KBR unit seeks plea bargain in probe over Nigeria bribes

M.W. Kellogg Ltd. (MWKL), a British joint venture in which Houston-based KBR owns 55%, is seeking plea negotiations with the UK’s Serious Fraud Office (SFO) to settle its investigation into a Nigerian bribe scheme.

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Feb. 22 -- M.W. Kellogg Ltd. (MWKL), a British joint venture in which Houston-based KBR owns 55%, is seeking plea negotiations with the UK’s Serious Fraud Office (SFO) to settle its investigation into a Nigerian bribe scheme.

"MWKL has informed the SFO that it intends to self-report corporate liability for corruption-related offenses arising out of the Bonny Island project," said Halliburton, which formerly owned KBR.

In a filing with US financial regulators, Halliburton said that MWKL, which held part of KBR's stake in the Nigerian project, expects to receive SFO confirmation that it will be admitted into a plea negotiation process.

Halliburton did not detail the potential impact of MWKL’s SFO plea impact, but said it expected its remaining obligation to KBR was $72 million effective yearend 2009—excluding the remaining money to resolve the earlier US investigations.

KBR last year pled guilty to US charges that, as part of a multinational consortium, it paid $180 million in bribes during 1994-04 to Nigerian officials to secure $6 billion in contracts.

The US Department of Justice said the bribes were paid to officials in Nigeria's executive branch as well as the state-owned Nigerian National Petroleum Corp.

DOJ said the scheme involved money wired through banks in Amsterdam and New York to accounts in Switzerland and Monaco, with KBR using shell companies in Portugal in an effort to avoid breaking US law.

At the time, KBR admitted to paying the bribes on behalf of the TSKJ consortium—comprised of Technip SA, Snamprogetti, KBR, and JGC Corp.—to secure contracts for the Bonny Island LNG terminal.

KBR and Halliburton agreed with DOJ to pay a combined $402 million fine: Halliburton, $382 million, and KBR, $20 million.

Halliburton also agreed with the US Securities and Exchange Commission to pay $177 million in profits to settle parallel criminal charges that KBR violated the Foreign Corrupt Practices Act (FCPA).

According to SEC, the $579 million paid by Halliburton and KBR is the highest combined settlement ever paid by US companies under the FCPA.

US authorities began their probe into the TSKJ consortium in 2004, and the SFO entered the investigation in 2006 since part of KBR's consortium share was held by MWKL.

Last October, Halliburton, said SFO findings of UK law violations could result in "fines, restitution and confiscation of revenues, among other penalties, some of which could be subject to our indemnification obligations."

Halliburton, which indemnified KBR for some past liabilities when the two companies split in 2007, said its indemnity for MWKL is limited to 55% of any penalties.

Halliburton also said SFO's decision on charges rested on many factors, including whether the UK joint venture knew of any payments.

In its US filing, Halliburton acknowledged that additional Bonny Island investigations are under way in France, Nigeria, and Switzerland.

Last week, Technip said it has set aside €245 million for possible fines resulting from the Nigeria bribery case, adding that it had cooperated with the SEC and DOJ in their investigation into the matter.

"The potential resolution does not contemplate a criminal conviction for Technip's role in the TSKJ joint venture. Although the amount to be paid is substantial, Technip will continue its global business in a normal manner," the French firm said.

Last year, Italian authorities widened the investigation to include Eni SPA and its former Snamprogetti oil field services unit.

An Eni spokeswoman confirmed the investigation, saying: "Eni and Saipem-Snamprogetti have voluntarily been in contact with investigators for some time to provide them the utmost cooperation."

Contact Eric Watkins at hippalus@yahoo.com.

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