Houston-based KBR said in an SEC filing this week that its compliance monitor ‘has certified that KBR’s current anti-corruption compliance program is appropriately designed and implemented to ensure compliance with the FCPA and other applicable anti-corruption laws.’
KBR appointed a monitor as part of its 2009 FCPA settlement with the DOJ and SEC. The monitor’s three-year term formally ended in February last year.
In the 2009 settlement, KBR and its former parent, Halliburton, paid $579 million to resolve FCPA offenses related to development of the Bonny Island gas facilities in Nigeria. That’s the second biggest FCPA-related case of all time.
KBR admitted paying Nigerian officials at least $182 million in bribes on behalf of itself and three partners in the TSKJ consortium. In all, the TSKJ partners and agents paid $1.7 billion in criminal and civil penalties and forfeitures imposed by U.S. authorities.
In the U.K., KBR’s subsidiary there paid a civil penalty to the Serious Fraud Office of about $11 million for the Nigeria corruption offenses.
This week, KBR said it doesn’t know ‘of any other corruption allegations against [it] by governmental authorities in foreign jurisdictions.’
Meanwhile, KBR’s former owner, Halliburton, said earlier this month its internal investigations into potential FCPA and conflict violations in Angola and Iraq are continuing.
In 2010, a whistleblower flagged potential violations through an Angolan vendor. The company then launched an investigation into those allegations.
Last year, Halliburton launched another unrelated investigation ‘into payments made to a third-party agent relating to certain customs matters in Angola and to third-party agents relating to certain customs and visa matters in Iraq.’
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Here’s KBR’s full FCPA disclosure in its Form 10-K filed with the SEC on February 20:
In February 2009, KBR LLC, entered a guilty plea to violations of the FCPA in the United States District Court, Southern District of Texas, Houston Division (the “Court”), related to the Bonny Island investigation. KBR LLC pled guilty to one count of conspiring to violate the FCPA and four counts of violating the FCPA, all arising from the intent to bribe various Nigerian government officials through commissions paid to agents working on behalf of TSKJ on the Bonny Island project. The plea agreement reached with the DOJ resolved all criminal charges in the DOJ’s investigation and called for the payment of a criminal penalty of $402 million, of which Halliburton was obligated to pay $382 million under the terms of the Master Separation Agreement (“MSA”), while we were obligated to pay $20 million. In addition, we settled a civil enforcement action by the SEC which called for Halliburton and KBR, jointly and severally, to make payments totaling $177 million, all of which was payable by Halliburton pursuant to the indemnification under the MSA. As of December 31, 2010, all criminal and civil penalties to the DOJ and SEC were paid. We also agreed to a period of organizational probation, during which we retained a monitor who assessed our compliance with the plea agreement and evaluated our FCPA compliance program over a three year period that ended on February 17, 2012, with periodic reports to the DOJ and SEC during the three-year period. Pursuant to the plea agreement with the DOJ and the consent judgment with the SEC, the monitor has certified that KBR’s current anti-corruption compliance program is appropriately designed and implemented to ensure compliance with the FCPA and other applicable anti-corruption laws.
In February 2011, M.W. Kellogg Limited (“MWKL”) reached a settlement with the U.K. Serious Fraud Office (“SFO”) in which the SFO accepted that MWKL was not party to any unlawful conduct and assessed a civil penalty of approximately $11 million including interest and reimbursement of certain costs of the investigation, which was paid during the first quarter of 2011. The settlement terms included a full release of all claims against MWKL, its current and former parent companies, subsidiaries and other related parties including their respective current or former officers, directors and employees with respect to the Bonny Island project. Due to the indemnity from Halliburton under the MSA, we received approximately $6 million from Halliburton in the second quarter of 2011.
With the settlement of the DOJ, SEC, SFO and other investigations, all known investigations in the Bonny Island project have been concluded. We are not aware of any other corruption allegations against us by governmental authorities in foreign jurisdictions.
Prior to separation, it was identified by our former parent in performing its investigation of anti-corruption activities that certain of these agents may have engaged in activities that were in violation of anti-corruption laws at that time and the terms of their agent agreements with us. Accordingly, we ceased the receipt of services from and payment of fees to these agents. In September 2010, we executed a final settlement agreement with one of our agents in question after the agent was reviewed and approved under our policies on business conduct. Under the terms of the settlement agreement, the agent had, among other things, confirmed their understanding of and compliance with KBR’s policies on business conduct and represented that they have complied with anticorruption laws as they relate to prior services provided to KBR. We negotiated final payment for fees to this agent on several projects in our Hydrocarbons segment resulting in an overall reduction of estimated project costs of approximately $60 million in 2010.
We released the remaining agent fee accruals in 2011 on the Bonny Island project which resulted in an increase of $4 million to operating income.
All FCPA-relevant disclosures filed with the SEC are available from ethiXbase, the world’s biggest anti-corruption knowledge base.
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