noble applied for an extension to the TIP for the Noble Roy Butler. (Exh. 81.) To obtain this

extension, Noble authorized ICN to pay 1,600,000 (approximately $12,308) in special handling

to government officials. (Exh. 82.) NCS granted the TIP extension for a period of six months on

May 10, 2007. (Exh. 83.) ICN invoiced Noble 1,862,500 for services rendered in obtaining

this extension, including 1,600,000 in special handling. (Exh. 84.)

4. Drilling Rig Noble Lloyd Noble

27. Noble Lloyd Noble False Paperwork TIP dated May 9, 2005. In February 2005,Noble applied for a new TIP for the rig Noble Lloyd Noble. (Exh. 85.) The application


was already in Nigeria. (Exh. 86, Fleet Status Update at 3.) On March 1, 2005, NCS cancelled

the bond securing the prior TIP granted in 2003 based on evidence of the re-exportation of the



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18

vessel. (Exh. 87.) On May 9, 2005, NCS granted the new TIP for a period of twelve months.

(Exh. 88.) To obtain this TIP, Noble authorized ICN to pay 6,900,000 (approximately

$51,707) in special handling to government officials. (Exhs. 89, 90, 91, 92, 93, 94.) ICN

invoiced Noble 22,675,454.60 for services rendered in obtaining the TIP, including

1,900,000 for special handling outwards/inwards and 5,000,000 in special handling to

procure the TIP. (Exhs. 95, 96.)

28. Noble Lloyd Noble First Extension dated August 14, 2006. By application datedMarch 15, 2006, Noble applied for an extension to the TIP for the rig Noble Lloyd Noble. (Exh.

97.) To obtain this extension, Noble authorized ICN to pay

1,600,000 (approximately $12,500)

in special handling to government officials. (Exhs. 98, 99.) NCS granted the TIP extension for a

period of six months on August 14, 2006. (Exh. 100.). ICN invoiced Noble 1,862,500 for

services rendered in obtaining this extension, including 1,600,000 in special handling. (Exh.

101.)

29. Noble Lloyd Noble Second Extension dated November 20, 2006. In October2006, Noble applied for a second extension to the TIP for the rig Noble Lloyd Noble. (Exh.

102.) To obtain this extension, Noble authorized ICN to pay 1,600,000 (approximately

$12,500) in special handling to government officials. (Exhs. 103, 104.) NCS granted the

extension for a period of six months on November 20, 2006. (Exh. 105.) ICN invoiced Noble


handling payments. (Exh. 106.)

30. Noble Lloyd Noble False Paperwork TIP attempted March 2007. In March2007, Noble applied for a new TIP for the rig Noble Lloyd Noble. (Exh. 107.) The application




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was already in Nigeria. (Exh. 108, Fleet Status Update at 3.) To obtain the TIP, Noble

authorized ICN to pay 7,200,000 (approximately $56,251) in special handling to government

officials. (Exhs. 109, 110, 111.) On April 25, 2007, NCS cancelled the bond securing the prior

TIP granted in 2005 based on evidence of re-exportation of the vessel. (Exh. 112.) Noble did

not ultimately obtain the TIP because it told ICN to suspend work on securing the TIP. (Exh.

113.) ICN invoiced Noble 5,100,340.60 for services rendered in cancelling the old TIP and

bond through exportation outwards of the rig, including 2,200,000 for special handling

outwards/inwards. (Exh. 114.)

5. Drilling Rig Noble Percy Johns

31. Noble Percy Johns Third Extension dated September 1, 2004.By applicationdated April 26, 2004, Noble applied for a third TIP extension to the TIP that it had received in

2002 for the rig Noble Percy Johns. (Exh. 115.) To obtain this extension, Noble authorized ICN

to pay 5,000,000 (approximately $35,000) in special handling to government officials. (Exhs.

116, 117, 118.) NCS granted the TIP extension for a period of six months on September 1, 2004.

(Exh. 119.) ICN invoiced Noble 5,367,500 for services rendered in obtaining this extension,

including 5,000,000 in special handling. (Exh. 120.)

32. Noble Percy Johns False Paperwork TIP dated May 9, 2005. In February 2005,Noble applied for a new TIP for the rig Noble Percy Johns. (Exh. 121.) By applying, Noble was

seeking approval to import the rig into Nigeria. (Id.) In truth, the rig was already in Nigeria.

