ENI Reserves €250 Million For FCPA Settlement

A category in our post Where The Money Is listed big-dollar FCPA enforcement actions in the pipeline. One was French company Technip, which had just disclosed a €245 million ($330 million) provision for its role in the TSKJ Nigeria joint venture. That's the same case KBR and Halliburton settled last year for $579 million.

We weren't the only ones reading Technip's news. So was Italian energy giant ENI SpA. It was also part of the TSKJ joint venture through a subsidiary it later sold.

ENI's 2009 Annual Report (released March 11, 2010) said:

In a press release of February 12, 2010, the French company Technip announced, as a result of the circumstances that its discussions with U.S. authorities have intensified over the last weeks, the recognition of a provision for an amount of €245 million reflecting the estimated cost of resolution with such Authorities. The decision was made according to the status of ongoing discussions with DOJ and SEC that allowed Technip to estimate a global resolution of all potential claims against the company arising from the investigation.

As to ENIi, the contacts with the U.S. authorities have been intensified recently. Based on the ongoing status of the discussions, the Company has been able to estimate the cost of a global resolution of all potential claims arising from the investigation with the U.S. authorities, similarly to Technip. As a result of this, a provision of €250,000,000 has been accrued, also considering the contractual obligations assumed by ENI to indemnify Saipem as part of the divestment of Snamprogetti.

Discussions with the U.S. authorities are underway.

If Technip and ENI resolve their FCPA cases for around $300 million each, that means TSKJ's $180 million bribery in Nigeria will have resulted in U.S. financial penalties of more than $1.1 billion. Some in Nigeria will no doubt ask why the penalty money should end up in the U.S. Treasury and not their country.

ENI's ADRs trade on the New York Stock Exchange under the symbol E.

Download a copy of ENI's 2009 Annual Report released March 11, 2010 here.

Our thanks to a friend for sending the link to ENI's disclosure.

Where The Money Is

The Justice Department on Monday described BAE's $400 million FCPA-related settlement as one of the biggest ever.

Here, by our reckoning, are the other big payouts:

Siemens' $800 million resolution with the DOJ and SEC in December 2008 is the most expensive so far.

Kellogg Brown & Root and Halliburton settled their case last year for $579 million.

Then comes BAE's $400 million payment.

Followed by Baker Hughes' 2007 price tag of $44.1 million.

Willbros paid $32.3 million last year.

Chevron's violations related to the U.N.'s oil-for-food program cost it $30 million, also last year.

Titan Corporation held the record after it paid $28.5 million in 2005 for its FCPA settlement.

Vetco's resolution cost it $26 million in 2007.

Lockheed paid $24.8 million in 1994, the biggest case of its time.

York International spent $22 million last year to end its enforcement action.

Statoil paid $21 million in 2006.

AGCO Corporation paid $19.9 million in 2009 to settle oil-for-food offenses.

AB Volvo's 2008 case settled for $19.6 million.

Novo Nordisk A/S paid $18 million in 2009 to settle oil-for-food offenses.

ABB's violations cost it $16.4 million in 2004.

Schnitzer Steel agreed to pay $15.2 million in 2006.

And Flowserve paid $10.5 million in 2009.

Several cases in the settlement pipeline, if they go as expected, will rank high on the list:

Technip said recently it has reserved €245 million (about $330 million) for a potential settlement of FCPA offenses with the DOJ and SEC for its role in the TSKJ Nigeria joint venture (see KRB / Halliburton above).

Daimler AG reportedly will pay around $200 million for its FCPA settlement.

Alcatel-Lucent said last month it will pay $137.4 million in a settlement that's agreed in principle with the DOJ and SEC.

Pride International, Inc. said it has set aside $56.2 million for an expected settlement with both U.S. agencies.

And Innospec Inc. disclosed last month that it hopes to settle bribery charges related to the U.N.'s oil-for-food program with the DOJ, SEC and the U.K.'s Serious Fraud Office for between $28.8 million and $40.2 million.

Comments about this list and corrections to it are welcome.

