Kellogg, Brown & Root, the engineering, construction, and services company, and its former parent, Halliburton, have agreed to pay a combined $579m to settle US criminal and civil allegations that KBR bribed Nigerian government officials to obtain contracts.
By Joanna Chung in New York
The fines, imposed by the US Department of Justice and the US Securities and Exchange Commission, make the largest combined settlement ever paid by US companies for violations of the 1977 Foreign Corrupt Practices Act. They are the second biggest fines ever imposed, after the $800m US settlement by Siemens, the German conglomerate.
US law enforcement officials have stepped up enforcement of the FCPA, which bans companies that do business in the US from bribing government officials anywhere in the world.
The investigation covered a period when Halliburton was headed by Dick Cheney, former US vice-president. KBR was a wholly owned subsidiary of Halliburton, the oilfield services company, until 2007, when KBR became a separate company.
Of the total fines, $402m is related to criminal charges by the justice department, accusing Houston-based KBR of participating in a decade-long scheme to bribe Nigerian government officials to obtain contracts – valued at more than $6bn – to build liquefied natural gas facilities. KBR entered guilty pleas on Wednesday, said prosecutors, who added that the company was part of a four-company joint venture that paid bribes to officials.
Meanwhile, KBR and Halliburton agreed to pay $177m in forfeited profits to settle civil charges by the SEC without admitting or denying wrongdoing. The SEC accused KBR of violating the FCPA’s anti-bribery provisions. It also accused KBR and Halliburton of engaging in books and records violations and internal controls violations related to bribery.
Beginning as early as 1994, the SEC alleges, members of the joint venture determined it was necessary to pay bribes. To conceal the illicit payments, the joint venture entered into sham contracts with two agents, one based in the UK and one in Japan, to funnel money to Nigerian officials, the SEC claims.
Antonia Chion, associate director of the SEC’s enforcement division, said: “Multinational companies should take heed that attempting to conceal bribes by funnelling them through intermediaries or offshore entities will not be successful.”
Last September, Albert Stanley, KBR’s former chief executive, pleaded guilty to conspiring to violate the FCPA. KBR and Halliburton lawyers did not immediately return comment requests.