(Exh. 86, Fleet Status Update at 3; Exh. 122.) On March 1, 2005, NCS cancelled the bond

securing the prior TIP granted in 2002 based on evidence of the re-exportation of the vessel.

(Exh. 123.) On May 9, 2005, NCS granted the new TIP for a period of twelve months. (Exh.

121.) To obtain this TIP, Noble authorized ICN to pay 6,900,000 (approximately $51,707) in



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special handling to government officials. (Exhs. 89, 90, 91, 92, 93, 94.) ICN invoiced Noble

22,276,342 for services rendered in obtaining the TIP, including 1,900,000 for special

handling outwards/inwards and 5,000,000 in special handling to procure the TIP. (Exhs. 124,

125.)

33. Noble Percy Johns First Extension dated August 14, 2006. By application datedMarch 15, 2006, Noble applied for an extension to the TIP for the rig Noble Percy Johns. (Exhs.

126, 127.) To obtain this extension, Noble authorized ICN to pay 1,600,000 (approximately

$12,500) in special handling to government officials. (Exhs. 128, 129.) NCS granted the TIP

extension for a period of six months on August 14, 2006. (Exh. 130.) ICN invoiced Noble


handling. (Exh. 131.)

34. Noble Percy Johns Second Extension dated November 20, 2006. In October2006, Noble applied for a second extension to the TIP for the rig Noble Percy Johns. (Exh. 132.)

To obtain this extension, Noble authorized ICN to pay 1,600,000 (approximately $12,500) in

special handling to government officials. (Exhs. 133, 134.) NCS granted the TIP extension for a

period of six months on November 20, 2006. (Exh. 135.) ICN invoiced Noble 1,862,500 for


136.)

35. Noble Percy Johns False Paperwork TIP attempted March 2007. In March2007, Noble applied for a new TIP for the rig Noble Percy Johns. (Exh. 137.) The application


was already in Nigeria. (Exh. 108, Fleet Status Update at 3; Exh. 138, Fleet Status Update at 3.)

To obtain the TIP, Noble authorized ICN to pay 7,200,000 (approximately $56,251) in special



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handling to government officials. (Exh. 111, 139, 140.) On April 25, 2007, NCS cancelled the

bond securing the prior TIP granted in 2005 based on evidence of re-exportation of the vessel.

(Exh. 112.) Noble did not ultimately obtain the TIP because it told ICN to suspend work on

securing the TIP. (Exh. 113.) ICN invoiced Noble 5,051,949.40 (approximately $38,272) for

services rendered in cancelling the old TIP and bond through exportation outwards of the rig,

including 2,200,000 for special handling outwards/inwards. (Exh. 141.)

6. Drilling Rig Noble Tommy Craighead

36. Noble Tommy Craighead Third Extension dated August 23, 2004. In July 2004,Noble applied for a third extension of the TIP that it had received in 2002 for the rig Noble

Tommy Craighead. (Exh. 142.) To obtain this extension, Noble authorized ICN to pay

5,000,000 (approximately $35,000) in special handling to government officials. (Exhs. 117,

118, 143.) NCS granted the TIP extension for a period of six months on August 23, 2004. (Exh.

144.) ICN invoiced Noble 5,367,500 for services rendered in obtaining this extension,

including 5,000,000 in special handling. (Exh 145.)

37. Noble Tommy Craighead False Paperwork TIP dated May 9, 2005. In February2005, Noble applied for a new TIP for the rig Noble Tommy Craighead. (Exh. 146.) The

application indicated that Noble was seeking approval to import the rig into Nigeria. (Id.) In

truth, the rig was already in Nigeria. (Exh. 86, Fleet Status Update at 3; Exh. 122.) On March 1,

2005, NCS cancelled the bond securing the prior TIP granted in 2002 based on evidence of the

re-exportation of the vessel. (Exh. 147.) On May 9, 2005, NCS granted the new TIP for a

period of twelve months. (Exh. 148.) To obtain this TIP, Noble authorized ICN to pay

6,900,000 (approximately $51,707) in special handling to government officials. (Exhs. 89, 90,

91, 92, 93, 94.) ICN invoiced Noble 21,950,413 for services rendered in obtaining the TIP,



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including 1,900,000 for special handling outwards/inwards and 5,000,000 in special handling

to procure the TIP. (Exhs. 149, 150.)