Technip's €245 Million FCPA Charge

French company Technip said on Friday in its fourth quarter earnings release that it has reserved €245 million for an exceptional charge related to a potential settlement of Foreign Corrupt Practices Act offenses with the Justice Department and Securities and Exchange Commission for its role in the TSKJ Nigeria joint venture.

The company said:

As previously disclosed in its public filings, Technip has been cooperating with the United States Securities and Exchange Commission ("SEC") and the United States Department of Justice ("DOJ") in the ongoing investigations involving the joint venture company TSKJ, of which Technip has a 25% share, in relation to events which occurred between 1994 and 2004. Technip and the SEC and DOJ have discussed a resolution of all potential claims against the company arising from the investigation. While these discussions have not concluded, Technip will record an exceptional charge of €245 million in the fourth quarter 2009 reflecting the estimated costs of resolution based on the current status of the ongoing discussions.

Technip's chairman and CEO Thierry Pilenko said discussions with the SEC and DOJ "have intensified over the last weeks. There is now a roadmap to a satisfactory global resolution of all potential claims in the U.S. arising from the investigation. This is why we are now able to estimate the monetary cost of a resolution in our fourth quarter 2009 accounts."

A year ago, Houston-based global engineering firm Kellogg Brown & Root LLC (KBR) pleaded guilty to a five-count criminal information, with one conspiracy count and four substantive counts of violating the Foreign Corrupt Practices Act, for its role in the TSKJ joint venture. And with its former parent, Halliburton, it settled civil charges with the SEC. KBR's criminal fine was $402 million and with Halliburton it agreed to pay the SEC $177 million in disgorgement.

KBR admitted paying Nigerian officials at least $182 million in bribes for engineering, procurement and construction contracts awarded between 1995 and 2004 to build liquefied natural gas facilities on Bonny Island, Nigeria. The contracts to TSKJ were worth more than $6 billion. KBR's former CEO, Albert "Jack" Stanley, pleaded guilty in September 2008 to conspiring to violate the FCPA. He was sentenced to seven years in prison, subject to court review based on his cooperation.

The TSKJ joint venture was equally owned by KBR, Technip, Snamprogetti Netherlands B.V., a subsidiary of Saipem SpA of Italy, and JGC of Japan. It operated through three Portuguese special purpose corporations based in Madeira, Portugal. See our prior posts about KBR and TSKJ here.

In its release today, Technip said it doesn't expect " a criminal conviction for Technip’s role in the TSKJ joint venture." It said the fine will be "substantial" but won't impede the company from continuing its global business "in a normal manner."

The company added that the deal with the DOJ and SEC isn't completed.

Technip is a market leader in oil, gas, and petrochemical engineering, construction and services. It is headquartered in Paris and has about 23,000 employees. In 2009, revenue was €6.4 billion and operating income was €677 million.

Technip S.A.'s ADRs trade on the over-the-counter market under the symbol TKPPY.

View a copy of the company's February 12, 2010 release here.

Special thanks to Cody Worthington for his help with this post.

Halliburton May Face U.K. Charges

Halliburton disclosed Friday in its latest SEC filing that the U.K.'s Serious Fraud Office (SFO) may bring civil claims or criminal charges against it under various British laws. In February this year, Halliburton and its former subsidiary, Kellogg Brown & Root LLC, admitted paying Nigerian officials at least $182 million in bribes for contracts awarded between 1995 and 2004 to build liquefied natural gas facilities on Bonny Island, Nigeria. The companies agreed with the U.S. Justice Department to pay a $402 million criminal fine, with Halliburton paying $382 million of that amount. Halliburton also agreed with the Securities and Exchange Commission to be jointly liable with KBR to pay $177 million in disgorgement. See our post here.

In Friday's disclosure, Halliburton said the SFO is focused on M.W. Kellogg Limited (MWKL), a U.K. subsidiary of KBR. The DOJ's criminal information had said KBR tried to shield itself from the FCPA by using MWKL to hold ownership in TSKJ, a four-party joint venture that acted as the main contractor on the Bonny Island project. TSKJ's other members were Technip SA of France, Snamprogetti Netherlands B.V. (a subsidiary of Saipem SpA of Italy), and JGC Corporation of Japan. Each partner held about 25% of the venture.

