The biggest FCPA enforcement action in history came to a close today with the sentencing of the mastermind behind the $182 million bribery scheme.
Albert ‘Jack’ Stanley, left, was ordered by Judge Keith B. Ellison to serve 30 months in prison and three years probation following his release.
Stanley, 69, was formerly KBR’s chairman and CEO. He pleaded guilty in Houston in 2008 to a two-count criminal information charging him with conspiracy to violate the Foreign Corrupt Practices Act and to commit mail and wire fraud.
He cooperated with prosecutors and over the next three years KBR and its three partners in the so-called ‘TSKJ joint venture’ paid $1.65 billion to settle FCPA charges.
Led by Stanley and KBR, TSKJ spent $182 million between 1995 and 2004 to bribe Nigerian government officials. The joint venture won four contracts to build liquefied natural gas facilities on Bonny Island, Nigeria worth more than $6 billion.
Earlier today, Judge Ellison sentenced Jeffrey Tesler, 63, the London lawyer who helped Stanley deliver bribes to Nigerian officials, to 21 months in federal prison. Tesler forfeited $149 million as part of his plea deal.
Wojciech Chodan, 74, a former U.K.-based KBR manager, was sentenced yesterday in Houston to just one year of unsupervised probation. He was credited with helping authorities prosecute Tesler.
After Stanley’s guilty plea, KBR and its one-time parent Halliburton paid $579 million in 2009 to resolve criminal and civil FCPA charges. In 2010, Italy’s Snamprogetti paid $365 million to U.S. enforcement agencies, and France’s Technip paid $338 million. Then in 2011, JGC paid $218.8 million.
Stanley received a preliminary sentence of 84 months in prison when he pleaded guilty in 2008. He was also ordered to make a restitution payment of $10.8 million. His final jail term depended on his cooperation with the DOJ. He’s been free on $100,000 bail since his guilty plea.
TSKJ settlements now make up four of the six biggest FCPA cases of all time. Together they’re twice the size of Siemens’ $800 million settlement, still the biggest single-company FCPA enforcement action.
Last month, Japan’s Marubeni Corporation paid a $54.6 million criminal penalty to resolve FCPA charges for its role as an agent of KBR and its partners.
Stanley and KBR created a complex corporate web in a futile attempt to shield TSKJ’s bribery from the FCPA. The joint venture, equally owned by the four partners, operated through three Portuguese special purpose corporations. KBR’s ownership of the Portugese companies was held indirectly through a U.K. subsidiary, M.W. Kellogg Ltd., as ‘part of KBR’s intentional efforts to insulate itself from FCPA liability,’ the DOJ said.
One of the Portugese companies had no American directors. It was used to enter into so-called consulting agreements with Tesler and Marubeni, who in turn passed bribes to Nigerian officials.
The Foreign Corrupt Practices Act prohibits both direct and indirect corrupt payments to foreign officials. Indirect payments that pass through the hands of an overseas partner or agent, such as those handled by Tesler and Marubeni, and then end up with a foreign official for an unlawful purpose, can violate the law.
Mythili Raman of the DOJ’s criminal division said: ‘These sentences [of Stanley, Tesler, and Chodan] reflect not only the defendants’ illegal acts, but also their substantial cooperation with the government. As a result of this investigation, three individuals have been convicted of FCPA-related crimes, and five companies in four countries have paid substantial penalties and undertaken significant efforts to enhance their compliance programs. This case shows the importance the department places on putting an end to foreign bribery.’