38. Noble Tommy Craighead First Extension dated August 14, 2006. Byapplication dated March 15, 2006, Noble applied for an extension to the TIP for the rig Noble

Tommy Craighead. (Exhs. 151, 152.) To obtain this extension, Noble authorized ICN to pay

1,600,000 (approximately $12,500) in special handling to government officials. (Exhs. 129,

153.) NCS granted the TIP extension for a period of six months on August 14, 2006. (Exh.

154.) ICN invoiced Noble 1,862,500 for services rendered in obtaining this extension,

including

1,600,000 in special handling. (Exh. 155. )

39. Noble Tommy Craighead Second Extension dated November 20, 2006. InOctober 2006, Noble applied for a second extension to the TIP for the rig Noble Tommy

Craighead. (Exh. 156.) To obtain this extension, Noble authorized ICN to pay 1,600,000

(approximately $12,500) in special handling to government officials. (Exhs. 134, 157.) NCS

granted the TIP extension for a period of six months on November 20, 2006. (Exh. 158.) ICN



40. Noble Tommy Craighead False Paperwork TIP attempted March 2007. InMarch 2007, Noble applied for a new TIP for the rig Noble Tommy Craighead. (Exh. 160.) The

application indicated that Noble was seeking approval to import the rig into Nigeria. (Id.) In

truth, the rig was already in Nigeria. (Exh. 108, Fleet Status Update at 3; Exh. 138, Fleet Status

Update at 3.) To obtain the TIP, Noble authorized ICN to pay 7,200,000 (approximately

$56,251) in special handling to government officials. (Exhs. 111, 161, 162.) On April 25, 2007,

NCS cancelled the bond securing the prior TIP granted in 2005 based on evidence of re-



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exportation of the vessel. (Exh. 112.) Noble did not ultimately obtain the TIP because it told

ICN to suspend work on securing the TIP. (Exh. 113.) ICN invoiced Noble 5,053,236.40 for

services rendered in cancelling the old TIP and bond through exportation outwards of the rig,

including 2,200,000 in special handling. (Exh. 163.)

7. Drilling Rig Noble Homer Ferrington

41. Noble Homer Ferrington TIP dated October 10, 2004. In October 2004, Nobleobtained a twelve month TIP from NCS for the rig Noble Homer Ferrington. (Exh. 164.) In

November 2004, Noble imported the rig into Nigeria. (Exh. 11 at 3.)

42.

Noble Homer Ferrington First Extension dated November 4, 2005. In October

2005, Noble applied for an extension to the TIP for the rig Noble Homer Ferrington. (Exh. 165.)

To obtain this extension, Noble authorized its agent, Murphy Shipping & Comm. Services Ltd.

(Murphy), to pay 3,000,000 (approximately $23,256) in special handling to government

officials. (Exhs. 166, 167.) NCS granted the TIP extension for a period of six months on

November 4, 2005. (Exh. 168.) Murphy invoiced Noble 3,525,000 for services rendered in

obtaining this extension, including 3,000,000 in special handling. (Exh. 169.)

43. Noble Homer Ferrington Second Extension dated April 25, 2006. In April2006, Noble applied for and NCS granted a second extension to the TIP for the Noble Homer

Ferrington. (Exh. 170.) The extension granted was for a period of six months. (Id.) To obtain

this extension, Noble authorized Murphy to pay 3,000,000 (approximately $23,256) in special

handling to government officials. (Exhs. 171, 172.) Murphy invoiced Noble 3,525,000 for


173.)



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44. Noble Homer Ferrington Third Extension dated October 30, 2006. In October2006, Noble applied for and NCS granted a third extension to the TIP for the rig Noble Homer


this extension, Noble authorized Murphy to pay 3,000,000 (approximately $23,438) in special

handling to government officials. (Exh. 175.) Murphy invoiced Noble 3,525,000 for services

rendered in obtaining this extension, including 3,000,000 in special handling. (Exh. 176.)

45. Noble Homer Ferrington Fourth Extension dated April 30, 2007. In April2007, Noble applied for, and NCS granted, a fourth extension to the TIP for the rig Noble Homer


this extension, Noble authorized ICN to pay 7,000,000 (approximately $54,687) in special

handling to government officials. (Exhs. 178, 179, 180.) ICN invoiced Noble 7,525,000 for


181.)

