Lagos — UNITED States Justice Department is presently conducting a criminal inquiry of nearly a dozen oil and oil-services companies, focusing on potentially illegal payments to Customs agents who provided freight forwarding and other services, in Nigeria

A civil investigation by the Securities and Exchange Commission is also underway.

While eleven oil and oil-service firms had already received a letter from the Justice Department's criminal fraud section asking them to detail their relationship with Panalpina World Transport Holdings Ltd. (PWTN), a Swiss-based shipping and logistics-management company, a civil investigation by the Securities and Exchange Commission is already underway.

The Justice Department's letter cited concerns about payments that may violate the U.S. Foreign Corrupt Practices Act.

The oil and oil-service firms were asked to list the countries where Panalpina provided services in the past five years, and to specify what was paid for those services.

SEC spokesman, John Heine declined to comment. Panalpina announced last Tuesday that it is conducting an internal investigation and has been asked to provide documents to the Justice Department relating to services in Nigeria, Kazakhstan and Saudi Arabia for "a limited number of customers."

The spokesman for Panalpina, Mr. Martin Spohn, noted: "Obviously, we are cooperating with the investigation,"

The Justice Department probe underscores the difficulty of complying with U.S. anti-bribery laws in countries that may be as awash in corruption as they are in oil.

Federal officials, in a bow to such concerns, called a meeting at the Justice Department in Washington D.C., last Friday specifically to discuss the pitfalls of operating in Nigeria.

Participants included four companies that weren't recipients of the earlier dispatched letter, and which had previously reported internal investigations of potential violations of U.S. anti-bribery laws in West Africa.

Tidewater Inc. (TDW), Noble Corp. (NE), GlobalSantaFe Corp. (GSF) and Global Industries Ltd. (GLBL), in announcing their own investigations, didn't identify any third parties by name, referring only to reimbursements to an unidentified "Customs agent."

On the agenda at the July 20 meeting was: How to comply with U.S. anti-bribery laws while doing business in Nigeria, where such laws aren't respected and bribery is rampant.

The meeting included officials from the Justice Department, the SEC, the Commerce Department and the State Department. U.S. State Department officials based in Lagos took part by telephone, but not Nigerian government officials, allowing U.S. corporations to freely discuss frustrations about doing business in Nigeria, said an individual close to the matter, who declined to be identified.

"It's a very difficult operating environment, even if you're trying to do everything by the book," said an individual familiar with operating in Nigeria, who agreed to speak anonymously.

Another individual, who has conducted business in Nigeria, who also agreed to speak anonymously, said corruption in Nigeria is so widespread, "you can't pass through the Lagos airport without being asked to pay a bribe."

Firms that refuse to pay bribes cannot obtain permits needed to conduct business in Nigeria, while those that pay run the risk of being charged with violating the U.S. Foreign Corrupt Practice Act.

U.S. oil and oil-services companies that do business in Nigeria are keenly interested in having the U.S. Government address such issues, and hope Nigeria's recent elections might offer an opportunity for change, as even power solutions are also in short supply.

However, Pulling out of Nigeria would help U.S. companies avert potential legal harm, but wouldn't benefit the nation's energy supply or U.S. consumers. Remaining in Nigeria carries other risks, particularly for companies found to be repeat offenders of the Foreign Corrupt Practices Act.

In February, Vetco Gray Controls, a Houston oil-services company, and two other Vetco International Ltd. subsidiaries, paid a $26 million settlement to the Justice Department, a record for a criminal foreign corrupt practices case. The units admitted paying about $2 million in bribes to Nigerian Customs officials through an international freight forwarding and Customs clearing company, ending in 2005. Vetco had agreed in 2004 not to make such payments.

Baker Hughes (BHI) and a subsidiary paid $44 million in April to settle criminal charges involving bribes in Kazakhstan and SEC civil charges involving payments elsewhere, including Nigeria, the largest combined penalty for such charges. Baker Hughes had a 2001 agreement not to pay bribes under an SEC settlement related to payments in Indonesia.

As the Justice Department focuses on 11 oil and oil-services firms that relied on Panalpina for services, including in Nigeria, four others are voluntarily scrutinizing operations, a process that might or might not yield criminal charges depending on the findings.

New Orleans-based Tidewater Inc. announced in April that it was investigating payments to a Customs agent to obtain permits to operate in waters off Nigeria. It cited concerns stemming from the fact that its Nigerian affiliate used the same Customs agent thought to be implicated in the Vetco case.

Noble Corp., of Sugar Land, Texas, GlobalSantaFe Corp., of Houston, and Global Industries Ltd., of Carlyss, Louisiana followed suit in June. Noble announced an internal investigation of its Nigerian operations, focusing on reimbursements to customs agents for expenses for import permits. GlobalSantaFe said it is examining agents who handled customs matters in Nigeria, and Global Industries reported it was probing payments in Nigeria that may violate laws meant to prevent U.S. firms from bribing officials overseas.