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UNITED STATES OF AMERICA
BEFORE THE
SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
RELEASE NO. 44784 / SEPTEMBER 12, 2001

ACCOUNTING AND AUDITING ENFORCEMENT
RELEASE NO. 1447 / SEPTEMBER 12, 2001

ADMINISTRATIVE PROCEEDING
FILE NO. 3-10572
                                       :
                                       :  ORDER INSTITUTING PUBLIC
                                       :  PROCEEDINGS PURSUANT TO
                                       :  SECTION 21C OF THE SECURITIES
In the Matter of                       :  EXCHANGE ACT OF 1934, MAKING
BAKER HUGHES INCORPORATED,             :  FINDINGS AND IMPOSING A
     Respondent.                       :  CEASE-AND-DESIST ORDER


                                       I.

The Securities and Exchange Commission ("Commission") deems it appropriate that
public administrative proceedings be, and hereby are, instituted pursuant to
Section 21C of the Securities Exchange Act of 1934 ("Exchange Act") against
Baker Hughes Incorporated ("Baker Hughes" or the "Respondent").

                                       II.

In anticipation of the institution of these proceedings, Baker Hughes has
submitted an Offer of Settlement ("Offer") which the Commission has determined
to accept. Solely for the purpose of this proceeding, and any other proceeding
brought by or on behalf of the Commission, or to which the Commission is a
party, and prior to a hearing pursuant to the Commission's Rules of Practice, 17
C.F.R. Section 201.100 et seq., the Respondent, without admitting or denying the
findings contained in this Order Instituting Public Proceedings Pursuant to
Section 21C of the Securities Exchange Act of 1934, Making Findings, and
Imposing a Cease-and-Desist Order ("Order"), except that Respondent admits that
the Commission has jurisdiction over it and over the subject matter of this
proceeding, consents to the entry of this Order.


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                                      III.

The Commission makes the following findings:

A. RESPONDENT

Baker Hughes Incorporated is a Delaware corporation headquartered in Houston,
Texas. The company is engaged principally in the oilfield services industry and
operates in more than 80 countries. Baker Hughes' common stock is registered
with the Commission pursuant to Section 12(b) of the Exchange Act, and is listed
on the New York Stock Exchange.

B. OTHER RELEVANT PERSONS AND ENTITIES

James W. Harris, age 42 and a Certified Public Accountant ("CPA"), was the
Director of Taxes from 1994 to 1997, Vice President (Tax) from 1997, and
Controller of Baker Hughes from 1998 until his resignation on May 21, 1999.

Eric L. Mattson, age 49, was the senior Vice President and Chief Financial
Officer ("CFO") of Baker Hughes from 1993 until his resignation on May 21, 1999.

PT Eastman Christiensen ("PTEC") is an Indonesian corporation headquartered in
Jakarta, Indonesia. PTEC is controlled by Baker Hughes and its financial results
appear in the consolidated financial statements of Baker Hughes.

KPMG Siddharta Siddharta & Harsono ("KPMG") is a public accounting firm in
Jakarta, Indonesia. KPMG is an affiliate firm of KPMG International, a Swiss
association with member firms in 159 countries. In 1997, Baker Hughes retained
KPMG as its accounting and tax consultants in Indonesia. KPMG reviewed PTEC's
1997 corporate tax returns and represented PTEC in the 1998 audit of its 1997
tax returns by the Indonesian Ministry of Finance, Directorate General of
Taxation (the "Directorate General").

Sonny Harsono, an Indonesian citizen, is a senior KPMG partner in the offices of
KPMG located in Jakarta, Indonesia.

                                       IV.

                                      FACTS

A. SUMMARY

In March 1999, Baker Hughes' CFO and its Controller authorized an illegal
payment, through KPMG, its agent in Indonesia, to a local government official in
Indonesia. Baker Hughes, through its CFO and Controller, directed that this
improper payment be made while knowing or aware that KPMG would pass all or part
of the payment along to a foreign government official for the purpose of
influencing the official's decision affecting the business of Baker Hughes. This
improper payment was made in violation of the Foreign Corrupt Practices Act
("FCPA"). In

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addition, in 1998 and 1995, senior managers at Baker Hughes authorized payments
to Baker Hughes' agents in India and Brazil, respectively, without making an
adequate inquiry as to whether the agents might give all or part of the payments
to foreign government officials in violation of the FCPA. Baker Hughes
improperly recorded all three transactions in its books and records as routine
business expenditures. In addition to its false books and records, Baker Hughes
also failed to devise and maintain an adequate system of internal accounting
controls to detect and prevent improper payments to foreign government officials
and to provide reasonable assurance that transactions were recorded as necessary
to permit the preparation of financial statements in conformity with Generally
Accepted Accounting Principles.