VI. SUMMARY JUDGMENT STANDARD

Summary judgment is warranted where the pleadings, affidavits, and other supporting

papers demonstrate that there is no genuine issue of material fact and that the moving party is

entitled to judgment as a matter of law. SeeFed. R. Civ. P. 56(a); Celotex v. Catrett, 477 U.S.

317, 322 (1986). Once the movant has made such a showing, the opposing party cannot escape

summary judgment based on mere allegations in the pleadings, id. at 324, and it must do more

than simply show that there is some metaphysical doubt as to the material facts. Matsushita

Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 596 (1986). The opposing party must

identify in the record specific facts showing that there is a genuine issue for trial. Celotex, 477

U.S. at 324 (quotation omitted).



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VII. ARGUMENT

A. Nobles payments to obtain discretionary exemptions from import duties arenot permissible facilitating payments under the FCPA.

The facilitating payment exception is inapplicable in this case as a matter of law, first and

foremost, because Noble paid government officials to obtain a valuable privilegean exemption

from import dutiesthat those officials granted to Noble at their discretion. Payments for

discretionary benefits from government officials are nothing like the innocuous payments for

routine services that Congress aimed to excuse under the facilitating payments exception. United

States v. Kay, 359 F.3d 738, 755 (5th Cir. 2004) (Kay I).

This Court resolved the relevant legal question in its ruling on Defendants motions to

dismiss. Recognizing that the FCPA was designed to cast a wide net over foreign bribery, the

Court held that the exception for facilitating payments refers to a very narrow categor[y] of

largelynon-discretionary, ministerialactivities performed by mid- or low-level foreign

functionaries. Dkt. No. 87 at 20, 33 (quoting Kay I, 359 F.3d at 749, 751) (emphasis added).

By carving out this narrow category, Congress only intended to exclude from the FCPAs reach

those payments which merely move a particular matter toward an eventual act or decision or

whichdo not involve any discretionary action. Id. at 33 (quoting H.R. Rep. No. 95-640, at 8)

(emphasis added). In short, the Court made clear that the touchstone of a facilitating payment is

a lack of discretion on the part of government officials to deny the outcome sought by the

payment.

The Courts prior conclusion is confirmed by the language of the statute and the Fifth

Circuits extensive analysis of its legislative history. The statute provides that facilitating

payments for routine governmental actions means only an action which is ordinarily and

commonly performed by a foreign official in:



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(i) obtaining permits, licenses, or other official documents toqualify a person to do business in a foreign country;

(ii) processing governmental papers, such as visas and workorders;

(iii) providing police protection, mail pick-up, and delivery, orscheduling inspections associated with contract performance orinspections related to transit of goods across country;

(iv) providing phone service, power and water supply, loading andunloading cargo, or protecting perishable products or commoditiesfrom deterioration; or

(v) actions of a similar nature.

15 U.S.C. 78dd-1(f)(3)(A). The routine actions specified here are the sorts of basic services

that government officials are typically required to provide, such as processing governmental

papers, providing police protection, and providing power and water supply. Although

subsection (1) includes obtaining permits as an example of the type of action that typically

qualifies as routine, the Court interpreted the example to refer to obtaining permits to which

one is properly entitled.1 Dkt. No. 87 at 33.

The common thread that unites the statutes various examples of facilitating payments is

the notion that it is generally permissible to pay a government official to do properly what he is

already clearly obligated to do. The Fifth Circuit confirmed this understanding, explaining that

Congress was not principally concerned with prohibiting payments that get an official to

perform properly those usually ministerial duties required of his office. Kay I, 359 F.3d at 749

n.40; see also, e.g., id. at 747 (quoting S. Rep. No. 95-114, at 10) (describing facilitating

payments as payments for the proper performance of duties); id. at 748 (quoting SEC Report to

1The SEC notes that Mr. Ruehlens own proposed expert testified: By routine, what I have in mind is driverslicense renewals [and] customs clearances . . . the kind of government service that is repeated, routine, and usuallyinvolves or often involves a significant portion of the population or a significant portion of the population willneed those services. (Amb. Campbell Dep. (Exh. 182) at 146.) Campbell also distinguished the TIPs and TIPextensions at issue in this case from routine customs clearances. (Id. at 145-47.)



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Congress) (defining grease payments as payments to persuade low-level government officials

to perform functions or services which they are obliged to perform as part of their governmental

responsibilities, but which they may refuse or delay unless compensated).

