Dick Cheney Fitted for New Halliburton Uniform - Striped Jumpsuit
The US Securities and Exchange Commission is conducting a formal investigation into whether Halliburton made improper
payments to government officials in Nigeria in connection with the construction and expansion by TSKJ of a natural gas
liquefaction complex and facilities at Bonny Island in Rivers State, Nigeria.
TSKJ is a company registered in Portugal whose members include Technip SA of France, Snamprogetti Netherlands BV, a
subsidiary of Saipem SpA of Italy, JGC Corporation of Japan, and Kellogg Brown & Root, a successor to the MW Kellogg Company, each of which has a 25% interest in the venture.
TSKJ entered into various contracts to build and expand the liquefied natural gas project for Nigeria LNG Limited, which
is owned by the Nigerian National Petroleum Corp, Shell Gas BV, Cleag Limited, and Agip International BV, an affiliate
of ENI SpA of Italy.
MW Kellogg Limited is a joint venture in which Halliburton has a 55% interest; and MW Kellogg Limited and the MW Kellogg
Company were subsidiaries of Dresser Industries before Halliburton's 1998 acquisition of Dresser Industries. The MW
Kellogg Company was later merged with a Halliburton subsidiary to form Kellogg Brown & Root.
The US Department of Justice is also conducting a related criminal investigation of the Nigerian bribery matter pursuant
to the US Foreign Corrupt Practices Act (FCPA).
In addition to the SEC and the DOJ investigations, other investigations are being conducted in France, Nigeria and
Switzerland and in Nigeria, a legislative committee of the National Assembly and the Economic and Financial Crimes
Commission are also investigating the matter.
And last but not least, on August 7, 2006, the Financial Times of London reported that KBR, a subsidiary of Halliburton,
is being investigated by Britain's Serious Fraud Office over the company's role in an alleged plot to pay more than $170
million in bribes to win $7 billion worth of contracts at a Nigerian oil plant.
For part of the period under investigation, the newspaper reported, Halliburton was headed by Vice President Dick
Cheney.
The SFO said it had conducted searches at business and residential premises as part of its investigation into KBR, which
it said was opened in March 2006. The probe comes after criticism that the SFO was doing too little on the case even
though a British-based company and a British lawyer were at the centre of a plot, the Times noted.
During the investigations, information has surfaced suggesting that at least 10 years ago, members of TSKJ planned to
make bribery payments to Nigerian officials.
According the Times article, documents from the French investigation show the payments relate to four separate contracts
under which the consortium agreed to pay a total of just over $170 million to an offshore company controlled by
London-based attorney, Jeffrey Tesler.
Investigators in the US, France and Nigeria, the Times said, have looked with particular interest at handwritten meeting
minutes surrendered by Halliburton, in which the consortium partners use highly suggestive language about how they plan
to do business.
"One note," the Times reports, "from December 1994 says that “all services” will cost the consortium $180m, with a
further $60m allocated to “culture”.
"Elsewhere in the notes," the article says, "KBR and its consortium partners – Technip of France, Italy’s Snamprogetti
and JGC of Japan – discuss the pros and cons of a series of possible “secret” and “open” payments to agents."
The payments were made during Cheney's tenure, and according to the Boson Globe, "If such payments were made and Cheney
approved them, he could be guilty of violating the U.S. Foreign Corrupt Practices Act."
Mr Tesler swears that Cheney knew about the bribes. He testified under oath in May, 2004 that he made payments to Jack
Stanley, while Stanley was president of KBR, and specifically testified that Cheney approved the payments.
His testimony is backed up by banking records that show that at least $5 million in payments were wired to Stanley
through a secret bank account in Zurich. Mr Tesler also testified that he paid $350,000 to another Halliburton
executive, William Chaudran, through a secret bank account on the isle of Jersey.
A French magistrate has officially placed Mr Tesler under investigation for corruption of a foreign public official and
is said to be offering him a deal if he implicates Dick Cheney.
Sources within the French legal system contend that there is more than enough evidence to indict Cheney on charges of
bribery, money laundering and misuse of corporate assets.
In connection with the Bonny Island project, TSKJ entered into a series of agreements, including with Tri-Star
Investments, of which Mr Tesler is a principal, beginning in 1995, and a series of subcontracts with a Japanese trading
company beginning in 1996.
The SEC and DOJ are seeking to determine whether TSKJ’s engaged Tri-Star as an agent, and the Japanese company as a
subcontractor, to make improper payments to Nigerian officials.
