Halliburton implicates Shell in Nigerian bribes probe

The Calgary Herald: Halliburton implicates Shell in probe

From Herald News Services
Published: Saturday, April 26, 2008

Halliburton Co., the world’s second-largest oilfield contractor, said an investigation into alleged bribes paid in relation to a Nigerian liquefied natural gas facility also may involve a Royal Dutch Shell PLC project.

Halliburton, based in Houston, said in a regulatory filing Friday it was notified of “evidence of payments to Nigerian officials” by “an agent” in connection with the offshore Shell EA project.

The evidence arose from an investigation into a joint venture involving former Halliburton unit Kellogg Brown & Root, now a separate company called KBR Inc. The probe, which started in 2004, began by focusing on alleged payments to Nigerian officials in the course of building the Bonny Island liquefied natural gas facility.

The case has grown to involve investigators in Nigeria, the U.S., Switzerland and France.

© The Calgary Herald 2008

http://www.canada.com/calgaryherald/news/calgarybusiness/story.html?id=2ce9efb9-cab1-409d-8a2a-cc526e79defd

Related article?

Financial Times: Probe into KBR role in Nigeria bribe case

By Michael Peel in London
Published: August 7 2006 22:06 | Last updated: August 7 2006 22:06

A subsidiary of Halliburton is under investigation by the UK’s Serious Fraud Office over the US oil service company’s part in an alleged plot to pay more than $170m (£89m) of bribes to win billions of dollars of work at a giant Nigerian gas plant.

The SFO said it had carried out searches at business and residential premises as part of the probe into KBR, whose work on the project was underwritten partly by British government money.

The SFO’s action opens a fresh front in a high-profile case being investigated in the US, France and Nigeria. For part of the period under investigation, Halliburton was headed by Dick Cheney, the US vice-president.

The SFO gave few details about its probe, which it said opened in March. The searches were carried out on July 20 at three residential addresses and one company office in London, and at a house in Somerset.

Halliburton said it continued to co-operate and was “committed to getting resolution”. It declined further comment.

The Nigerian bribery allegations erupted three years ago, when a former executive of the consortium working on the gas plant told a French judge it had operated an offshore slush fund to win contracts since the mid-1990s. The consortium is quarter-owned by KBR, through its 55 per cent-controlled British joint venture, MW Kellogg.

More than $12bn has so far been invested in the gas plant, which supercools natural gas into liquid form so it can be shipped. Royal Dutch/Shell is the project’s biggest private shareholder, partnered by Total of France, Italy’s Eni and the Nigerian government.

In 2004, Halliburton severed links with two former employees including Jack Stanley, the former KBR chairman, for having taken “improper personal benefits” in connection with the project. Lee Kaplan, Mr Stanley’s lawyer, declined to comment.

■The bribery allegations centre on the construction of the Nigeria LNG natural gas liquefaction plant. The plant is 49 per cent owned by the Nigerian government, 25.6 per cent by Royal Dutch/Shell, 15 per cent by Total of France and 10.4 per cent by Italy’s Eni

What the SFO is investigating

■The SFO investigation comes after the launch of invest-
igations by a French magistrate, the US Department of Justice and Nigeria’s Economic and Financial Crimes Commission

■Investigators are looking into allegations that TSKJ, the plant’s main construction consortium for the past decade, agreed between 1994 and 2003 to pay more than $170m in bribes to win billions of dollars of building work.

■One of the consortium members is MW Kellogg, a British joint venture in which Halliburton’s KBR subsidiary has a 55 per cent stake. The other companies involved are JGC of Japan, Technip of France and Italy’s Snamprogetti

■The payments in question were made by the consortium to an offshore company controlled by Jeffrey Tesler, a London-
based lawyer, who has declined to comment. His lawyer has denied the money was used for bribes.

■The contracts are for services such as promoting the consor-
tium, advising on contractors and helping to maintain good relations with the client, government authorities and business representatives. They include a no-bribery clause

■Halliburton has severed ties with two former employees including Jack Stanley, a former KBR chairman, for allegedly receiving ‘improper personal benefit’

■Halliburton has said minutes of internal meetings show the consortium had ‘considered payments to Nigerian officials’

Copyright The Financial Times Limited 2008

Another related article?

Bribing Nigeria

Bribery of foreign officials is prohibited by the Foreign Corrupt Practices Act (FCPA)1, a law passed in 1976 after a post-Watergate SEC investigation uncovered an epidemic of overseas bribery by American multinational corporations.

A number of bribery cases involving large U.S. corporations have been reported in recent years. The companies involved include Enron, Xerox, Tyco, IBM, Accenture and Halliburton. There are two alleged bribery cases related to Halliburton.

In May of 2003, Halliburton reported to the Security Exchange Commission (SEC) that company employees made $2.4 million in “improper payments” to officials of Nigeria’s Federal Inland Revenue Service in 2001 and 2002 “to obtain favorable tax treatment.” “Based on the findings of the investigation we have terminated several employees,” Halliburton said in the filing, adding that none of its senior officers was involved in the bribe.2 But the Houston Chronicle later pointed out, “left unanswered is how a ‘low-level employee’ could channel that much money from the company to the pockets of a corrupt official.”3

The second case is more complicated and potentially much more controversial. It involves an international consortium of four companies, including Halliburton’s Kellogg Brown & Root subsidiary. The other companies are from France (Technip), Italy (Snamprogetti SpA), and Japan (Japan Gasoline Corp.). Together, the companies formed a joint venture called TSKJ, which won a lucrative contract from international oil companies to build a large liquefied natural gas plant on Bonny Island in the eastern Niger delta.