B. BAKER HUGHES MADE AN IMPROPER PAYMENT IN INDONESIA AND FALSIFIED ITS BOOKS
   AND RECORDS

1. THE INDONESIAN MINISTRY OF FINANCE'S TAX ASSESSMENT

In November 1998, the Indonesian Ministry of Finance's Directorate General of
Taxation notified PTEC, an Indonesian corporation controlled by Baker Hughes,
that it would soon begin a tax audit of PTEC's 1997 tax returns. Those returns
claimed a substantial refund. The next month, the Directorate General commenced
the tax audit. In February 1999, the Directorate General notified PTEC of its
preliminary determination that PTEC's tax liability would be assessed at $3.2
million. On February 26, 1999, as instructed by PTEC's Finance Manager, a PTEC
employee contacted KPMG and instructed KPMG to represent PTEC before the
Directorate General. Shortly after that initial contact, the PTEC Finance
Manager told KPMG that the Indonesian tax official was seeking an improper
payment.

KPMG immediately reviewed the preliminary determination by the Directorate
General and concluded that the proposed $3.2 million assessment against PTEC was
incorrect. Initially, KPMG concurred with PTEC's determination that it was due a
refund. KPMG contacted Baker Hughes' Asia-Pacific Tax Manager (the "Regional Tax
Manager") based in Australia with oversight responsibility for Indonesian tax
matters, and told him of its findings. KPMG suggested that it meet with the
Directorate General in an attempt to reconcile the disparity between their
respective findings. Following KPMG's advice, the Regional Tax Manager
instructed KPMG to meet with the Directorate General to discuss the merits of
the assessment and correct what KPMG believed was an incorrect tax assessment.
During these meetings, the Indonesian tax official told KPMG that he was aware
of PTEC's reputation of making "goodwill payments" to tax officials, and
demanded a payment of $200,000 in exchange for which he would reduce PTEC's tax
assessment. KPMG initially rejected the Indonesian tax official's request for an
illicit payment. On March 5, 1999, KPMG informed the Regional Tax Manager of the
Indonesian tax official's demand for an illicit payment. During this
conversation, the Regional Tax Manager instructed KPMG not to pay the Indonesian
tax official but to challenge the assessment on its merits.

2. KPMG DISCUSSES MAKING AN IMPROPER PAYMENT

During several subsequent meetings between the Indonesian tax official and KPMG,
the Indonesian tax official reiterated his demand for an improper payment. The
KPMG Tax Manager


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assigned to the audit engagement ("KPMG Tax Manager"), who was an Australian
citizen on secondment from KPMG Australia, informed the Regional Tax Manager of
the Indonesian tax official's continuing demand for an illicit payment. In
response, the Regional Tax Manager asked the KPMG Tax Manager to find out how
much the Indonesian tax official wanted to reduce the assessment. Because it
appeared to the KPMG Tax Manager that the Regional Tax Manager was considering
making the illicit payment, the KPMG Tax Manager met with Sonny Harsono, a
senior KPMG partner, and told him about the Indonesian tax official's continuing
demand for an illicit payment. Concerned about the applicability of the FCPA,
the KPMG Tax Manager asked Harsono how to handle the Indonesian tax official's
insistence on an illicit payment.

After listening to an explanation of the situation, Harsono advised the KPMG Tax
Manager that the FCPA was an issue because PTEC was controlled by a U.S. public
company and that KPMG should be careful in dealing with the Indonesian tax
official's demand. Notwithstanding his recognition of the potential FCPA issues,
Harsono advised the KPMG Tax Manager that if Baker Hughes represented directly
to KPMG, not through PTEC, that it wanted KPMG to make the illicit payment, KPMG
would be willing to pay the Indonesian tax official. To conceal the improper
payment, Harsono agreed with the KPMG Tax Manager that KPMG should generate an
invoice that would include money for the payment to the Indonesian tax official
and for KPMG's fees for services rendered. As a result of his discussions with
Harsono, the KPMG Tax Manager understood that PTEC would have to provide the
funds to pay the Indonesian tax official.