There is a fundamental difference, however, between paying a government official to do

his job of providing a necessary service and paying a government official to exercise his

discretion to award a valuable benefit. The latter is not a facilitating payment; it is instead the

very bribery that Congress intended to eradicate. As the Fifth Circuit reasoned, Congress sought

to prohibit the type of bribery that prompts officials tomisuse their discretionary authority,

while at the same time recognizing that smaller payments intended to expedite ministerial

actions should remain outside the scope of the statute. Kay I, 539 F.3d at 747 (emphasis

added); see also id. (defining corrupt actions as actions requiring [an official] to misuse his

official position and his discretionary authority). Awarding a discretionary benefit in exchange

for money is the quintessential misuse of authority. As this Court held as a matter of law,

payments for discretionary government benefits cannot be permissible facilitating payments.

Dkt. No. 87 at 33.

The only question here is whether the TIPs that Noble received (as well as the numerous

extensions of those TIPs) were discretionary benefits. When the Court gave the SEC leave to

amend its complaint to support the allegation that granting TIP extensions is a matter of

discretion, the Court indicated that the simplest way to do so would be to plead the Nigerian

law or policy that so provides. Dkt. No. 87 at 35. The SEC did so2and, as set forth in the

SECs Rule 44.1 Motion, Nigerian law made the granting of import duty exemptions

2See, e.g.,Dkt. No. 106 23 (CEMA vests discretion in NCS to grant or deny TIPs and TIP extensions that avoid(temporarily and conditionally) import duties chargeable on goods such as rigs.).



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discretionary.3 That conclusion as a matter of law compels summary judgment.

1. Nigerian law provides that the grant of TIPs and TIP extensions is adiscretionary act.

The Nigerian Customs and Excise Management Act No. 55 of 1958 generally requires

the payment of import duties: [N]o imported goods shall be delivered or removed on

importation until the importer has paid to the proper officer any duty chargeable thereon . . . .

NL2. Despite this general requirement to pay import duties, CEMA permits the Board of

Customs and Excise to grant exemptions from those duties for goods temporarily imported.

NL3. The statute, however, makes clear that these temporary exemptions are discretionary:

[W]here the Boardis satisfiedthat goods are imported only temporarily and are intended to be

re-exported . . ., itmaypermit the goods to be delivered on importation . . . subject to such

conditionsas it sees fitto impose, without payment of duty. NL3 (emphasis added). The

Boards discretion, in turn, has been delegated to NCS to determine whether to grant a temporary

exemption or extend one already granted. NL6.

The discretion conferred by CEMA is also reiterated and confirmed in the regulations and

codes issued by the Board. Thus, C&E Notice No. 14 provides that exemptions are allowed if

officials are satisfied, after review of the documents submitted, that the goods are to be

imported only temporarily. NL7. The TI Code also further reiterates that TIPs may be

granted discretionally on advise after consideration of the merits, and that TIPs may be

extended if officials are satisfied that an extension is reasonable and necessary. NL12, 14.

Nigerian law thus makes clear that TIPs and TIP extensions are a privilege, subject to

limitation, which temporarily exempts the recipient from taxes. Nothing in CEMA, or anywhere

else in Nigerian law, entitled Noble to receive a tax exemption or required officials to grant one.

3The SEC incorporates by reference the arguments set forth in its separately-filed Rule 44.1 Motion. For theCourts convenience, the salient provisions of Nigerian law are summarized herein. See alsoSection IV, supra.



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NL3, 7, 8. And, when NCS granted temporary exemptions, the statute establishes that Noble

received these benefits only at the discretion of Nigerian officials, and only on terms that those

officials s[aw] fit to impose. NL3.

2. Each of the payments at issue in this case was authorized to obtaindiscretionary import duty exemptions.

As set forth above, the applicable Nigerian law is clear and undisputed: the grant of a

temporary import duty exemption is a discretionary act. The material facts are likewise

straightforward and undisputed.4 Noble sought import duty exemptions for its rigs on thirty (30)

occasions between August 2004 and May 2007. UF5-45. For each import duty exemption

sought, Noble authorized payments to government officials ranging from approximately $12,120

to $56,251 per transaction. UF16-45. Because Nigerian law makes the grant of import duty

exemptions discretionary, Nobles payments to obtain those exemptions are not permissible

facilitating payments under the FCPA.

