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US: Halliburton Ex-Official
Pleads Guilty in Bribe Case


by RUSSELL GOLDThe Wall Street Journal
September 4th, 2008

In a wide-ranging foreign-corruption investigation, fired former Halliburton Co. executive Albert J. "Jack" Stanley pleaded guilty to orchestrating more than $180 million in bribes to senior Nigerian government officials. The bribes were used to win a contract to build a liquefied-natural-gas plant in Nigeria. 

Under a plea agreement entered Wednesday in a Houston federal court, Mr. Stanley faces seven years in prison and a $10.8 million restitution payment. His lawyer, Lee Kaplan, said, "We're hopeful the government finds his cooperation merits" a reduction in his prison sentence.

Mr. Stanley's agreement to cooperate could breathe new life into the five-year federal investigation, and additional charges of executives are possible. Various current and former executives of KBR, once a unit of Halliburton but now an independent company, have been subpoenaed, as have other companies involved in the construction.

The guilty plea exposes the corruption that sometimes goes hand in hand with enormous energy investments in Africa and other parts of the world. As energy companies search the world for oil and gas and related projects, they sometimes encounter foreign government officials whose approval is needed for investments but who seek bribes. Bribing such officials subjects companies and executives to possible prosecution under the U.S. Foreign Corrupt Practices Act.

According to the plea, government prosecutors said bribes began in 1995, while Mr. Stanley worked for M.W. Kellogg, then part of a company called Dresser Industries Inc. Halliburton acquired Dresser in 1998 and merged M.W. Kellogg into an engineering and construction unit of Halliburton called Kellogg Brown & Root, or KBR.

Several of the bribes Mr. Stanley has said were paid occurred after that acquisition, during the time when Vice President Dick Cheney led Halliburton, and they continued after Mr. Cheney left. Though there was no evidence Mr. Cheney knew of the bribes, the future vice president promoted Mr. Stanley to run KBR in 1998. Mr. Stanley's guilty plea said the bribes continued until 2004, the year Halliburton fired him. Mr. Cheney's tenure as Halliburton chief executive ended in 2000.

The guilty plea thus could renew attention to Mr. Cheney's past ties to Halliburton. The oil-service company was the focus of intense scrutiny in Washington starting in late 2003 when evidence emerged of extensive overcharging for work in provisioning the U.S. war effort in Iraq. Pentagon auditors later found dozens of examples of shoddy billing and inadequate services, including evidence that a KBR subcontractor was supplying fuel to the Iraqi market at highly inflated prices.

Mr. Cheney was traveling in the Caucasus region Wednesday and couldn't be reached. His office in Washington said it wouldn't comment on "pending litigation."

Halliburton did not comment on the guilty plea, but it has said in financial filings that it has produced documents to investigators and made employees available for interviews. A spokeswoman for KBR Inc., which Halliburton spun off last year, said it hadn't reviewed the plea and couldn't comment, but that the company "does not in any way condone or tolerate illegal or unethical behavior."

Halliburton, despite no longer owning KBR, still faces investigations, including a federal criminal investigation and a probe by the Securities and Exchange Commission. In addition, governments in Switzerland, the U.K. and elsewhere are looking into the matter.

According to Mr. Stanley's plea, a construction consortium that included Kellogg and later KBR paid a combined $182 million, through two agents, to bribe Nigerian officials in a scheme to win a series of contracts. The work involved building a $6 billion facility to cool natural gas until it turns into a liquid and can be transported on thermoslike tankers. The facility was built on Bonny Island in the Nigerian River delta.

Mr. Stanley, 65 years old, said he and others met with Nigerian officials to ask how the illegal payment should be handled.

Mr. Stanley also pleaded guilty to taking $10.8 million in kickbacks from an agent of the construction firms. In 2004, Halliburton dismissed Mr. Stanley for taking "improper" payments from a British lawyer, Jeffrey Tesler. Mr. Tesler, who has denied wrongdoing in the past, is suspected by investigators of helping funnel money from the consortium to Nigerian officials.

The liquefied-natural-gas trade was beginning to boom in 1995, when what was then M.W. Kellogg first submitted a bid, along with three other companies. Mr. Stanley was Kellogg's representative on the consortium's steering committee and helped hire agents who would later bribe Nigerian officials to win engineering and construction contracts.

According to the federal filing in the case, the bribery scheme moved money through a series of banks, in Amsterdam, New York City, Japan and Switzerland, before it was paid to senior Nigerian government officials and a Nigerian political party. Mr. Tesler operated out of an office in a rundown north London immigrant neighborhood.

Allegations that bribes had been paid first surfaced in an unrelated case in France. A French magistrate began looking into the matter in October 2003, uncovering shell corporations in Gibraltar and bank accounts in Switzerland. U.S. investigators joined the hunt in January 2004, according to Halliburton SEC filings.

Over the years, the investigation has grown in scope. According to Halliburton's financial filings, the SEC has issued subpoenas looking into multiple construction projects initiated over the past two decades, both inside and outside Nigeria. The plea agreement Wednesday was the first time any executive had pleaded guilty in this investigation.

In the earlier focus on Halliburton over its supply work in Iraq, Democratic lawmakers accused Mr. Cheney of having helped steer work to Halliburton, and held hearings on the subject. The matter became an issue in the 2004 presidential election, during which Democratic candidate Sen. John Kerry accused the Bush administration of being soft on Halliburton. The Stanley case, especially if it balloons to include still-more-senior Halliburton officials, could supply fresh ammunition for Democrats to attack the Bush administration and the Republican Party as being overly cozy with Big Oil.

--Neil King Jr. contributed to this article.

Write to Russell Gold at russell.gold@wsj.com





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