3. KPMG INFORMS BAKER HUGHES OF ITS OPTIONS

On March 8, 1999, the KPMG Tax Manager notified the Regional Tax Manager that
despite repeated requests, the Indonesian tax official was unwilling to review
the merits of the assessment without the improper payment. However, the KPMG Tax
Manager further explained that the Indonesian tax official had told KPMG that he
was now willing to reduce the assessment from $3.2 million to $270,000 in
exchange for an improper payment of $75,000. In addition, the KPMG Tax Manager
told the Regional Tax Manager that he had consulted with Harsono and that
Harsono had authorized him to make the illicit payment if Baker Hughes wanted
KPMG to make the payment. Based on his discussion with Harsono, the KPMG Tax
Manager told the Regional Tax Manager that, to conceal the improper payment,
KPMG would issue a $143,000 invoice for "professional services rendered." The
$143,000 was comprised of $75,000 for the Indonesian tax official, plus KPMG's
actual fees and applicable taxes. Further, the KPMG Tax Manager told the
Regional Tax Manager that KPMG was unwilling to use its own funds to pay the
Indonesian tax official, but rather required PTEC to provide the funds.

The KPMG Tax Manager concluded the conversation with the Regional Tax Manager by
noting that there were only two options available to Baker Hughes: one, contest
the $3.2 million tax assessment which, under Indonesian law, would require
immediate payment of the full assessment and perhaps as much as two years to
resolve the issue; or two, make the illicit payment. The Regional Tax Manager
told the KPMG Tax Manager that any decision to make the payment had to be made
and authorized by senior management in Houston and that he intended to take this
matter to them. In the meantime, the Regional Tax Manager told the KPMG Tax


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Manager to stall the Indonesian tax official and thus delay the issuance of the
$3.2 million tax assessment.

4. BAKER HUGHES' SENIOR MANAGEMENT DISCUSS THE PROPOSED TRANSACTION

On March 9, 1999, during a conference call, the Regional Tax Manager in
Australia spoke to Harris, Baker Hughes' controller, located in Houston, and to
Baker Hughes' FCPA advisor ("FCPA advisor") in Washington, D.C. about the
Indonesian tax official's demand for a $75,000 improper payment, KPMG's offer to
make the improper payment on PTEC's behalf using PTEC's funds, and the method by
which KPMG would conceal the payment. Further, the Regional Tax Manager told
Harris and the FCPA advisor that the Indonesian tax official had given PTEC only
48 hours to respond to his demand and, that if PTEC failed to meet his demand,
he was prepared to issue the $3.2 million tax assessment. The FCPA advisor
advised Harris and the Regional Tax Manager that any payment to an Indonesian
tax official under the circumstances described would violate the FCPA. In
addition, the FCPA advisor instructed Harris and the Regional Tax Manager that
for KPMG to continue working for PTEC, KPMG must first provide PTEC with
specific written assurances that it would not make any illegal payments on
behalf of PTEC to any Indonesian government official.

Shortly after the conference call, the Regional Tax Manager sent Harris a
detailed e-mail delineating the events in Indonesia and apologizing for bringing
this distasteful problem to Harris. In the e-mail, the Regional Tax Manager
discussed the urgency of the problem and described the two options available to
PTEC for resolving the tax problem that the KPMG Tax Manager previously had
identified. The Regional Tax Manager identified the option of making the
improper payment as the better one from a financial perspective because it would
provide Baker Hughes "certainty" and save "significant profit and loss costs,
associated with foreign exchange risks and cost of finance." He also told Harris
that KPMG could characterize the improper payment as a "success fee."

On March 10, 1999, Harris told Baker Hughes' General Counsel and Mattson, Baker
Hughes' CFO, of the Indonesian tax official's demand for an improper payment.
During this meeting, Harris told the General Counsel and Mattson that he had
talked with the FCPA advisor, who had advised him to obtain a letter from KPMG
assuring Baker Hughes that it would not make any improper payments to any
Indonesian government official on behalf of PTEC. The General Counsel stated
that the Indonesian tax official's demands raised FCPA concerns. In response,
Mattson asked the General Counsel why PTEC could not pay KPMG and not worry
about what KPMG did with the money. The General Counsel responded by stating
that Baker Hughes cannot bury its head in the sand and ignore the problem. The
General Counsel instructed Mattson and Harris to continue working with the FCPA
advisor, to follow any directions given by the FCPA advisor, and under no
circumstances to enter into any transaction that could potentially violate the
FCPA.

