CORPORATE CRIME REPORTER
Corporate
Probation Is Back: KBR Pleads Guilty to Foreign Bribery
23 Corporate Crime Reporter 7, February 13, 2009
Corporate probation is back.
So are corporate guilty pleas.
Kellogg Brown & Root LLC (KBR), a global engineering, construction and services company based in Houston, pled guilty to charges related to the Foreign Corrupt Practices Act (FCPA) for its participation in a decade-long scheme to bribe Nigerian government officials to obtain engineering, procurement and construction (EPC) contracts.
The company will pay a $402 million fine and will be sentenced to corporate probation.
As a condition of probation, KBR will accept a corporate monitor who will report back to the Justice Department.
According to the plea agreement, the monitor's “primary responsibility is to assess and monitor the company's compliance with the terms of this Agreement so as to specifically address and' reduce the risk of any recurrence of the company's misconduct, including evaluating the company's corporate compliance program with respect to the FCPA.”
The monitor will “review and evaluate the effectiveness of KBR's internal controls, record-keeping, and financial reporting policies and procedures as they relate to KBR's compliance with the books and records, internal accounting controls and anti-bribery provisions of the FCPA, and other applicable anti-corruption laws.”
KBR was represented before the Justice Department by Paul Hastings’ partners William Pendergast and Timothy Dickinson.
KBR entered guilty pleas to a five-count criminal information in federal court in Houston before U.S. District Judge Keith P. Ellison.
The
contracts to build liquefied natural gas (LNG) facilities on Bonny Island, Nigeria,
were valued at more than $6 billion.
KBR was part of a four-company joint venture that was awarded four EPC contracts
by Nigeria LNG Ltd. (NLNG) between 1995 and 2004 to build LNG facilities on
Bonny Island.
The government-owned Nigerian National Petroleum Corporation (NNPC) was the largest shareholder of NLNG, owning 49 percent of the company.
KBR pled guilty to conspiring with its joint-venture partners and others to violate the FCPA by authorizing, promising and paying bribes to a range of Nigerian government officials, including officials of the executive branch of the Nigerian government, NNPC officials, and NLNG officials, to obtain the EPC contracts. KBR also pleaded guilty to four counts of violating the FCPA related to the joint venture’s payment of tens of millions of dollars in "consulting fees" to two agents for use in bribing Nigerian government officials.
KBR admitted that, at crucial junctures before the award of the EPC contracts, KBR’s former CEO, Albert Jack Stanley, and others met with three successive former holders of a top-level office in the executive branch of the Nigerian government to ask the office holder to designate a representative with whom the joint venture should negotiate bribes to Nigerian government officials.
Stanley and others negotiated bribe amounts with the office holders’ representatives and agreed to hire the two agents to pay the bribes.
The joint venture paid approximately $132 million to the first agent, a consulting company incorporated in Gibraltar, and more than $50 million to the second agent, a global trading company headquartered in Tokyo, Japan, during the course of the bribery scheme. KBR admitted that it had intended for these agents’ fees to be used, in part, for bribes to Nigerian government officials.
Under the terms of the plea agreement, KBR agreed to retain an independent compliance monitor for a three-year period to review the design and implementation of KBR’s compliance program and to make reports to KBR and the Department of Justice. KBR also agreed to cooperate with the Department in its ongoing investigations.
In a related criminal case, Stanley pled guilty in September 2008 to conspiring to violate the FCPA for his participation in the bribery scheme.
Stanley’s sentencing is currently scheduled for May 6, 2009.
KBR’s parent company, KBR Inc., and its former parent company, Halliburton Company, also reached a settlement of a related civil complaint filed by the U.S. Securities and Exchange Commission (SEC).
The SEC’s complaint charged KBR Inc. with violating the FCPA’s anti-bribery provisions, and charged KBR and Halliburton with engaging in books and records and internal controls violations related to the bribery.
KBR
Inc. and Halliburton jointly agreed to pay $177 million in disgorgement of profits
relating to those violations.
Corporate
Crime Reporter
1209 National Press Bldg.
Washington, D.C. 20045
202.737.1680