Oilfield service giant, Halliburton has disclosed that ongoing investigations into the bribes from agents of its TSKJ joint venture to Nigerian officials have uncovered that payments may have been made.
TSKJ is the consortium of contractors that built the first five trains for the Nigeria LNG plant in Bonny, River State.
Haliburton said that information uncovered last year suggested that, prior to 1998, plans may have been made by employees of MW Kellogg now part of the company’s KBR group to make payments to government officials in connection with the pursuit
of a number of other projects in countries outside of Nigeria.
“We are reviewing a number of recently discovered documents related to KBR activities in countries outside of Nigeria with respect to agents for projects after 1998,” the company revealed in a regulatory filing at the week.
The company in a statement, also revealed it suspended the services of two unnamed agents last year.
The US Securities &Exchange Commission is continuing a formal investigation into whether improper payments were made to government officials in Nigeria in connection with the building and subsequent expansion by the TSKJ joint venture of a multi-billion dollar natural gas liquefaction complex and related facilities at Bonny Island in Rivers State, Nigeria.
Partners in TSKJ also include France’s Technip, Japan’s JGC Corporation and Italy’s Snamprogetti .
It would be recalled that France had opened an investigation into the allegations that a Halliburton subsidiary, TSKJ, had engaged in bribery activities in Nigeria 2003. What then began as a French investigation into allegations of improper payments by a TSKJ agent to Nigerian government officials in exchange for favorable treatment in contracts connected with the construction of a multibillion dollar natural gas liquefaction complex at Bonny Island.
Nigeria has widened into an investigation by the Nigerian government and FCPA investigations by the U.S. Department of Justice and Securities and Exchange Commission.
The Nigerian House of Representatives Committee on Public Petitions engaged in an investigation of the alleged bribery activities of Halliburton/TSKJ and held hearings starting in early 2004 to identify those who may have benefited from the alleged bribe money and to determine the extent the Nigerian Government might have suffered losses in the transactions. This was followed by a public inquiry into the same matter by the National Assembly.
According to the 10Q filed with the SEC by Halliburton on October 31, 2005, the Nigerian Economic and Financial Crimes Commission, “which is organized as
part of the executive branch of the government,” is also investigating these matters. The 10Q further reports that “TSKJ notified the Nigerian Attorney General that TSKJ would not oppose the Attorney General’s efforts to have sums of money held on deposit in banks in Switzerland transferred to Nigeria and to have the legal ownership of such sums
determined in the Nigerian courts.”
The issues raised by the French inquiry into Halliburton/TSKJ’s alleged payments to Nigerian government officials of about $180 million in exchange for securing contractual advantages provide an excellent model for examining the influence of the current anti-corruption environment on FCPA enforcement. The French are examining allegations of illicit payments to Nigerian government officials by the TSKJ joint venture in which Halliburton Company’s subsidiary, Kellogg Brown & Root (“KBR”), is a partner. (11) With an American corporation involved, the French regulators related the information they had obtained to their U.S. compliance counterparts.
Starting in 1994, the joint venture, TSKJ, entered into a series of contracts to build and expand the liquefied natural gas project for Nigeria LNG
Limited at Bonny Island in Rivers State. M.W.Kellogg–a twenty-five percent partner in TSKJ�was allegedly its lead company. M.W. Kellogg became part of Halliburton in 1998, when Halliburton acquired its parent company, Dresser Industries. After the
acquisition, M. W. Kellogg’s business was merged with an earlier Halliburton acquisition, Brown & Root, to become KBR, the engineering and construction unit within Halliburton. Some of the M.W. Kellogg executives, who later worked for KBR, have been targeted for alleged misdeeds in the government investigations of bribery.
Commencing in 1995, TSKJ entered into an agency agreement with Tri Star Investments, a firm headed by a British lawyer, Jeffrey Tesler. The TSKJ joint venture allegedly engaged in its subterfuge by using
Tri Star to act as an agent in making payments. Reports estimate that TSKJ paid Tri Star $180 million which was remitted to Nigerian public officials through offshore accounts that allowed TSKJ to obtain contract awards for building the Bonny Island liquefied natural gas production units. Some evidence has emerged in the French investigation that
between 1995 and 2002, dates that “roughly coincided with contract awards for the Nigeria LNG project worth $6.7 billion,” Tri Star paid officials $166 million.
Handwritten notes detailing conversations among representatives of the consortium between 1993 and 1998, discuss the possibility of bribes to Nigerian officials to win bids for construction of the $12 billion Nigeria Liquefied Natural Gas Project, thus offering support for allegations of bribery. Subsequent to the discovery of the notes, Halliburton
disclosed their contents to the SEC.
Although some of the alleged misconduct took place from 1995 to 1998, before the M.W. Kellogg parent corporation, Dresser, was acquired by Halliburton, the merger may have carried with it the liabilities of the target company. To further attach the possibility of
liability to Halliburton, the suspect payments continued until 2002–after the merger–when a partner in the Nigerian project alerted the French prosecutor
of TSKJ’s alleged “slush fund.”
Mar192007