5. BAKER HUGHES' CFO AND CONTROLLER AUTHORIZE THE IMPROPER PAYMENT

On the evening of March 10, 1999, during a conference call with Mattson and
Harris, the Regional Tax Manager reported that KPMG was unwilling to issue the
specific letter requested


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by the FCPA advisor. However, the Regional Tax Manager said that KPMG indicated
a willingness to issue its standard engagement letter in lieu of the letter
specifically requested by the FCPA advisor. The Regional Tax Manager told
Mattson and Harris that the standard engagement letter referenced KPMG's
international code of conduct. In addition, the Regional Tax Manager told
Mattson and Harris that PTEC's 48 hour grace period was fast running out and
that the Indonesian tax official was threatening to issue the $3.2 million
assessment. Disregarding the FCPA advisor's instructions, and acting contrary to
the advice of the General Counsel, Mattson and Harris authorized the Regional
Tax Manager to proceed with the "success fee" transaction without obtaining the
specific letter that the FCPA advisor had instructed they obtain. After the
conference call, the Regional Tax Manager called the KPMG Tax Manager to
authorize him to proceed with the "success fee" transaction. The Regional Tax
Manager also told the KPMG Tax Manager that the authorization came from the
highest level in Houston, specifically the CFO.

On March 11, 1999, KPMG created and sent a false invoice to PTEC for $143,000.
Although the invoice purported to be for professional services rendered, in
reality, it comprised the $75,000 to be paid to the Indonesian tax official, and
the remainder for KPMG's actual fees and applicable taxes. After receiving the
invoice, PTEC paid KPMG $143,000 and improperly entered the transaction on its
books and records as payment for professional services rendered. On March 23,
1999, PTEC received a tax assessment of approximately $270,000 from the
Directorate General.

6. BAKER HUGHES ATTEMPTS TO UNWIND THE TRANSACTION AND TAKES CORRECTIVE ACTION

After Baker Hughes' General Counsel and FCPA advisor discovered that Mattson and
Harris had authorized KPMG to make the improper payment to the Indonesian tax
official to reduce PTEC's tax assessment, Baker Hughes embarked on a corrective
course of conduct. In particular, the company: attempted to stop the payment to
KPMG; instructed KPMG not to make the payment to the Indonesian tax official and
to return the entire amount paid to KPMG; engaged outside counsel to report to
the audit committee; voluntarily and promptly disclosed the misconduct to the
Commission and the Department of Justice; disclosed the matter to its outside
auditors and corrected its books and records; fired KPMG; asked for and obtained
the resignation of those senior management officials responsible for the
violative conduct; filed a formal objection to the $270,000 assessment with the
Directorate General and took steps to determine the correct tax deficiency; paid
$2.1 million to the Indonesian government, which it believed to be the correct
tax assessment; and implemented enhanced FCPA policies and procedures. In
addition, Baker Hughes cooperated with the Commission's investigation, including
declining to assert its attorney-client privilege with respect to communications
during the relevant time period concerning the Indonesian transaction.

As part of its ameliorative efforts, Baker Hughes demanded that KPMG issue a
true and accurate invoice. KPMG returned Baker Hughes' $75,000 plus related
taxes and charges, and issued PTEC a true and accurate invoice in the amount of
$14,300 for professional services rendered.


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C. THE 1998 TRANSACTION IN INDIA

In August 1998, Baker Hughes acquired the Western Atlas Corporation ("Western
Atlas"). At that time, Western Geophysical Corporation ("Western Geophysical")
was a subsidiary of Western Atlas providing, among other things, seismic
services throughout the world for offshore geophysical exploration. With the
acquisition of Western Atlas, Western Geophysical became a subsidiary of Baker
Hughes.

In September 1998, under the terms of a contract signed in September 1996, with
the Indian Oil and Natural Gas Commission, Western Geophysical began
preparations to perform various 3D seismic surveys in the Bay of Canby, India.
In order for its foreign-flagged vessels to enter the Indian coastal waters and
perform the seismic surveys, Western Geophysical was required to obtain shipping
permits from the Director General of Shipping in Bombay, India. Before the
Director General of Shipping could issue the permits, Western Geophysical had to
obtain a "no objection certificate" from the Indian Coastal Commission ("ICC"),
an organization of private Indian-flagged vessels, stating that there were no
suitable Indian-flagged vessels available to carry out the seismic operations.

