4th UPDATE: Halliburton Agrees To Pay $35 Million To Settle Nigeria Bribery Case

Halliburton Co. (HAL) said Tuesday it has agreed to pay $35 million to the Nigerian government to settle bribery allegations related to the construction and expansion of its Bonny Island natural gas liquefaction facility, in which its former subsidiary KBR Inc. (KBR) had a 25% stake.

The deal comes two weeks after nine people and entities were indicted on the allegations, including former Halliburton chief executive and U.S. Vice President Dick Cheney. The charges were dropped Friday as an anti-graft agency spokesman said a settlement had been reached.

Under the pact, all lawsuits and charges against Halliburton, KBR and associated persons, including Cheney, have been dropped and the Nigerian government agreed not to file further criminal or civil charges. In addition to paying $32.5 million as part of the settlement, Halliburton will pay $2.5 million in government legal fees and aid in Nigeria's efforts to recover funds frozen in a Swiss bank account of a former joint-venture agent.

A lawyer for Cheney, Terrence O'Donnell, said the charges against the former vice president were "baseless."

Tara Mullee Agard, a Halliburton spokeswoman, said the company would not comment beyond a news release it issued announcing the settlement.

Halliburton and KBR, which separated in 2007, paid a combined $579 million to the U.S. government last year to settle similar allegations related to Nigeria. KBR pleaded guilty to charges in the case and the government agreed not to prosecute Halliburton.

Earlier this month, former KBR consultant Wojciech J. Chodan pleaded guilty in Houston to bribing Nigerian officials to win contracts to design and build the Bonny Island facility, according to the U.S. Justice Department. The 72-year-old U.K. citizen admitted that he and co-conspirators paid out $182 million over 10 years in order to secure contracts worth more than $6 billion.

Chodan faces up to five years in prison and has agreed to forfeit $726,885. Sentencing is scheduled for Feb. 22 in Houston.

The $35 million settlement amounts to about 4 cents a share for Halliburton, said Scott Burk, an analyst with Oppenheimer & Co.

"It's modest enough that we don't think it's going to have an impact on Halliburton," Burk said. "It seems like it will be worthwhile to just not have to worry about it going forward."

Nigerian anti-graft officials last week said the settlement would total $250 million.

Fred Enochs, a partner at Washington-based consultancy TD International, said that with Nigerian elections looming next spring, investigators there likely faced pressure from politicians and government officials to settle the matter without a trial, which may have divulged the names of those on the receiving end of illegal payments.

"They certainly didn't want to see that happen - especially with an election coming up," said Enochs, who was formerly with the Central Intelligence Agency and a director at Enron Corp.

Energy companies have become increasingly targeted in bribery probes, particularly those stemming from dealings in Nigeria.

At the same time earlier this month that Nigeria's Economic and Financial Crimes Commission said it was probing Halliburton, investigators said they were also looking into alleged bribery by Royal Dutch Shell PLC (RDSA, RDSA.LN).

Seven companies, including Shell, agreed in November to pay a combined $236 million to settle allegations by U.S. investigators that they or their contractors bribed foreign officials to obtain import permits for drilling equipment and other materials into countries including Nigeria.

Among the companies involved in that settlement were offshore drillers Noble Corp. (NE), Transocean Ltd. (RIG, RIGN.VX) and Pride International Inc. (PDE).

Earlier this fall The Wall Street Journal reported the U.S. Department of Justice had begun looking into allegations of bribery in Yemen by Halliburton's larger oil field services rival Schlumberger Ltd. (SLB).

Halliburton shares closed up 14 cents at $40.29. The stock has gained approximately 33% this year.

-By Ryan Dezember and Tess Stynes, Dow Jones Newswires; 713-547-9208; Ryan.Dezember@dowjones.com

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