DOJ, SEC probe Bonny Island partners for violations

Nick Snow
Washington Correspondent

WASHINGTON, DC, Nov. 3 -- The US Department of Justice and the Securities and Exchange Commission are formally investigating whether a joint venture in which Halliburton Co. has a 25% interest played a role in alleged bribes of Nigerian government officials, the oil field services and engineering and construction company disclosed on Oct. 31.

SEC also has issued subpoenas for information, which Halliburton said it is furnishing, about current and former agents used in connection with several Nigerian and global projects during the last 20 years.

SEC also asked Halliburton in September to enter into a tolling agreement that would delay the time the legal clock started running, or tolling, on the case under the statute of limitations, generally 5 years for such cases. It expects to do so, Halliburton said in its 10-Q report to the SEC of its financial and operating results for the 3 months ended Sept. 30.

The company said investigations center around the use of agents or subcontractors at the Bonny Island natural gas liquefaction complex in Nigeria by TSKJ, a joint venture of affiliates of Technip SA of France, Saipem SPA of Italy, Halliburton subsidiary Kellogg Brown & Root, and JCG Corp. of Japan. Each partner holds about 25% interest.

The investigations center on possible violations of the Foreign Corrupt Practices Act, Halliburton said. "In addition to performing our own investigation, we have been cooperating with the SEC and DOJ investigations and with other investigations into the Bonny Island project in France, Nigeria, and Switzerland," it added.

Halliburton also said its corporate board has appointed a committee of independent directors to oversee and direct the FCPA investigations.

Extended period
It said the DOJ and SEC investigations cover an extended period, in some cases significantly before Halliburton's 1998 acquisition of Dresser Industries Inc. The merger brought M.W. Kellogg Co. into Halliburton, which it combined with its own E&C division, Brown & Root.

Halliburton supplied DOJ and SEC with documents from the files "of numerous offices of Halliburton and KBR, including current and former executives of Halliburton and KBR, and we are making our employees available to the DOJ and SEC for interviews," the company said.

The SEC has subpoenaed former KBR chairman and consultant A. Jack Stanley and other current and former KBR executives and employees and at least one KBR subcontractor, Halliburton said.

"We further understand that the DOJ has invoked its authority under a sitting grand jury to issue subpoenas for the purpose of obtaining information abroad, and … that other partners of TSKJ have provided information to the DOJ and the SEC with respect to the investigations, either voluntarily or under subpoenas," the company said.

Halliburton said the two investigations include an examination of whether TSKJ's use of Tri-Star Investments as an agent, beginning in 1995, and an unnamed Japanese trading company as a subcontractor, beginning in 1996, led to bribes of Nigerian government officials.

Halliburton said a French magistrate placed Tri-Star principal Jeffrey Tesler under investigation for corruption of a foreign public official. It said investigations of TSKJ's activities also are under way by a legislative committee of Nigeria's national assembly, by the African nation's Economic and Financial Crimes Commission, and by the UK's Serious Frauds office.

"We notified the other owners of TSKJ of information provided by the investigations and asked them each to conduct their own investigation," Halliburton said.

TSKJ has suspended payments to and services from Tri-Star and the Japanese trading company and is considering legal action to terminate all agency agreements with Tri-Star and recovery payments under those agreements, said Halliburton. TSKJ also notified Nigeria's attorney general in February 2005 that it would not oppose his efforts to have Swiss bank account money from the agreements transferred to Nigeria, Halliburton added.

Halliburton said it terminated all relationships with Stanley and another former M.W. Kellogg employee and consultant in June 2004 because the company found the pair violated Halliburton's business conduct code by allegedly receiving personal benefits from Tesler in connection with TSKJ's construction of the Bonny Island project.

Halliburton said that in 2006 it suspended the services of another agent who had worked for KBR outside of Nigeria on several current projects and older projects going back to the 1980s. It said it also is investigating whether another agent involved in still another current Nigerian project has violated any laws and the company's business conduct code in response to bribery allegations by one of the other TSKJ partners.

Contact Nick Snow at nsnow@cox.net.

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