On October 14, 1998, while Western Geophysical's foreign-flagged vessels were en
route to India, an agent for Western Geophysical was working on securing the
permits from the Director General of Shipping. The agent contacted the General
Manager for Western Geophysical's Far East, Australia and China Operations
("General Manager") who, at the time, was traveling in Hong Kong. The Western
Geophysical agent told the General Manager that the company needed to obtain
permits before its foreign-flagged vessels could enter Indian coastal waters.
The Western Geophysical agent advised the General Manager that if the General
Manager provided $15,000, he might be able to get the permits issued. The
General Manager authorized the agent to "take care of it." Shortly after the
General Manager's authorization, the Western Geophysical agent obtained the
necessary shipping permits, without obtaining the "no objection certificate."

Thereafter, the Western Geophysical agent requested a reimbursement of the
$15,000 payment. A Western Geophysical employee in the accounting department
sent an e-mail to the General Manager in the United States seeking authorization
to pay the agent. Without making an adequate inquiry to ensure that all or part
of the $15,000 would not be paid to a foreign government official in violation
of the FCPA, the General Manager authorized the payment of $15,000 to the
Western Geophysical agent. Subsequently, Western Geophysical's accounting staff
improperly recorded the $15,000 payment: (a) without determining to whom the
money ultimately would be paid or the specific purpose of the payment; and (b)
by inaccurately describing the payment on its books and records as payment for a
"Shipping Permit."

D. THE 1995 TRANSACTION IN BRAZIL

In 1995, Baker Hughes planned and implemented a two part restructuring of its
operations in Brazil. The first part of the restructuring involved merging
several of Baker Hughes' Brazilian subsidiaries into Centrilift, another Baker
Hughes subsidiary. Upon completion of the merger, Baker Hughes reincorporated
and renamed Centrilift "Baker Hughes do Brasil Ltda." ("BHB"). The second part
of the restructuring involved transferring the assets and liabilities of Baker


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Hughes Equipamentos Ltda. ("BHEL"), another Baker Hughes subsidiary, to BHB and
leaving BHEL dormant. BHEL's Finance Director ("Finance Director") and Baker
Hughes' International Tax Manager ("International Tax Manager"), who was also
the team leader for the reorganization, believed that the restructuring, as
planned, had to be completed by Baker Hughes' September 30, 1995 fiscal year
end, in order for Baker Hughes to take a $40 million U.S. tax deduction in that
year. Before the restructuring became effective, Brazilian law required that BHB
file various documents with, and receive the approval of, the Commercial
Registry in Rio de Janeiro ("Commercial Registry").

In August 1995, a Brazilian agent representing BHEL informed the Finance
Director that he needed $10,000 in order to obtain the approval from the
Commercial Registry that was necessary to complete the restructuring within a
week. The Finance Director sought approval for this payment from the
International Tax Manager. The International Tax Manager informed his supervisor
of the agent's request for $10,000 to obtain the approval from the Commercial
Registry. Without making an adequate inquiry to ensure that all or part of the
$10,000 would not be paid to a foreign government official in violation of the
FCPA, Baker Hughes authorized the Finance Director to pay the $10,000. Based on
this authorization, the Finance Director paid the agent $10,000 on August 30,
1995. Subsequently, Baker Hughes improperly recorded the $10,000 payment: (a)
without determining to whom the money ultimately would be paid or the specific
purpose of the payment; and (b) by inaccurately describing the payment as an
"advance payment for expenses related to the commercial registry board of Rio de
Janeiro."

                                       V.

                                LEGAL DISCUSSION

A. APPLICABLE LAW

The FCPA, first enacted in 1977, amended the Exchange Act to make it unlawful
for U.S. issuers, or anyone acting at their behest, to make improper payments to
any foreign official in order to obtain or retain business. Section 30A of the
Exchange Act. In addition, the FCPA established accounting control requirements
for issuers subject to either the registration or reporting provisions of the
Exchange Act. Section 13 of the Exchange Act.

Section 13(b)(2)(A) of the Exchange Act requires every issuer with a class of
securities registered pursuant to Section 12 of the Exchange Act to make and
keep books, records, and accounts, which, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of the assets of the issuer.
Section 13(b)(2)(B) of the Exchange Act requires every issuer to devise and
maintain a system of internal accounting controls sufficient to provide
reasonable assurances that: (i) transactions are executed in accordance with
management's general or specific authorization; and (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles or any other criteria
applicable to such statements, and to maintain accountability for assets.