According to Halliburton's SEC filing, company representatives have met with the French magistrate and Nigerian
officials and in October 2004, representatives of TSKJ testified before the Nigerian legislative committee.
If violations of the FCPA are found in these investigations, a guilty person or entity could be subject to fines, and
civil penalties of up to $500,000 for each violation, as well as equitable remedies, including disgorgement, and
injunctive relief.
Under the statute, criminal penalties could range from up to the greater of $2 million per violation or twice the gross
pecuniary gain or loss. The SEC and the DOJ could also decide that continuing conduct constitutes multiple violations
for purposes of assessing the penalty amounts for each violation.
Potential consequences of a criminal indictment to Halliburton could include suspension by the US Department of Defense,
or other federal, state, or local government agencies, of KBR and its affiliates from their ability to contract with
government agencies.
If a criminal or civil violation is found, KBR and its affiliates could be debarred from receiving future contracts and
also from receiving new orders under existing contracts to provide services to any such entities, which would naturally
include current KBR contracts in Iraq and Afghanistan.
And this would be no small penalty for Halliburton. According to the company's SEC filing for the quarter ending June
30, 2006, during 2005, "KBR and its affiliates had revenue of approximately $6.6 billion from its government contracts
work with agencies of the United States or state or local governments."
"Suspension or debarment from the government contracts business," the filing states, "would have a material adverse
effect on the business, results of operations, and cash flows of KBR and Halliburton."
The investigations could also result in third-party claims against the company, "which may include claims for special,
indirect, derivative or consequential damages, damage to our business or reputation, loss of, or adverse effect on, cash
flow, assets, goodwill, results of operations, business, prospects, profits or business value, adverse consequences on
our ability to obtain or continue financing for current or future projects or claims by directors, officers, employees,
affiliates, advisors, attorneys, agents, debt holders or other interest holders or constituents of us or our
subsidiaries," the SEC filing says.
In addition, Halliburton "could incur costs and expenses for any monitor required by or agreed to with governmental
authority to review our continued compliance with FCPA law," it notes.
On another front, during the investigation into the Bonny Island project, the SEC filing states, "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, the DOJ is reportedly seeking to determine the nature of any improper bidding
practices, whether antitrust laws were violated, and whether Halliburton employees have received payments as a result of
such bidding practices on foreign projects.
If violations of antitrust laws are found to have occurred, according to Halliburton's SEC filing, "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," the filing states, "under applicable laws of relevant foreign jurisdictions and civil claims
by, or relationship issues with customers, are also possible."
As part of the investigation, the SEC has issued subpoenas seeking information regarding current and former agents used
in connection with projects over the past 20 years located in and outside of Nigeria in which MW Kellogg Company, MW
Kellogg, Ltd, KBR or their joint ventures, as well as the Halliburton energy services business, were participants.
Halliburton says it has "produced documents to the SEC and the DOJ both voluntarily and pursuant to company subpoenas
from the files of numerous officers of Halliburton and KBR, including current and former executives of Halliburton and
KBR, and we are making our employees available to the SEC and the DOJ for interviews."
In addition, the SEC has issued a subpoena to Jack Stanley, and to other current and former KBR employees, former
executive officers of KBR, and at least one subcontractor of KBR.
The DOJ has invoked its authority under a sitting grand jury to issue subpoenas for the purpose of obtaining information
abroad, and other partners in TSKJ have provided information to the DOJ and the SEC related to the investigations.
Back in May of 2003, Halliburton was forced to admit to the SEC that it had paid $2.4 million in bribes to officials of
Nigeria's Federal Inland Revenue Service in 2001 and 2002 "to obtain favorable tax treatment."
Of course Halliburton pointed the finger of blame at a couple of lowly employees for bribing the Nigerian IRS, and
claimed that none of its senior officers were involved in the bribery plot. But as the Houston Chronicle pointed out at
the time, "left unanswered is how a 'low-level employee' could channel that much money from the company to the pockets
of a corrupt official."
The current investigation into the payment of $170 million in bribes could be near to a conclusion because Halliburton
seems to be ready to throw in the towel.
"We have reason to believe," Halliburton said in its SEC filing, "based on the ongoing investigations, that payments may
have been made to Nigerian officials."
So if Dick Cheney goes missing again, it probably just means that he's off being fitted for a new Halliburton uniform -
a striped jumpsuit.
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Evelyn Pringle
evelyn.pringle@sbcglobal.net
(Evelyn Pringle is a columnist for OpEd News and an investigative journalist focused on exposing corruption in
government and corporate America)