The Justice Department said today that Albert “Jack” Stanley, 65, a former chairman and CEO of KBR, the global engineering and construction firm based in Houston, pleaded guilty to a two-count criminal information charging him with conspiracy to violate the Foreign Corrupt Practices Act and conspiracy to commit mail and wire fraud. He appeared in U.S. District Court in his hometown of Houston before U.S. District Judge Keith P. Ellison.
From 1995 to 2004, Stanley helped a joint venture that included KBR and its predecessors funnel $182 million in bribes to government officials in Nigeria. The bribes were paid in exchange for contracts worth $6 billion to build liquefied natural gas facilities there. Stanley and others met with high-ranking Nigerian government officials and their representatives at least four times to arrange the bribe payments. He also received $10.8 million in kickbacks from a consultant hired in connection with LNG projects around the world.
Under the plea deal accepted by the court, Stanley faces seven years in prison and a restitution payment of $10.8 million. A sentencing date hasn’t been set. Criminal violations of the FCPA’s anti-bribery provisions are punishable by five years in prison, and criminal violations of the accounting provisions by 20 years in jail. As part of his plea agreement, Stanley agreed to cooperate with law enforcement authorities in the ongoing investigations. The DOJ said it gathered evidence abroad and was helped by authorities in France, Italy, Switzerland and the United Kingdom.
In a related civil enforcement proceeding, the Securities and Exchange Commission said Stanley has consented to a final judgment permanently enjoining him from violating the anti-bribery, record-keeping and internal control provisions of Securities Exchange Act of 1934 (Sections 30A and 13(b)(5) and Rule 13b2-1).
Stanley was a senior vice president of Dresser Industries, Inc. when it merged into Halliburton in September 1998. Dresser’s wholly-owned construction subsidiary, Kellogg, was combined with Halliburton’s construction subsidiary, Brown & Root, Inc., to form KBR. Stanley became CEO of KBR and was named chairman in 2001. He was fired in June 2004. In November 2006, Halliburton spun KBR off and it became a separate publicly-traded company. Vice President Dick Cheney was Halliburton’s chief executive from 1995 to 2000.
KBR’s 2007 annual report describes a joint venture called TSKJ “formed to design and construct large-scale projects in Nigeria. TSKJ’s members are Technip, SA of France, Snamprogetti Netherlands B.V., which is a subsidiary of Saipem SpA of Italy, JGC [of Japan] and us, each of which has a 25% interest. TSKJ has completed five LNG production facilities on Bonny Island, Nigeria and is nearing completion on a sixth such facility.”
As KBR’s senior representative in TSKJ, Stanley authorized the hiring of an agent in the U.K. and another in Japan to pay bribes to various Nigerian government officials, and concealed the payments. The SEC’s complaint said,
In numerous Dresser, Halliburton and KBR company records, Stanley and others falsely characterized the payments to the UK Agent and the Japanese Agent as legitimate “consulting” or “services” fees when, in fact, Stanley knew they were bribes. For example, Stanley authorized entering into contracts with the UK Agent and the Japanese Agent that he knew falsely described the purpose of the contracts in order to make it appear that the agents would perform legitimate services. Stanley and others also prepared for approval internal company bid documents for the LNG Trains that mischaracterized the bribe payments as legitimate expenses. In addition, certain records falsified by Stanley were used in the companies’ due diligence process for approving use of the UK Agent.
KBR’s 2007 annual report added these details:
In connection with the Bonny Island project, TSKJ entered into a series of agency agreements, including with Tri-Star Investments, of which Jeffrey Tesler is a principal, commencing in 1995 and a series of subcontracts with a Japanese trading company commencing in 1996. We understand that a French magistrate has officially placed Mr. Tesler under investigation for corruption of a foreign public official. . . .
Our representatives have met with the French magistrate and Nigerian officials. In October 2004, representatives of TSKJ voluntarily testified before the Nigerian legislative committee. Halliburton notified the other owners of TSKJ of information provided by the investigations and asked each of them to conduct their own investigation. . . .
In June 2004, all relationships with Mr. Stanley and another consultant and former employee of M.W. Kellogg Limited were terminated. The terminations occurred because of violations of Halliburton’s Code of Business Conduct that allegedly involved the receipt of improper personal benefits from Mr. Tesler in connection with TSKJ’s construction of the Bonny Island project.
Jeffrey Tesler, the Tri-Star Investments principal referred to in the annual report (called “the UK Agent” by the SEC), is a 60-year old lawyer in a small North London law firm called Kaye Tesler & Co.
KBR employs 52,000 people worldwide. Revenue last year was about $8.7 billion. According to its website, “not only is KBR the largest contractor for the United States Army and a top-ten contractor for the U.S. Department of Defense, it is currently the world’s largest defense services provider. ”
KBR, Inc. trades on the NYSE under the symbol KBR.
Halliburton Company trades on the NYSE under the symbol HAL.
View the plea agreement here.
View the DOJ’s Sept. 3, 3008 release here.
View SEC Litigation Release No. 20700 and Accounting and Auditing Enforcement Release No. 2871 (Sept. 3, 2008) here.
View the SEC’s Civil Complaint Securities and Exchange Commission v. Albert Jackson Stanley, 08-CV-02680, S.D. Tex. (Houston) here.
Comments are closed for this article!