SEC & DOJ Drop Hammer on Former Halliburton/KBR Executive

What is the punishment for bribing Nigerian officials and violating the Foreign Corrupt Practices Act? Apparently it’s seven years in the pokey and a $10.8 million fine. Jack Stanley, the former chief executive of KBR Inc. (KBR), a former Halliburton (HAL) subsidiary, agreed yesterday to plead guilty to participating in a decade-long scheme to bribe Nigerian government officials in return for engineering and construction contracts.

We first spotted this story two years ago, when KBR was originally spun off from Halliburton and buried the item in a 358-page amended S-1. Now, we learn that the illegal acts were much more prevalent than originally disclosed. Stanley has admitted in his plea agreement with the DOJ that a four-company joint venture, including KBR, paid about $182 million to consulting companies that then paid bribes to several Nigerian government officials.

But the legal woes don’t stop there. In investigating L’Affaire Nigeria, Halliburton disclosed in its second quarter 10-Q:

In connection with the investigation into payments relating to the Bonny Island project in Nigeria, information has been uncovered suggesting that Mr. Stanley and other former employees may have engaged in coordinated bidding with one or more competitors on certain foreign construction projects, and that such coordination possibly began as early as the mid-1980s.

On the basis of this information, Halliburton and the DOJ have broadened their investigations to determine the nature and extent of any improper bidding practices, whether such conduct violated United States antitrust laws, and whether former employees may have received payments in connection with bidding practices on some foreign projects.

If violations of applicable United States antitrust laws occurred, the range of possible penalties includes criminal fines, which could range up to the greater of $10 million in fines per count for a corporation, or twice the gross pecuniary gain or loss, and treble civil damages in favor of any persons financially injured by such violations. Criminal prosecutions under applicable laws of relevant foreign jurisdictions and civil claims by or relationship issues with customers are also possible.

Given how tough the DOJ was on Stanley, for Halliburton and KBR, the legal nightmare might just be beginning.

Image credit: AP file photo