2nd UPDATE:KBR,Halliburton To Pay $579 Million To Settle Bribe Case
February 11 2009 - 5:43PM
Dow Jones News
Halliburton (HAL) and its former subsidiary KBR Inc. (KBR)
settled federal charges Wednesday totaling $579 million, with KBR
paying the bulk of those fines after pleading guilty to criminal
charges for bribing Nigerian government officials for more than a
decade.
The criminal and civil settlements, which were both announced by
the U.S. Department of Justice and the Securities and Exchange
Commission, end a long-running investigation into an elaborate
bribery scheme which helped KBR executives obtain more than $6
billion worth of construction contracts in Nigeria.
KBR's subsidiary Kellog Brown & Root LLC pleaded guilty in a
Houston federal court to criminal charges of violating the Foreign
Corrupt Practices Act and agreed to pay a $402 million fine.
"Today's settlements announced by the Department of Justice and
the Securities Exchange Commission close both a regrettable and
unfortunate chapter in KBR's rich and storied history," KBR's
President and CEO William P. Utt said in a statement. "KBR has
fully cooperated with the U.S. Government throughout the extensive
investigations over the last five years."
Halliburton, meanwhile, said Wednesday it had received a
non-prosecution agreement from the DOJ in which the DOJ agreed not
to bring criminal charges in exchange for cooperation with the
ongoing investigation.
"As a result of the indemnity and the KBR subsidiary's criminal
plea, Halliburton has agreed to pay in eight installments over the
next two years $382 million of $402 million in criminal fines
payable by KBR as part of KBR's resolution of the DOJ
investigation, with KBR consenting to pay the remaining $20
million," Halliburton said in a statement.
In a related civil complaint by the SEC, Halliburton and KBR
jointly agreed to pay $177 million in disgorgement. The SEC had
charged KBR with violating the anti-bribery provisions of the
Foreign Corrupt Practices Act. It also charged Halliburton and KBR
with record-keeping and internal control violations.
"As part of the resolution of the SEC investigation, Halliburton
will retain an independent consultant to perform a 60-day initial
and, approximately one year later, a 30-day follow-up review and
evaluation of Halliburton's anti-bribery and foreign agent internal
controls and record-keeping policies and to adopt any necessary
improvements," the company said.
Halliburton separated itself from KBR in 2007. An attorney for
KBR couldn't be reached for comment.
"This bribery scheme involved both senior foreign government
officials and KBR corporate executives who took actions to insulate
themselves from the reach of U.S. law enforcement," said Rita M.
Glavin, the acting assistant attorney general of the criminal
division of the DOJ. "This successful prosecution of KBR and its
agreement to pay a more than $400 million fine, demonstrates that
no one is above the law, and that the department is determined to
seek penalties that are commensurate with, and will deter, this
kind of serious criminal misconduct."
The DOJ and SEC alleged that Albert "Jack" Stanley, KBR's former
chief executive, met with high-ranking Nigerian officials at least
four times to arrange bribe payments in return for construction
contracts.
Stanley pleaded guilty to criminal charges of conspiring to
violate the Foreign Corrupt Practices Act in September and also
reached a settlement with the SEC in a civil complaint. His
sentencing is scheduled for May 6.
According to the DOJ, KBR was part of a four-company joint
venture that received the contracts. As part of its plea, KBR
admitted to conspiring with those partners to promise and pay
bribes. They also admitted to paying tens of millions of dollars in
consulting fees to two agents for use in bribing government
officials.
As part of its criminal plea deal, KBR agreed to retain an
independent compliance monitor for a three-year period and continue
to cooperate with the DOJ's continuing investigation of this
matter.
KBR's CEO Utt noted Wednesday that none of the allegations in
the complaints involved current KBR management or employees.
-By Sarah N. Lynch, Dow Jones Newswires; 202-862-6634;
sarah.lynch@dowjones.com
(Kerry E. Grace contributed to this report.)