Halliburton said a finding that it broke British laws could "result in fines, restitution and confiscation of revenues, among other penalties." The amount of final civil or criminal penalties, the company said, will depend on whether MWKL knew about and authorized any of the illegal payments, how much revenue resulted from the bribes, and "the level of cooperation provided to the SFO during the investigations."

The company said its role in the Bonny Island project is also being investigated by France, Nigeria, and Switzerland and could also result in third-party claims.

In February this year, a federal grand jury sitting in Houston indicted Jeffrey Tesler, 60, of London, England, and Wojciech Chodan, 71, of Maidenhead, England, for violating the FCPA. The two U.K. citizens allegedly helped KBR bribe Nigerian officials. The Justice Department unsealed the indictments after Tesler's March 5 arrest by British police acting at the request of U.S. authorities. Chodan hasn't been arrested but faces an outstanding U.S. warrant. The DOJ said it will try to extradite both men to the U.S. to stand trial.

Tesler, a lawyer in London, and Chodan, a former employee and consultant of MWKL, were charged with one count of conspiracy to violate and ten counts of violating the FCPA. They face up to 55 years in prison if convicted on all counts. The indictment also seeks forfeiture from them of more than $132 million -- the amount they allegedly paid to Nigerian officials as bribes. See our post here.

In the U.K., the SFO hasn't indicated whether it plans to take action against Tesler and Chodan or other individuals involved in the case. Tesler was identified in KBR's 2007 annual report. British and French authorities investigated him two years ago but didn't file any charges.

In September 2008, Albert “Jack” Stanley, 65, a former chairman and CEO of KBR, pleaded guilty to a two-count criminal information that charged him him with conspiracy to violate the FCPA and conspiracy to commit mail and wire fraud. He admitted that from 1995 to 2004, he helped TSKJ bribe government officials in Nigeria. Stanley was sentenced to seven years in prison and a restitution payment of $10.8 million. The sentence is subject to review based on his cooperation. See our post here.

Jack Stanley was a senior vice president of Dresser Industries, Inc. when it merged into Halliburton in September 1998. Dresser's wholly-owned construction subsidiary, Kellogg, was combined with Halliburton's construction subsidiary, Brown & Root, Inc., to form KBR. In November 2006, Halliburton spun off KBR, which became a separate publicly-traded company.

Under their agreement for KBR's spin off, Halliburton is obligated to pay most of KBR's fines and other penalties for actual or alleged violations of the FCPA and similar foreign laws committed before November 2006. Halliburton has said it gave the indemnity "[t]o enhance KBR's financial stability and solvency, making possible the separation of KBR . . . ."

KBR, Inc. trades on the NYSE under the symbol KBR.

Halliburton Company trades on the NYSE under the symbol HAL.

Halliburton Company's Form 10-Q filed October 23, 2009 (for the period ending September 30, 2009) can be downloaded here.

Read all our posts about Halliburton here.
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KBR: Nigerians Tell Their Own Story

A new Nigeria-based publication called Next has just posted an article (here) naming some of the officials who took bribes from KBR and its TSKJ joint venture for the $6 billion Bonny Island LNG development project. The story by Dapo Olorunyomi and Mojeed Musiliku names three former presidents among the bribe takers, including Sani Abacha, Abdusalami Abubakar, and Olusegun Obasanjo.

The reporting appears to be based primarily on documents produced during U.S. and French investigations of KBR, TSKJ, Jack Stanley (KBR's former CEO) and Jeffrey Tesler, an alleged London-based KBR middleman. He was indicted earlier this year by U.S. authorities for violating the Foreign Corrupt Practices Act and is being extradited from the U.K.

KBR resolved FCPA charges with the Justice Department and Securities and Exchange Commission in February, agreeing to pay $579 million in penalties and disgorgement. Jack Stanley pleaded guilty last year to violating the FCPA and faces up to 7 years in prison and a fine of about $11 million. He and KBR admitted paying at least $182 million in bribes for contracts for the Bonny Island project.

