(The Intelligence Daily) -- Former Halliburton subsidiary, Kellogg Brown & Root (KBR), will pay the federal government $402 million to settle a decade-long criminal investigation into claims the company paid off intermediaries of the notoriously corrupt Nigerian dictator Sani Abacha and some of his subordinates to win a lucrative construction contract for a natural gas liquefaction plant while former Vice President Dick Cheney headed the corporation, according to court documents obtained by
The Public Record over the weekend.
Under terms of the plea deal KBR will be placed on three years probation and will be appointed an independent monitor. The fines, the largest ever recorded under the Foreign Corrupt Practices Act (FCPA), will be paid in installments, according to federal court documents. A federal judge still needs to approve the terms.
The Justice Department filed a 22-page criminal information in a Houston federal courthouse Friday that says KBR “agrees to all the facts alleged in the information.” A criminal information is filed in cases when a plea deal has been reached. The court documents have not yet been released publicly.
Neither Halliburton nor KBR, which was spun off into a separate company two years ago and is now known simply as KBR, spokespeople would comment. Attorneys for both companies are due in court sometime next week to enter guilty pleas on behalf of Halliburton and KBR to a single count of conspiring to violate the Foreign Corrupt Practices Act and four counts of violating that law.
The company is expected to enter into a separate settlement with the Securities and Exchange Commission, the terms of which are still unknown. Late last month, Halliburton said in a news release that it was in talks with the SEC to pay $177 million in "disgorgement” related to the bribery scheme. In that news release, the company confirmed that it had reached an agreement with the federal government to settle the criminal probe.
"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 prospective settlement with the DOJ would not require Halliburton to engage a monitor," Halliburton's Jan. 26
news release said. "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."
The plea deal and settlement between the government and KBR as outlined in Friday’s court documents was arranged at the same time KBR awarded a new $35 million defense contract to build a power plant and electrical distribution center in Iraq even though the company is under criminal investigation over the electrocution of two U.S. Soldiers who allegedly were killed as a result of KBR’s shoddy electrical work. KBR announced last week that the Army Corps of Engineers awarded the company the contract.
KBR also has handled lucrative U.S. government support contracts for U.S. troops in other countries. 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 in November of that year, Halliburton’s financial troubles disappeared.
At the urging of unnamed officials in the Office of the[n] Vice President [Dick Cheney], according to Defense Department documents, the DoD recommended the Army Corps of Engineers award a contract to KBR to extinguish Iraqi oil well fires in addition to "assessing the condition of oil-related infrastructure; cleaning up oil spills or other environmental damage at oil facilities; engineering design and repair or reconstruction of damaged infrastructure; assisting in making facilities operational; distribution of petroleum products; and assisting the Iraqis in resuming Iraqi oil company operations."
That was a deal hatched five months before the start of the Iraq war, when the Bush administration said publicly that it had not been working on war plans.
"The fact that the Department was planning for the possibility that it would need to repair and provide for continuity of operations of the Iraqi oil infrastructure was classified until March 2003," the Army Corps of Engineers said on its web site. "This prevented earlier acknowledgement or announcement of potential requirements to the business community."
A March 6, 2003
internal Pentagon e-mail sent by an Army Corps of Engineers official says "action" on the multibillion-dollar Halliburton contract was "coordinated" within Cheney's office.
The e-mail says Douglas Feith, the former Undersecretary of Defense for Policy, received authorization from then Deputy Secretary of Defense Paul Wolfowitz to “execute” the Restore Iraqi Oil contract to Halliburton in 2002.
Feith was one of the architects of the Iraq war who operated the Pentagon’s Office of Special Plans that exaggerated the Iraqi threat and provided the White House with bogus information about links between Iraq and al Qaeda.
The email said Feith approved elements in the contract "contingent on informing WH [White House] tomorrow. We anticipate no issues since action has been coordinated w VP's [Vice President's] office."
Two days after the email was sent, the Army Corps of Engineers formally awarded Halliburton’s KBR unit the contract, without reviewing bids from other companies.
Bunnatine Greenhouse, the Army Corps’ top civilian contracting expert, said the Halliburton/KBR Iraq deal represented “the most blatant and improper contract abuse I have witnessed during the course of my professional career." Greenhouse, who testified before Congress in June 2005, was demoted for speaking out about contract fraud.
In the case of the bribes paid to Nigerian officials, a formal 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 a 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.”
Last September, Albert “Jack” Stanley, KBR’s former chief executive, pleaded guilty to conspiracy to commit wire and mail fraud and conspiring to violate the Foreign Corrupt Practices Act. The Justice Department said he paid more than $180 million in bribes to Nigerian government officials so KBR could win the Bonny Island liquefied natural gas plant contract.
Stanley is a close associate of Cheney who was promoted by the former vice president in 1998 to head Kellogg, Brown & Root, Halliburton’s engineering and construction subsidiary. Stanley faces seven years in prison and nearly $11 million in restitution payments. His sentencing is scheduled for May 6.
According to last year’s plea deal, Stanley started paying bribes began in 1995, the year Cheney was named chief executive of the corporation, and ended when Stanley was fired in 2004.
As part of the plea deal, Stanley cooperated with the federal government’s investigation into the matter, which may result in criminal charges against other KBR executives in the months ahead.
Documentary evidence showing Cheney was aware that the bribes took place during his five years he spent as Halliburton’s CEO has not surfaced. But his role in the scheme was scrutinized by one foreign judge.
According to previous published accounts of the bribery scandal, the bribes Stanley paid 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, a French 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.
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.
The governments of Switzerland and the United Kingdom launched their own investigation into Halliburton and KBR over bribes paid to Nigerian government officials. Those probes are still ongoing.
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