B. Nobles payments to obtain illegal exemptions from import taxes are notpermissible facilitating payments under the FCPA.

There is a second and independent reason that many of the payments at issue in this case

are not permissible facilitating payments. Aside from Nigerian law providing that all of the

import duty exemptions Noble obtained were discretionary, many of the payments at issue

cannot be facilitating payments because the import duty exemptions were illegal. The SEC

alleged in its original complaint that defendants authorized payments to foreign officials in

order to obtain TIPs based on false paperwork, and the Court held that this allegation, if proven,

4The facts set forth in the Statement of Undisputed Facts are voluminous, owing primarily to the number oftransactions at issue. However, the material facts are straightforward: For each of the 30 transactions detailed inSection V.C, supra, Noble authorized payments to government officials in connection with seeking discretionaryimport duty exemptions. For the purposes of this motion the only material fact is that payments to governmentofficials were authorized and, as a matter of law, NCS had discretion to grant or deny a TIP or TIP extension. Atthis juncture, to negate the applicability of the facilitating payment exception, the SEC need not prove whether thepayments were authorized with corrupt intent.



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would easily negate the facilitating payments exception. Dkt. No. 87 at 33-34. Similarly,

payments to obtain TIPs in a manner that violated Nigerian law in other ways, such as

obtaining prohibited second, third or fourth extensions, also cannot be facilitating payments. Id.

at 33. After all, the grant of permits by government officials that have no authority to grant

permits on the basis sought is in no way a ministerial act nor can it be characterized as speeding

the proper performance of a foreign officials duties. Id. (quoting H.R. Rep. No. 95-640, at 8);

see also Kay I,359 F.3d at 756 (finding that Congress was concerned about bribery that

include[d] illicit payments made to officials to obtain favorable but unlawful tax treatment).

1.

Nobles TIPs based on false paperwork were illegal.

Although there are myriad reasons why Nobles import duty exemptions were illegal, the

most obvious reason is that many of them were obtained based on false paperwork. Noble

sought and obtained new TIPs for its oil rigs using paperwork in which it represented that the

rigs had been exported out of Nigeria and re-imported back into Nigeria under a new TIP.

UF12. But these representations were false; with one exception,5the rigs never in fact moved.

UF5-9. This use of false paperwork enabled Noble to evade paying import duties for years.

UF10-11. In fact, Noble never paid import duties on any of the rigs it had in Nigeria. UF10.

Specifically, Noble sought TIPs based on false paperwork (and related illegal payments

to Nigerian officials) on the following eight occasions during the relevant time period:

1. Noble Lloyd Noble False Paperwork TIP dated May 9, 2005 (UF27)2. Noble Percy Johns False Paperwork TIP dated May 9, 2005 (UF32)3. Noble Tommy Craighead False Paperwork TIP dated May 9, 2005 (UF37)4. Noble Ed Noble False Paperwork TIP dated January 24, 2006 (UF21)

5The Noble Don Walker was physically exported to Benin and subsequently re-imported in connection with adrilling contract. UF8.



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5. Noble Roy Butler False Paperwork TIP dated March 7, 2006 (UF25)6. Noble Lloyd Noble False Paperwork TIP attempted March 2007 (UF30)7. Noble Percy Johns False Paperwork TIP attempted March 2007 (UF35)8. Noble Tommy Craighead False Paperwork TIP attempted March 2007 (UF40)

The use of false paperwork to procure new TIPs (and to extend those TIPs once falsely

procured) during the relevant period was illegal under Nigerian law,6which specifically

prohibits submitting any untrue declarations or falsified documents to customs officials.

NL19-20. Anyone who does so even unintentionally is strictly liable for fines; and doing so

intentionally is a crime punishable by up to two years in prison. NL19. Moreover, it is not

only illegal to submit false paperwork, but also to knowingly accept, receive, or use it. NL20.

And anyone knowingly involved in any fraudulent evasion of import duties can be punished by

up to two years in prison. NL21. Thus, Nobles payments to Nigerian officials to process TIPs

based on false paperwork cannot be considered permissible facilitating payments. The payments

induced officials to violate their lawful duties and enabled Noble to illegally avoid paying import

taxes for years without moving its rigs.