Among the details in Next's story are these:

Having put the Train 1 and 2 contracts in the can, TSKJ turned its gaze on the Train 3 contract. For this, Stanley flew to Abuja again in the second quarter of 1997, with the sole mission of asking Mr. Abacha to recommend a trusted front man to collect his bribe.

Shortly after [Abacha] died on June 8, 1998, Mr.Tesler promptly erased him from the list of bribe beneficiaries, substituting him with the new helmsman, Abdulsalami Abubakar.

To keep the entire scheme on the rails, Stanley flew back to Abuja on February 28, 1999, asking Mr. Abubakar, to recommend a trusted front man to collect his bribe.

Another Nigeria-based publication, Vangard, last week carried an article (here) by Chudi Offodile, a former member of Nigeria's House of Representatives and Chairman of the House’s Public Petitions Committee from 2003 to 2005, where he was responsible for investigations. After spotting irregularities, he says his committee recommended dropping TSKJ and all its members from the Bonny Island project and other contracts in Nigeria. But, writes Offodile, he was continually stonewalled by high-level politicians.

He tells how his investigation got started and finally ended. He begins this way:

No one would have heard of the Nigeria LNG bribery scandal if not for Georges Krammer, former Director General of the French company, Technip [a TSKJ member]. Krammer was accused of paying 3 million euros in illegal commissions during investigations into Elf-Aquitane operations in Asia and Africa.

Krammer claimed the commissions were legal and in line with company's policy. Technip management disputed his claims and left him to face charges of misappropriating 3 million euros. Angered by this development, Krammer who had worked for Technip for 35 years, squealed. He went before Judge d’ Instruction Renaud Van Ruymbeke and told him how Technip’s commission payment system worked in Indonesia, Thailand and on the LNG Project in Nigeria.

Thus began the French investigation of the Nigeria LNG project with Renaud Van Ruymbeke in charge. The French investigation triggered off other investigations in Switzerland, the United States, and Nigeria. . . .

These two reports are unusual not only because of the details being disclosed. But also because both publications are reporting from inside Nigeria, in some cases about government officials still in power.
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KBR's U.K. Middlemen Indicted

Two U.K. citizens who allegedly helped Houston-based Kellogg Brown & Root (KBR) bribe Nigerian officials have been indicted for violating the Foreign Corrupt Practices Act. Jeffrey Tesler, 60, of London, England, and Wojciech Chodan, 71, of Maidenhead, England, were indicted on Feb. 17, 2009 by a federal grand jury sitting in Houston. The Justice Department didn't unseal the indictments until after yesterday's arrest of Tesler by British police, who acted at the request of U.S. authorities. Chodan hasn't been arrested but faces an outstanding U.S. warrant. The DOJ said it will try to extradite Tesler and Chodan from the U.K. to stand trial in the U.S.

Tesler, a lawyer in London, and Chodan, a former employee and consultant of KBR's U.K subsidiary, were charged with one count of conspiracy to violate and ten counts of violating the FCPA. They face up to 55 years in prison if convicted on all counts. The indictment also seeks forfeiture from them of more than $132 million.

The indictment says a joint venture that included KBR entered into consulting contracts with a Gibraltar corporation allegedly controlled by Tesler called Tri-Star Investments. The joint venture paid Tri-Star about $132 million to be used to bribe Nigerian government officials. The bribes were intended to secure contracts worth more than $6 billion to build liquefied natural gas facilities on Bonny Island, Nigeria. The joint venture, known as TSKJ, was equally owned by KBR, Technip, SA of France, Snamprogetti Netherlands B.V. (a subsidiary of Saipem SpA of Italy) and JGC of Japan. Chodan allegedly participated in meetings where the bribery was discussed and he wired $50 million from KBR-controlled accounts to a Japanese trading company to be used to bribe Nigerian officials.

Among the details in the indictment: In August 2002, a KBR representative, using money KBR provided to Tesler, "delivered a pilot's briefcase containing one million U.S. dollars in one-hundred dollar bills to the [Nigerian] Official at a hotel in Abuja, Nigeria, for the benefit of a political party in Nigeria." And in April 2003, a KBR representative "delivered a vehicle containing Nigerian currency valued at approximately $500,000 to the hotel of the [Nigerian] Official in Abuja, Nigeria, for the benefit of a political party in Nigeria, leaving the vehicle in the hotel parking lot until the . . . Official caused the money to be removed."

