SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.

Litigation Release No. 17126 \ September 12, 2001

   Accounting and Auditing Enforcement Release No. 1445 / September 12,
   2001

   SECURITIES AND EXCHANGE COMMISSION v. ERIC L. MATTSON AND JAMES W.
   HARRIS, Civil Action No. H-01-3106 (S.D. Tex.)(filed September 11,
   2001)

    SEC SUES BAKER HUGHES INCORPORATED'S FORMER CHIEF FINANCIAL OFFICER
           AND CONTROLLER FOR AUTHORIZING THE PAYMENT OF A BRIBE

   On September 11, 2001, the Securities and Exchange Commission filed a
   civil injunctive action in the United States District Court for the
   Southern District of Texas, Houston Division, against Eric L. Mattson
   ("Mattson"), the former Chief Financial Officer of Baker Hughes
   Incorporated ("Baker Hughes"), and James W. Harris ("Harris"), Baker
   Hughes' former Controller. The Commission's complaint alleges that
   Mattson and Harris authorized the payment of a bribe of $75,000,
   through KPMG-Siddharta Siddharta & Harsono ("KPMG-SSH"), Baker Hughes'
   agent and accountant in Indonesia, to a local government official in
   Indonesia. Mattson and Harris directed that this payment be made while
   knowing that KPMG-SSH would pass all or part of the payment along to
   an Indonesian tax official for the purpose of influencing him to
   reduce a tax assessment from $3.2 million to $270,000 for PT Eastman
   Christensen ("PTEC"), an Indonesian company beneficially owned by
   Baker Hughes. This improper payment was authorized in violation of the
   antibribery provisions of the Foreign Corrupt Practices Act ("FCPA")

   The complaint alleges that on March 9, 1999, Harris was told that an
   Indonesian tax official was demanding a $75,000 payment, in exchange
   for which he would reduce PTEC's tax assessment. Harris learned that
   KPMG-SSH had offered to make the improper payment on PTEC's behalf
   using PTEC's funds, and then issue an inflated invoice that would
   conceal the payment. The complaint further alleges that Baker Hughes'
   FCPA advisor advised Harris that any such payment to an Indonesian tax
   official would violate the FCPA. On March 10, 1999, Harris told Baker
   Hughes' General Counsel and Mattson of the Indonesian tax official's
   demand for an improper payment. During this meeting, the General
   Counsel stated that the Indonesian tax official's demands raised FCPA
   concerns and under no circumstances should Harris or Mattson enter
   into any transaction that could potentially violate the FCPA. On the
   evening of March 10, 1999, disregarding the FCPA advisor's
   instructions, and acting contrary to the advice of the General
   Counsel, defendants Mattson and Harris authorized the payment of the