According to news reports, French police launched a preliminary probe in October 2002. In June 2003, the prosecutor found enough merit in the case to assign it to an investigating anti-corruption judge, Renaud van Ruymbeke, a French judge with a reputation for probity and independence, who previously investigated bribe-giving by the French petrogiant Elf. It was the Elf investigation that led van Ruymbeke to open a formal investigation into the Nigerian deal in October 2003.

News reports suggest that TSKJ incorporated a subsidiary (LNG Services) in the Portuguese tax-haven Madeira which paid at least $180 million into a score of different off-shore bank accounts controlled by Gibraltar-based TriStar corporation for “commercial support services.”4 Jeffrey Tesler, a British lawyer and the only TriStar official that could be identified, channeled the money through TriStar and bank accounts he controlled in Switzerland and Monaco.5 It is not known where the money ultimately ended up, but Tesler was reportedly also a financial advisor to Nigeria’s late dictator, Gen. Sani Abacha. Georges Krammer, a former top Technip official, testified to French investigators that Tesler was imposed as an intermediary by Halliburton over the objections of Technip.6

In October 2003, Le Figaro reported the existence of a March 17 letter by William Chaudan, one of the directors of the LNG project, which explained: “Jeffrey Tesler has a professional and personal relationship with KBR since the ’80s.”7 The paper also reported that Dan Etete, the former Oil Minister to Nigeria’s ex-dictator Sani Abacha, indicated that Shell and KBR were extremely well established in Nigeria and had close relationships with the ruling power. According to the Washington Post, “at the heart of the investigation is the question of whether those payments amounted to illegal commissions, or bribes, to Nigerian public officials.” The payments would have been made during Vice President Cheney’s tenure as CEO.8 The level of corruption in Nigeria, which at the time was under the control of the late dictator Sani Abacha, is notorious.

Judge Van Ruymbeke has suggested that he may summon Cheney to France to be questioned about what, if anything, he knew about the payments. The judge has reportedly ruled out directly prosecuting Cheney on a charge of bribing foreign officials, although the judge’s investigation into the “misuse of funds” and “corruption of foreign public agents” continues. The Nigerian government, the U.S. Justice Department, and the SEC have opened their own investigations.

“If such payments were made and Cheney approved them, he could be guilty of violating the U.S. Foreign Corrupt Practices Act,” the Boston Globe points out. (U.S. corporate officials are only liable for the actions of their foreign subsidiaries if it can be determined that they had personal knowledge of the subsidiary’s improper actions.) The Globe editorialized that, “If the payments were made and he [Cheney] did not know about them, he could not have been a hands-on leader of his conglomerate. The nation, in any case, deserves answers before it votes in November.”9

Halliburton says it is cooperating with US officials on the case and “has no basis to assume that any of its employees, or employees of the joint venture, has violated the US Foreign Corrupt Practices Act.” Halliburton CEO David Lesar said in February that whatever happened in Nigeria was commenced by an independent company that was later bought by Halliburton.10 Nevertheless, the company reported to the SEC that there can be no assurance the matter “will not lead to additional allegations” or that “we will not have to defend against these and other similar allegations.”

In February, the Corporate Crime Reporter reported that Halliburton hired James Doty – an attorney with the Washington office of the Baker Botts law firm — to investigate the case. Doty represented George W. Bush when he bought the Texas Rangers and was general counsel to the Securities and Exchange Commission at a time when the SEC was investigating Bush for insider trading associated with his experience on the board of Harken Energy Corp. (Doty recused himself from that case, which was eventually closed without action.)11 Doty has also represented Baker Hughes in a corrupt payments scandal in Nigeria, Angola and Kazakhstan.12

Footnotes

1. 15 U.S.C.S. §§ 78dd-1, 78dd-2, and 78dd-3.

2. See Halliburton 10-K, 2002.

3. “The Cheney Factor,” Houston Chronicle, February 22, 2004.

4. Jon Henley, “French sleaze inquiry targets US oil subsidiary,” The Guardian, October 11, 2003.

5. David Pallister and Jon Henley, “UK lawyer named in bribery inquiry,” The Guardian (London), Febuary 6, 2004.

6. Doug Ireland, “Will the French Indict Cheney?” The Nation, December 29, 2003.

7. Eric Decouty, “A Nigerian Contract at the Heart of a Corruption Affair,” Le Figaro, December 20, 2003.

8. Keith B. Richburg, “French Judge Probes Unit of Halliburton,” Washington Post, January 24, 2004.

9. “A Cloud Over Cheney,” Boston Globe (editorial), February 10, 2004.

10. “Halliburton Smoke,” Boston Globe February 25, 2004.

11. Peter Behr, “Bush sold Stock After Lawyers’ Warning,” The Washington Post, November 1, 2002.

12. Corporate Crime Reporter, February 16, 2004.

http://www.halliburtonwatch.org/about_hal/nigeria.html

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