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KBR Hit With Record Bribery Fine

Former Halliburton subsidiary agrees to pay $579 million

February 12, 2009
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After five years of multi-jurisdictional investigations, the U.S. Department of Justice announced on Feb. 11 that Kellogg, Brown, and Root (KBR) - until recently a subsidiary of the Halliburton Corporation - agreed to pay a total of $579 million in fines for their part in a decade-long scheme to bribe government officials in Nigeria in exchange for construction contracts.

The fine is the largest ever for a U.S. company under the Foreign Corrupt Practices Act (FCPA), which forbids the bribing of foreign government officials to obtain or retain business overseas. It is in fact more than ten times the previous record bribery fine for a U.S. corporation -- $44 million paid by Baker Hughes in 2007.

Houston, Texas

KBR entered guilty pleas to a five-count criminal information in federal court in Houston, Texas, and agreed to pay $402 million in criminal fines.

KBR entered guilty pleas to a five-count criminal information in federal court in Houston, Texas, and agreed to pay $402 million in criminal fines. (KBR Inc. and Halliburton jointly agreed to pay $177 million in forfeited profits to the SEC in a concurrent civil action without admitting wrongdoing.) According to the Justice Department, KBR also agreed to cooperate with the Department in its ongoing investigations.

The plea is the partial culmination of no less than five international investigations, including French, American, Swiss, Nigerian and British authorities who have spent years unwrapping what happened behind the scenes of one of the most expensive construction projects in African history.

The guilty pleas come two weeks after Halliburton first announced in a press release that it expected to pay a settlement of more than half a billion dollars.

PBS FRONTLINE reporter Lowell Bergman spoke with NPR's All Things Considered the day of Halliburton's initial statement to discuss the settlement, an interview available online.

The settlement stems from a $180 million bribery scheme orchestrated by Albert "Jack" Stanley, the former CEO and Chairman of KBR, as first revealed in a joint PBS FRONTLINE/ProPublica report last year. Mr. Stanley's sentencing is scheduled for May 6, 2009.

The bribes were paid to well-placed officials in the Nigerian government from 1995 until 2004, and resulted in KBR and its partners winning contracts to build liquefied natural gas facilities on Bonny Island, Nigeria - contracts valued at more than $6 billion.

Former Nigerian president Olusegun Obasanjo, who was in power from 1999 until 2007, acknowledges that corruption is endemic in his country, but denies receiving any bribe money himself. Obasangjo told FRONTLINE he welcomes the Justice Department's investigations. "The fact a country like the United States of America is investigating the corruption deals that took place in Nigeria gives confidence to Nigerians who want to fight corruption that they are not doing it alone," he said.

Obasanjo believes the Nigerian people are the real victims of corporate corruption and objects to the Halliburton settlement being collected by the U.S. Treasury. "I believe it should go to Nigeria. We have a saying in my part of the world: if you lose property and cry out and somebody chases the robber and gets the property, he doesn't appropriate that property to himself."

Editor's Note: This report is part of a year-long investigation of international bribery by PBS FRONTLINE and the Investigative Reporting Program at the UC Berkeley Graduate School of Journalism. A documentary will air on FRONTLINE on April 7, 2009 at 9 P.M. ET on PBS.

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REACTIONS


Adam Ibrahim Sabongari - Abuja, Nigeria
While congratulating you on your noble cause of stamping out corruption in business, I am of the opinion that there is the need to help people and agencies fighting corruption in Nigeria by exposing the officials involved in the halliburton/KBR bribe scandal. All reports on this issue fail to give the names of the Nigerian collaborators. I would be grateful if you could furnish me with the complete court proceedings and the names of the Nigerian officials in this case. This would go a long way in authenticating the issue in Nigeria.
Thanks and regards.

 

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