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B. VIOLATIONS BY BAKER HUGHES

Baker Hughes, through its CFO and Controller, authorized PTEC to pay KPMG
$143,000 at a time when PTEC had a tax assessment matter pending before the
Indonesian tax authorities. Baker Hughes' CFO and Controller knew or were aware
of a high probability that KPMG intended to use $75,000 of the $143,000 to pay
the Indonesian government tax official who was conducting PTEC's tax audit.
Further, Baker Hughes' CFO and Controller knew that the $75,000 payment to the
Indonesian tax official was to be made to obtain a reduction in its tax
assessment from $3.2 million to approximately $270,000. Subsequent to the
payment to KPMG, PTEC recorded the $143,000 payment to KPMG on its books and
records as payment for professional services rendered knowing that the entry did
not accurately and fairly reflect the disposition of its assets. Such conduct
violated the books and records and internal controls provisions of the Exchange
Act, Sections 13(b)(2)(A) and (B).

Baker Hughes, through Western Geophysical's General Manager for Western
Geophysical's Far East, Australia and China Operations, authorized Western
Geophysical to pay one of its agents $15,000 to obtain shipping permits from the
Director General of Shipping. The General Manager authorized the $15,000 payment
without determining to whom the money ultimately would be paid or the specific
purpose of the payment. In addition, Baker Hughes recorded the $15,000 payment
on its books and records in a manner that did not, in reasonable detail,
accurately and fairly reflect the disposition of its assets. Accordingly, Baker
Hughes' conduct violated the books and records and internal controls provisions
of the Exchange Act, Sections 13(b)(2)(A) and (B).

Baker Hughes, through its Director of Taxes and International Tax Manager,
authorized BHEL to pay one of its agents $10,000 to obtain from the Commercial
Registry the approval necessary to complete its restructuring. Baker Hughes
authorized the $10,000 payment without determining to whom the money ultimately
would be paid or the specific purpose of the payment. In addition, Baker Hughes
recorded the $10,000 payment on its books and records in a manner that did not,
in reasonable detail, accurately and fairly reflect the disposition of its
assets. Accordingly, Baker Hughes' conduct violated the books and records and
internal controls provisions of the Exchange Act, Sections 13(b)(2)(A) and (B).

                                       VI.

                                    FINDINGS

Based on the foregoing, the Commission finds that Respondent violated Sections
13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act. In determining to accept the
offer, the Commission considered remedial acts promptly undertaken by Respondent
and cooperation afforded to the Commission staff.


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                                      VII.

                                      ORDER

Accordingly, IT IS HEREBY ORDERED, pursuant to Section 21C of the Exchange Act,
that Respondent cease and desist from committing or causing any violation and
any future violation of:

(i) Section 13(b)(2)(A) of the Exchange Act by making and keeping books, records
and accounts, which, in reasonable detail, accurately and fairly reflect the
transactions and disposition of the assets of the issuer, including, but not
limited to, accurately and fairly reflecting any payment or gift, or the
authorization of the payment of any money or the giving of anything of value to:
(1) any foreign official; (2) any foreign political party or official thereof or
any candidate for foreign political office; or (3) any person, while knowing
that all or a portion of such money or thing of value will be given, directly or
indirectly, to any foreign official, to any foreign political party or official
thereof, or to any candidate for foreign political office; whether such payment
or gift is prohibited by Section 30A(a) of the Exchange Act, excepted by Section
30A(b) of the Exchange Act, or is subject to the affirmative defense under
Section 30A(c) of the Exchange Act.

(ii) Section 13(b)(2)(B) of the Exchange Act by devising and maintaining a
system of internal accounting controls sufficient to provide reasonable
assurances that: (1) transactions are executed in accordance with management's
general or specific authorization; (2) transactions are recorded as necessary
(I) to permit preparation of financial statements in conformity with generally
accepted accounting principles or any other criteria applicable to such
statements, and (II) to maintain accountability for assets. With respect to the
requirements of 2(II), any payment or gift, or the authorization of the payment
of any money or the giving of anything of value to: (1) any foreign official;
(2) any foreign political party or official thereof or any candidate for foreign
political office; or (3) any person, while knowing that all or a portion of such
money or thing of value will be given, directly or indirectly, to any foreign
official, to any foreign political party or official thereof, or to any
candidate for foreign political office shall be recorded in sufficient detail to
permit a determination of whether such payment or gift is prohibited by Section
30A(a) of the Exchange Act, excepted by Section 30A(b) of the Exchange Act, or
is subject to the affirmative defense under Section 30A(c) of the Exchange Act;
(3) access to assets is permitted only in accordance with management's general
or specific authorization; and (4) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
By the Commission.


                                                   -----------------------------
                                                                Jonathan G. Katz
                                                                       Secretary



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