Last month, KBR pleaded guilty to violating the Foreign Corrupt Practices Act. It agreed with the DOJ to pay a $402 million fine. KBR and its former parent company, Halliburton Company, also agreed to pay $177 million in disgorgement to the Securities and Exchange Commission to settle the FCPA offenses. KBR's former CEO, Albert "Jack" Stanley, pleaded guilty in September 2008 to conspiring to violate the FCPA and to mail and wire fraud charges. He has been cooperating with prosecutors. His sentencing is now scheduled for Aug. 27, 2009.

The DOJ said it had help in the case from "authorities in France, Italy, Switzerland and the United Kingdom, including in particular the Serious Fraud Office’s Anti-Corruption Unit, the London Metropolitan Police and the City of London Police."

The indictment against Tesler and Chodan contains only FCPA charges. Usually the DOJ adds other criminal counts, such as money-laundering, mail and wire fraud. Relying strictly on alleged antibribery offenses will test the jurisdictional reach of the FCPA over foreign citizens who apparently were not in the U.S. at any times relevant to the charged conduct.

The FCPA asserts jurisdiction over foreign companies and nationals that take any act in furtherance of a corrupt payment while within the territory of the United States. See §78dd-3(a), (f)(1). This part of the FCPA is untested in court, but the DOJ interprets it expansively as conferring jurisdiction whenever a foreign company or national acting as an agent of an issuer or domestic concern causes an act to be done within the territory of the United States. (See the United States Attorneys' Manual, Title 9, Criminal Resource Manual §1018 “Prohibited Foreign Corrupt Practices” here.) The indictment says Tesler and Chodan were agents of KBR and sent some of the bribe money through U.S. bank accounts.

Another unusual aspect of the indictment is the use of the forfeiture remedy against Tesler and Chodan. (See 28 USC Section 2461, and Title 18 USC Section 981 (a)(l )(C), "all property, real and personal, which constitutes or is derived from proceeds traceable to the violations.") The U.S. government says it wants the entire $132 million that KBR transferred to Tesler's Gibraltar company or the property derived from it. The DOJ apparently isn't distinguishing the KBR money Tesler allegedly paid out in bribes from amounts he may have kept.

Jeffrey Tesler was identified in KBR's 2007 annual report. British and French authorities investigated him two years ago but didn't file any charges. In 2007, British authorities searched his London office at the request of U.S. officials. He is listed as a consultant to a small North London law firm called Kaye Tesler & Co. Among other things, the firm offers anti-money laundering training. 

As the Justice Department says: Criminal indictments are only charges and not evidence of guilt. A defendant is presumed to be innocent until and unless proven guilty.

The DOJ's March 5, 2009 release can be downloaded here.

The federal grand jury's February 17, 2009 indictment of Jeffrey Tesler and Wojciech Chodan can be downloaded here.

KBR Nears Final Plea Deal

A criminal information filed in federal court in Houston on Friday shows that Kellogg, Brown & Root LLC, the Houston-based global engineering and construction firm that was once part of Halliburton, will plead guilty to violating the Foreign Corrupt Practices Act. KBR may appear in court next week. The information refers to a plea agreement that has not yet been released by the Justice Department. The Houston Chronicle and the AP have reports.

The criminal information, according to the reports, indicates that the government has agreed to a $402 million fine, payable in installments, beginning with a $52 million payment five days after sentencing, and seven $50 million installments, each due on the first day of each quarter beginning April 1. Under federal sentencing guidelines, the fine range was between $376.8 million and $753.6 million.

Two weeks ago, KBR's former parent, Halliburton, said a settlement of Foreign Corrupt Practices Act enforcement actions with the Justice Department and the Securities and Exchange Commission was waiting for the DOJ's final approval. It said it had reserved $559 million for the proposed settlements. Halliburton is obligated under indemnity agreements to pay fines and penalties on behalf of KBR. It said in the release that it would "pay $382 million [to the DOJ] on behalf of KBR in eight installments over the next two years. Pursuant to the terms of the prospective settlement with the SEC, Halliburton would agree to be jointly and severally liable with KBR for and, as a result of the indemnity, to pay to the SEC $177 million in disgorgement."

