The DOJ and SEC have brought related enforcement actions against KBR LLC, KBR, Inc. and Halliburton in connection with a decade-long scheme to bribe government officials in Nigeria to obtain contracts concerning natural gas facilities. KBR LLC formed a joint venture with others, which operated through three Portugal-based companies, to bid on and perform natural gas contracts in Nigeria. In response to criminal charges by the DOJ, KBR LLC admitted that prior to the award of the contracts, its former CEO, Albert Stanley, and others met with senior executives in Nigeria’s government to request the office holders to designate representatives with whom the joint venture should negotiate government officials’ bribes. KBR LLC further admitted to paying more than US$180 million to consultants to be used, at least in part, for Nigerian government officials’ bribes.
KBR LLC pleaded guilty to one count of conspiring with joint venture parties and others to violate the FCPA by authorizing, promising and paying bribes to government officials, including executive branch officials, and four counts of violating the FCPA’s antibribery provisions. To settle the DOJ’s criminal charges, the company agreed to pay a US$402 million fine and to retain an independent compliance monitor for three years to review the design and implementation of the entity’s compliance program and report to the DOJ. Further, KBR LLC agreed to undergo three years of organizational probation and continue to cooperate with the DOJ’s ongoing investigation.
In related actions, the SEC charged KBR, Inc., KBR LLC’s parent company, with violating the FCPA’s antibribery, books and records, and internal controls provisions, as well as aiding and abetting Halliburton’s violations of the books and records and internal controls provisions. The SEC also charged Halliburton, KBR LLC’s former parent company, with books and records and internal controls violations of the FCPA. Specifically, with respect to Halliburton, the complaint alleged that the company failed to devise adequate internal controls relating to foreign sales agents and the FCPA, and failed to enforce the internal controls then in place. As a result, Halliburton failed to detect, deter or prevent violations by its subsidiaries.
KBR, Inc. and Halliburton have agreed to pay US$177 million in disgorgement to settle the SEC’s charges. KBR, Inc. is permanently enjoined from violating the antibribery provisions and from aiding and abetting violations of the books and records and internal controls provisions of the FCPA and must retain an independent monitor for three years to review its compliance program. Halliburton is permanently enjoined from violating the FCPA’s books and records and internal controls provisions and must retain an independent consultant to review its FCPA compliance program. The combined US$579 million in penalties represents the largest penalty ever paid by US companies in the FCPA’s history.