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Halliburton Settles Cheney-Era Bribery Probe With U.S. Government

By Jason Leopold

Monday, 26 January 2009

Halliburton and its former subsidiary, Kellogg Brown & Root, will pay the federal government $559 million to settle a long-running investigation into allegations the company bribed Nigerian officials to win a lucrative construction contract for a natural gas liquefaction plant while former Vice President Dick Cheney headed the corporation, the company said in a statement.

Last May, Halliburton disclosed in a footnote in its quarterly filing with the SEC in May that the Justice Department obtained evidence that Halliburton officials bribed Nigerian officials to secure the Bonny Island natural gas liquefaction plant contract in violation of the U.S. Foreign Corrupt Practices Act (FCPA). The bribes allegedly went to the notoriously corrupt Nigerian dictator Sani Abacha and some of his subordinates.

KBR, which also has handled lucrative U.S. government support contracts for U.S. troops in Iraq and elsewhere, was spun off from Halliburton last year into a separate company in 2007. In 2002, Halliburton, now based in Dubai, was on the brink of bankruptcy related to a massive financial settlement it paid out to settle asbestos litigation. But the company bounced back after its KBR subsidiary was awarded a multibillion-dollar no-bid contract to rebuild oil wells in Iraq.

Halliburton disclosed in its quarterly filing last May that the company was “engaged in discussions with the [Securities and Exchange Commission] and the [Department of Justice] regarding a settlement of these matters,” Halliburton disclosed in a July 25 SEC filing.

On Monday, the company confirmed that it had reached an agreement with the federal government to settle the matter, but conceded that it is awaiting on the DOJ to sign off on the agreement.

“The settlement with the Department of Justice has been fully negotiated and Halliburton has been advised that it is being reviewed for final approval,” said a statement released by the company. “The settlement with the SEC has been approved contingent upon the completion of the settlement with the DOJ. There can be no assurance, however, that the settlement with the DOJ will be approved or that, consequently, the condition to the settlement with the SEC will be satisfied. 

The settlement calls for Halliburton to pay the DOJ $382 million over two years and $177 million in “disgorgement” to the SEC.

“The prospective settlement with the DOJ would not require Halliburton to engage a monitor,” Halliburton’s statement says. “The prospective settlement with the SEC would require Halliburton to 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.” 

Halliburton would not respond to questions or comment further on the prospective settlements “given that there can be no assurance that they will become effective in accordance with their respective terms.”
The bribery investigation was launched in 2003 when Georges Krammer, a former executive French company Technip, a member of the consortium for the Bonny Island project, informed French magistrate Renaud Van Ruymbeke that the contracts his group obtained came as a result of payments Tesler made to Nigerian officials from a slush fund the lawyer allegedly managed.

In its quarterly filing last October, Halliburton said it was subpoenaed by the Justice Department and SEC over the use – by a KBR-led consortium known as TSKJ – “of an immigration services provider, apparently managed by a Nigerian immigration official, to which approximately $1.8 million in payments in excess of costs of visas were allegedly made between approximately 1997 and the termination of the provider in December 2004 and our 2007 reporting of this matter to the government.”

Halliburton also noted that federal investigators had “expressed concern regarding the level of our cooperation,” wording that suggests suspicion of a cover-up or at least foot-dragging.

Halliburton’s April 25, 2008, filing with the SEC marked the first time that specific evidence was cited to support claims that Halliburton bribed Nigerian officials in violation of the U.S. Corrupt Foreign Practices Act while Cheney was the company’s chief executive officer.

The SEC, which regulates companies that sell stock on public markets as Halliburton does, also has been investigating the case. Halliburton said it had agreed to extend the statute of limitations related to the investigation.

According to previous published accounts of the bribery scandal, the cash allegedly was laundered through UK lawyer Jeffrey Tesler, who served as a consultant to KBR after it was formed in a 1998 merger that Cheney engineered between Halliburton and Dresser Industries.

For more than a year, the magistrate poured over evidence to determine whether Cheney may have been responsible under French law for at least one of four bribery payments to the Nigerian officials.

Under French law, “the head of a company can be charged with ‘misuse of corporate assets’ for bribes paid by any employee – even if the executive didn’t know about the improper payments.” Authorities in the UK and Switzerland also have been investigating the matter. 

To date, there has been no direct evidence indicating that Cheney played a direct role in the bribes.

However, during Cheney’s tenure, Halliburton did expand operations in Nigeria despite human rights abuses by Gen. Abacha’s regime and environmental damage to the Niger Delta caused by international oil companies, Shell and Chevron, both of which signed contracts with Halliburton subsidiaries.

In April 2000, Brown & Root Energy Services, a business unit of Halliburton, was selected by Shell Petroleum Development Co. of Nigeria to work on the development of an offshore oil and gas facility, the first of its kind for Shell.

The deal, valued at $300 million, has been questioned by activists who have tried to hold Shell accountable for the pollution and the human rights abuses that have harmed Nigerian indigenous groups in a part of the Niger Delta known as Ogoniland.

In its four-plus decades of oil exploration in Nigeria, Shell has been responsible for repeated environmental calamities, involving oil spills, noxious gas flares, cleared forests, despoiled farmland and pipeline blowouts.

Gen. Abacha’s appreciation for the money that Shell’s operations put into his coffers made him an eager ally when the oil industry faced popular protests, which were crushed by the dictator’s army and security forces.

In 1995, the year Cheney joined Halliburton, renowned writer and environmental advocate Ken Saro-Wiwa and eight of his colleagues were hanged by the Abacha government for their efforts to prevent Shell from continuing to poison the environment of the Niger Delta.

It is estimated that more than 2,000 people have been murdered for their involvement in protests against Shell’s activities in the Delta. Most of those murdered were Ogoni who had rallied behind Saro-Wiwa in the early 1990s.

In 1998, Gen. Abacha died of an apparent heart attack.

Last year, oil field services company Baker Hughes Inc. paid $44.1 million and agreed to hire an outside monitor to oversee its compliance activities to settle claims related to a federal bribery probe of its operations in Nigeria, Angola and Kazakhstan.

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