In September 2008, Albert “Jack” Stanley, 65, a former chairman and CEO of KBR, pleaded guilty to a two-count criminal information charging him with conspiracy to violate the Foreign Corrupt Practices Act and conspiracy to commit mail and wire fraud. His final sentencing is set for May this year. Under his plea agreement, he faces up to seven years in prison and a restitution payment of $10.8 million.

From 1995 to 2004, Stanley helped a joint venture that included KBR and its predecessors funnel $182 million in bribes to government officials in Nigeria. The bribes were paid in exchange for contracts worth $6 billion to build liquefied natural gas facilities there. KBR's 2007 Annual Report (its most recent) described a joint venture called TSKJ "formed to design and construct large-scale projects in Nigeria. TSKJ's members are Technip, SA of France, Snamprogetti Netherlands B.V., which is a subsidiary of Saipem SpA of Italy, JGC [of Japan] and us, each of which has a 25% interest. TSKJ has completed five LNG production facilities on Bonny Island, Nigeria . . . ."

Jack Stanley was a senior vice president of Dresser Industries, Inc. when it merged into Halliburton in September 1998. Dresser's wholly-owned construction subsidiary, Kellogg, was combined with Halliburton's construction subsidiary, Brown & Root, Inc., to form KBR. In November 2006, Halliburton spun KBR off and it became a separate publicly-traded company. Former Vice President Dick Cheney was Halliburton's chief executive from 1995 to 2000.

Why did Halliburton, and not KBR, first announce the proposed settlements with the DOJ and SEC two weeks ago? Under the indemnity in their agreement for KBR's spin off, known as the master separation agreement, Halliburton calls the shots on most FCPA-related matters. Here's what KBR said about that in the 2007 Annual Report:

As part of the master separation agreement, Halliburton has agreed to indemnify us for certain FCPA Matters, but we had to agree that Halliburton will, in its sole discretion, have and maintain control over the investigation, defense and / or settlement of FCPA Matters until such time, if any, that we exercise our right to assume control of the investigation, defense and /or settlement of FCPA Matters. We have also agreed, at Halliburton’s expense, to assist with Halliburton’s full cooperation with any governmental authority in Halliburton’s investigation of FCPA Matters and its investigation, defense and/or settlement of any claim made by a governmental authority or court relating to FCPA Matters, in each case even if we assume control of FCPA Matters.

Halliburton said in its release two weeks ago that it gave KBR the indemnity "[t]o enhance KBR's financial stability and solvency, making possible the separation of KBR . . . ."

KBR, Inc. trades on the NYSE under the symbol KBR.

Halliburton Company trades on the NYSE under the symbol HAL.

Listen to the podcast here.
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Ex-KBR Boss Pleads Guilty

The Justice Department said today that Albert “Jack” Stanley, 65, a former chairman and CEO of KBR, the global engineering and construction firm based in Houston, pleaded guilty to a two-count criminal information charging him with conspiracy to violate the Foreign Corrupt Practices Act and conspiracy to commit mail and wire fraud. He appeared in U.S. District Court in his hometown of Houston before U.S. District Judge Keith P. Ellison.

From 1995 to 2004, Stanley helped a joint venture that included KBR and its predecessors funnel $182 million in bribes to government officials in Nigeria. The bribes were paid in exchange for contracts worth $6 billion to build liquefied natural gas facilities there. Stanley and others met with high-ranking Nigerian government officials and their representatives at least four times to arrange the bribe payments. He also received $10.8 million in kickbacks from a consultant hired in connection with LNG projects around the world.

Under the plea deal accepted by the court, Stanley faces seven years in prison and a restitution payment of $10.8 million. A sentencing date hasn't been set. Criminal violations of the FCPA's anti-bribery provisions are punishable by five years in prison, and criminal violations of the accounting provisions by 20 years in jail. As part of his plea agreement, Stanley agreed to cooperate with law enforcement authorities in the ongoing investigations. The DOJ said it gathered evidence abroad and was helped by authorities in France, Italy, Switzerland and the United Kingdom.

