KBR’s sense of irony…

March 13, 2009

We’ve been meaning to write about this one for awhile now — ever since we spotted it in the 10-K that KBR (KBR) filed last month.

As announced last month, KBR settled with both the Department of Justice and the SEC over KBR’s violations of the Foreign Corrupt Practices Act (FCPA) and agreed to pay $20 million. Halliburton (HAL), KBR’s former parent (before it was spun off) agreed to pay another $559 million. We’ve footnoted this whole saga several times over the years, including here and here. In a nutshell, there was this rogue agent and some other folks who were involved with bribing Nigerian officials.

Case closed, right? Not exactly. The part that caught our eye in the most recent 10-K was this new disclosure that sounded like a mighty fine whine, as opposed to the contrition one might expect from a company that essentially got caught with their hands in the cookie jar:

Limitations on our use of agents as part of our efforts to comply with applicable laws, including the FCPA, could also put us at a competitive disadvantage in pursuing large-scale international projects. Most of our large-scale international projects are pursued and executed using one or more agents to assist in understanding customer needs, local content requirements, and vendor selection criteria and processes and in communicating information from us regarding our services and pricing.

So basically, KBR is arguing that because some of its activities overseas, especially in relation to hiring foreign agents, will now have to be monitored as a result of the settlement, it may not be as competitive when it comes to getting those overseas contracts.

While we see the irony here, we don’t think the folks who wrote this language in the 10-K probably do.

Leave a Reply

You must be logged in to post a comment.