US: Halliburton Ex-Official Pleads Guilty in Bribe Case

Publisher Name: 
The Wall Street Journal

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

AMP Section Name:Natural Resources
  • 15 Halliburton
  • 107 Energy