In a related civil enforcement proceeding, the Securities and Exchange Commission said Stanley has consented to a final judgment permanently enjoining him from violating the anti-bribery, record-keeping and internal control provisions of Securities Exchange Act of 1934 (Sections 30A and 13(b)(5) and Rule 13b2-1).

Stanley was a senior vice president of Dresser Industries, Inc. when it merged into Halliburton in September 1998. Dresser's wholly-owned construction subsidiary, Kellogg, was combined with Halliburton's construction subsidiary, Brown & Root, Inc., to form KBR. Stanley became CEO of KBR and was named chairman in 2001. He was fired in June 2004. In November 2006, Halliburton spun KBR off and it became a separate publicly-traded company. Vice President Dick Cheney was Halliburton's chief executive from 1995 to 2000.

KBR's 2007 annual report describes a joint venture called TSKJ "formed to design and construct large-scale projects in Nigeria. TSKJ's members are Technip, SA of France, Snamprogetti Netherlands B.V., which is a subsidiary of Saipem SpA of Italy, JGC [of Japan] and us, each of which has a 25% interest. TSKJ has completed five LNG production facilities on Bonny Island, Nigeria and is nearing completion on a sixth such facility."

As KBR's senior representative in TSKJ, Stanley authorized the hiring of an agent in the U.K. and another in Japan to pay bribes to various Nigerian government officials, and concealed the payments. The SEC's complaint said,

In numerous Dresser, Halliburton and KBR company records, Stanley and others falsely characterized the payments to the UK Agent and the Japanese Agent as legitimate “consulting” or “services” fees when, in fact, Stanley knew they were bribes. For example, Stanley authorized entering into contracts with the UK Agent and the Japanese Agent that he knew falsely described the purpose of the contracts in order to make it appear that the agents would perform legitimate services. Stanley and others also prepared for approval internal company bid documents for the LNG Trains that mischaracterized the bribe payments as legitimate expenses. In addition, certain records falsified by Stanley were used in the companies’ due diligence process for approving use of the UK Agent.

KBR's 2007 annual report added these details:

In connection with the Bonny Island project, TSKJ entered into a series of agency agreements, including with Tri-Star Investments, of which Jeffrey Tesler is a principal, commencing in 1995 and a series of subcontracts with a Japanese trading company commencing in 1996. We understand that a French magistrate has officially placed Mr. Tesler under investigation for corruption of a foreign public official. . . .

Our representatives have met with the French magistrate and Nigerian officials. In October 2004, representatives of TSKJ voluntarily testified before the Nigerian legislative committee. Halliburton notified the other owners of TSKJ of information provided by the investigations and asked each of them to conduct their own investigation. . . .

In June 2004, all relationships with Mr. Stanley and another consultant and former employee of M.W. Kellogg Limited were terminated. The terminations occurred because of violations of Halliburton's Code of Business Conduct that allegedly involved the receipt of improper personal benefits from Mr. Tesler in connection with TSKJ's construction of the Bonny Island project.

Jeffrey Tesler, the Tri-Star Investments principal referred to in the annual report (called "the UK Agent" by the SEC), is a 60-year old lawyer in a small North London law firm called Kaye Tesler & Co.

KBR employs 52,000 people worldwide. Revenue last year was about $8.7 billion. According to its website, "not only is KBR the largest contractor for the United States Army and a top-ten contractor for the U.S. Department of Defense, it is currently the world’s largest defense services provider. "

KBR, Inc. trades on the NYSE under the symbol KBR.

Halliburton Company trades on the NYSE under the symbol HAL.

View the plea agreement here.

View the DOJ's Sept. 3, 3008 release here.

View SEC Litigation Release No. 20700 and Accounting and Auditing Enforcement Release No. 2871 (Sept. 3, 2008) here.

View the SEC's Civil Complaint Securities and Exchange Commission v. Albert Jackson Stanley, 08-CV-02680, S.D. Tex. (Houston) here.

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