2. Nobles second, third, and fourth TIP extensions were illegal.

In addition to the use of false paperwork to obtain new TIPs, twelve of Nobles import

duty exemptions were illegal because they violated official rules promulgated by the Board of

Customs and Excise, which limited the discretion of NCS officials to grant TIP extensions under

certain circumstances. Most significantly, these rules prohibited oil rigs from receiving more

than one extension of a TIP, and they limited the duration of any such extension to a maximum

6SeeRule 44.1 Motion at 8-10, 19-20.



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of twelve months.7 NL9-16. These rules are found in Section 16 of the TI Code, which states

that an extension is only allowed once, as well as Annex C to the TI Code, which sets forth the

procedure for oil rigs and provides that TIP extensions must not be renewed more than once

and that the duration of the renewal must not exceed twelve months.8 NL13-14.

Despite these rules prohibiting more than one extension, Noble obtained seven second

extensions, four third extensions, and one fourth extension for its rigs during the relevant time

period:9

Second Extensions

1. Noble Ed Noble Second Extension dated December 7, 2004 (UF19)2. Noble Don Walker Second Extension dated August 5, 2005 (UF16)3. Noble Roy Butler Second Extension dated August 5, 2005 (UF24)4. Noble Homer Ferrington Second Extension dated April 25, 2006 (UF43)5. Noble Lloyd Noble Second Extension dated November 20, 2006 (UF29)6. Noble Percy Johns Second Extension dated November 20, 2006 (UF34)7.

Noble Tommy Craighead Second Extension dated November 20, 2006 (UF39)

Third Extensions

1. Noble Tommy Craighead Third Extension dated August 23, 2004 (UF36)2. Noble Percy Johns Third Extension dated September 1, 2004 (UF31)3. Noble Ed Noble Third Extension dated June 13, 2005 (UF20)

7Although the details need not be addressed here, Nobles TIPs and TIP extensions violated numerous other officialrequirements contained in the TI Code and elsewhere. These violations included obtaining TIPs for rigs that were

inconsistent with a rigs drilling contract and using invalid invoices and improper rig values.

8SeeRule 44.1 Motion at 5-7, 18-19.

9To be clear, payments for initial TIPs and first extensions are not facilitating payments, even if Nigerian law allowsthem, because the decision to grant a TIP or a first extension is discretionary. During the relevant period, Noblesought two initial TIPs upon physical import of rigs (the Noble Homer Ferrington in 2004 and the Noble DonWalker in 2006) and eight first extensions. SeeUF 17, 18, 22, 23, 26, 28, 33, 38, 41, 42. The fact that second,third, and fourth TIP extensions are not allowed under Nigerian law is merely an additional independent reason whypayments for those extensions are not facilitating payments.



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4. Noble Homer Ferrington Third Extension dated October 30, 2006 (UF44)Fourth Extensions

1. Noble Homer Ferrington Fourth Extension dated April 30, 2007 (UF45)Because each of Nobles extensions was for six months, each third extension increased

the total duration of the TIP to 30 months, and the one fourth extension increased the total

duration of the TIP to 36 monthswell beyond the maximum 24-month limit imposed by the TI

Code (i.e., an initial TIP not to exceed twelve months, plus a single extension not to exceed

twelve months). All of these second, third, and fourth extensions were therefore illegal, and for

this additional independent reason, Nobles payments to Nigerian officials to obtain these

extensions cannot be facilitating payments.

C. The purported existence of rampant bribery and unlawful conduct in Nigeriadoes not make Nobles payments for discretionary or illegal exemptions

permissible.

Defendants experts largely ignore the dictates of Nigerias written law and focus on

what they call informal governance normsi.e., the manner in which government officials

supposedly conducted themselves in Nigeria. According to defense expert Campbell, payments

to civil servants for a wide range of government services are a customary and accepted

practice in Nigeria. (Campbell Rpt. at 27-28.10) Lacking any experience with TIPs or NCS,

Campbell also speculates that the practice of using false paperwork to obtain illegal tax

exemptions without moving the rigs (euphemistically termed the paper process) could have

been viewed as normal and legitimate by people in Nigeria. (Id. at 60.) This, Campbell says,

is simply the way business is done in Nigeria. (Campbell Dep. (Exh.182) at 115:24-25.)

Conspicuously absent from these unsupported and speculative opinions, however, is any

10Campbells Rule 26 Report (Campbell Rpt.) is attached as Exhibit A to the SECs motion to exclude histestimony, filed contemporaneously herewith.



