Somewhat off the radar screen in recent weeks, the Department of Justice is quietly continuing to investigate major military contractor Halliburton and its spin-off company KBR. Halliburton is the giant oilfield services company where Vice President Dick Cheney was CEO before joining the 2000 Republican ticket with George W. Bush. The investigation has borne fruit. On Sept. 3, in US District Court in Houston, the feds filed a plea agreement with Albert Jackson Jack Stanley, the former chairman and CEO of KBR. Stanley pled guilty to bribing Nigerian officials in oil commerce.
This is a big case. Stanley, who ran KBR when it was a Halliburton subsidiary, is introduced by the nonprofit ProPublica.org blog [see below] thus:
In the world of Big Oil, Albert Jack Stanley was legendary for winning billion-dollar contracts in third world countries, the Halliburton executive who knew all the secrets of deals in places like Malaysia, Egypt and Yemen.
In the wake of his admission in a guilty plea last week that he had resorted to bribes, kickbacks and high-level corruption to secure [oil] deals in Nigeria, however, Stanley now lies at the center of a widening scandal in the oil industry that has implications for corporations and governments across the globe.
Prosecuted under the US Foreign Corrupt Practices Act, Stanley admitted to arranging more than $182 million in illegal paymentsbribes and kickbacksto Nigerian government officials.
As the FCPA Blog (fcpablog.blogspot.com), led by former Wall Street Journal managing editor Paul Steiger, notes, The scale of the bribery is enormous, the companies involved are powerhouses, and the cast of characters is daunting. But its the most important FCPA story around, and maybe the most important one ever.
This would seem to be a particularly good time for a chief executive such as Barack Obama to exploit friendly relations with other governments. This case presents another side of globalization. According to the financial analysts at ProPublica, the Stanley case could begin a string of coming indictments of US corporate managers who have bribed foreign officials. In cooperating with prosecutors, Stanley could assist in multiple investigations involving foreign governments and American companies.
Results might extend well beyond US shores: The $182 million in bribes were allegedly paid not just by Halliburton but by its partners, an international consortium of engineering companies from France, Italy and Japan. The United Kingdom has jurisdiction, too, because much of the bribery scheme was, according to court documents, hatched in London, where Stanley maintained a sumptuous home, ProPublica reported in an investigation conducted with PBSs Frontline.
Investigators will have plenty to work with. Some further details of the investigation come from a former contract employee for Halliburton, northern Virginia resident David A. Smith. Smith got on the trail when by mistake he received email correspondence intended for a Halliburton executive with a name similar to his: While working in Halliburtons Kellogg, Brown & Root offices in Arlington, Virginia, I received a series of mis-directed e-mails intended for David R. Smith, the Vice President of Tax for Halliburton, Smith says in an email. The emails he received pertained to federal investigations, not yet announced publicly, into bribery and public corruption charges in Halliburtons Nigerian operations.
Smith, who worked in the Arlington, Va., offices of KBR from August 2001 to April 2003, says that the e-mails pertained to alleged foreign bribes that would have been paid while Vice President Cheney was CEO of Halliburton. Smith also says that he has cooperated with the Department of Justice since July 23, 2004, adding: In September 2006, I went public with the story of the mis-directed e-mails. Later that same month, the SEC required Halliburton/KBR to execute a tolling agreement, extending the statute of limitations on the FCPA investigation. Soon thereafter, so did the DOJ. Last month, Albert Jack Stanleythe former CEO of KBRentered into a plea agreement with the DOJ.
Smith says that the plea agreement entered into by Jack Stanley contradicts initial Halliburton denials of the bribery allegations, made through a company spokesperson, when Smith first went public with his claim.
The emails that David A. Smith received had been intended for a Halliburton vice president named David R. Smith. Publicly released statements by Halliburton, Smith notes, do not confirm or deny that the FBI asked for the backup tapes of the emails. That demand would have been made in Arlington, Virginia, and Houston, Texas, on Friday, July 23, 2004.
Smith also says that his supervisor, a longtime Halliburton employee who transferred from Houston to help start the companys federal government practice in Arlington, Va., advised Smith to ignore the emails. Only after I pointed out the logical consequence, Smith says, that eventually someone would track down the mistaken recipient, did his supervisor instruct me to go ahead and send an email to the Halliburton attorney who sent the original e-mail to me by mistake. Apparently the Halliburton attorney reacted somewhat angrily.
Smith further says that his telephone records and email from 2008 include calls and emails exchanged with in-house counsel at Halliburton on the matter.
Expressing a hope that congressional committees may also investigate, Smith notes that paying foreign bribes like those admitted by Stanley requires a bank with offshore operations to serve as middleman for the bribes and to facilitate tax evasion.
Furthermore, Smith says, Halliburton and KBR shareholders have a right to know if the current corporate officersmany of whom created 10b5-1 plans recently to sell shares while in possession of material, non-public informationare aware that the Stanley plea agreement is expected to lead to further high-level indictments of current or former corporate officers.
Margie Burns is a Texas native who now writes from Washington, D.C. Email email@example.com. See her blog at www.margieburns.com.
From The Progressive Populist, December 1, 2008
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