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Thursday, February 12, 2009
A final resolution has been issued regarding an investigation by the US Dept. of Justice (DOJ) and the Securities Exchange Commission (SEC) regarding violations of the Foreign Corrupt Practices Act (FCPA) by former Halliburton subsidiary KBR.
KBR pleaded guilty to conspiring to violate the US Foreign Corrupt Practices Act (FCPA) on February 11, as well as counts charging violations of the anti-bribery provisions of the FCPA in connection with the Bonny Island project in Nigeria as part of the TSKJ JV.
The investigations commenced in 2003 as a result of allegations of improper payments to government officials in Nigeria through the use of agents or subcontractors in connection with the construction and subsequent expansion of the LNG facility on Bonny Island.
In the Halliburton-issued release, the company said in an effort to ensure KBR’s financial stability upon separation it “indemnified KBR from fines or other monetary penalties or direct monetary damages, including disgorgement, as a result of a claim made or assessed by a governmental authority in the United States and certain other countries related to alleged or actual violations occurring prior to November 20, 2006 of the FCPA or particular, analogous applicable foreign statutes, laws, rules, and regulations in connection with investigations pending as of that date.” As a result of this and KBR’s guilty plea, Halliburton has agreed to pay in eight installments over the next two years $382 million of $402 million in criminal fines payable by KBR as part of KBR’s resolution of the DOJ investigation, with KBR paying the remaining $20 million.
With respect to the SEC, without admitting or denying the allegations in the complaint, Halliburton consented to the entry of a final judgment that permanently enjoins Halliburton from violating the record-keeping and internal control provisions of the FCPA. KBR also entered into a related settlement with the SEC. As part of Halliburton’s settlement, Halliburton agreed to be jointly and severally liable with KBR and, as a result of the indemnity, to pay to the SEC $177 million in disgorgement. KBR has agreed that Halliburton’s indemnification obligations with respect to the DOJ and SEC investigations have been fully satisfied.
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