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claim that either the formal law or informal norms of Nigeria entitled Noble to any exemptions

from import taxes.11 There is no claim that customs officials somehow had an informal

practice of treating TIPs or TIP extensions as an entitlement, despite the discretion afforded them

by law. (See Campbell Dep. (Exh. 182) at 145:25-146:1 (Are TIP extensions routine? I dont

know.); id. at 146:24-147:4 (Q: Are you offering any opinions in this case as to whether the

TIP or TIP extensions were a benefit to which Noble was entitled? A: I am not.).) Indeed,

Campbell confirms the large amount of discretion possessed by customs officials when he

characterizes the process of TIP authorizations as informal, conducted in the context of

individual applications for particular rigs at particular points in time, and subject to ad hoc and

erratic change. (Campbell Rpt. at 49.) Thus, in the alleged informal practice as well as in law,

the TIP regime was plainly discretionary.

But even if Defendants could somehow show that it was routine to secure import duty

exemptions with customary payments to government officials, they would only succeed in

establishing a pervasive pattern of bribery. Nor can the use of false paperwork or other illegal

practices be excused on the ground that they are supposedly normal or common in a foreign

country.12

Any other result would eviscerate the FCPA. In enacting the statute, Congress was

motivated to prohibit rampant foreign bribery by domestic business entities. Kay I, 359 F.3d at

11Campbell asserts that [p]ayments are regularly made to civil servants to expedite a process or to navigate an

informal road block erected as an impediment to receiving a benefit to which an individual is otherwise entitled.(Campbell Rpt. at 28-9 (emphasis added).) He also contends that a customary and accepted practice in Nigeriangovernance is payment for public services that are required to be delivered as a matter of law, policy or existingregulation. Id. at 27 (emphasis added). But he does not claim that an exemption from import taxes is a benefit towhich anyone is entitled or a public service that any law, policy, or regulation requires to be granted. (CampbellDep. (Exh. 182) at 145:18-147:4.)

12 Indeed, CEMA prohibits the use of false paperwork and false statements to obtain TIPs and TIP extensions. Also,as discussed in the SECs Rule 44.1 Motion, Nigerian law expressly prohibits payments to government officials forofficial acts.



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755. Congress could not possibly have sought to prohibit bribery only up to the point at which it

becomes pervasive. This would turn the very limited exception for facilitating payments into a

ready license to bribe officials wherever doing so is common. Dkt. No. 87 at 33 (quoting Kay

I, 359 F.3d at 750). Put another way, widespread informal norms of corruption and bribery are

exactly what the FCPA aims to eradicate. It is no defense to say that bribery and illegality are

just the way business is done in Nigeria. As the Fifth Circuit put it, multiple violations of a

law do not make those violations legal. United States v. Kay, 513 F.3d 432, 442 (2007) (Kay

II) The fact that other companies [are] guilty of similar bribery . . . does not excuse a

companys or its employees actions under the FCPA. Id.

As a matter of law, informal norms and practices regarding TIPs are immaterial to the

issue of whether the payments in this case were facilitating payments. It is decisive that Nigerian

law makes TIPs and TIP extensions discretionary; and equally decisive is that they were illegally

obtained. These legal conclusions compel partial summary judgment on the inapplicability of

the facilitating payments exception.



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VIII. CONCLUSION

For the reasons explained above, the SEC respectfully requests that the Court grant

partial summary judgment and hold that payments to obtain exemptions from import duties are

not facilitating payments within the meaning of 15 U.S.C. 78dd-1(b).

Dated this 28thday of March, 2014 Respectfully submitted,

/s/ Alfred A. Day

ALFRED A. DAYMA Bar No. 654436PATRICK M. BRYAND.C. Bar No. 490177

S.D. Tex. ID No. 1572792SHARAN K.S. CUSTERD.C. Bar No. 464495Securities and Exchange Commission100 F Street NEWashington, DC 20549-5949Telephone: (202) 551-4702 (Day)

Counsel for the SEC



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CERTIFICATE OF SERVICE

I certify that on March 28, 2014 I electronically filed the foregoing document with the

Clerk of the Court for the Southern District of Texas, Houston Division, by using the CM/ECF

system, which will send a notice of filing to all CM/ECF participants for this matter.

/s/ Alfred A. DayAlfred A. Day
