Two Strikes Against Halliburton in Nigeria

INTRODUCTION

Halliburton is in the news again – in Nigeria.  But before proceeding much further, and to assist the Nigerian public,  let us keep some of the names and dates straight in this unfolding saga.

Houston-based Halliburton is a huge multi-national corporation, a provider of products and services to the petroleum and various industries. The company offers a range of products and services through its Energy Services and Engineering and Construction Groups.  It was founded in 1919 .

Dick Cheney was Halliburton's chairman from 1995 to 2000 before he resigned to become current USA Vice-President on a joint-ticket with Mr. George W. Bush (now US president).

We next go to W.H. KELLOGGS, a well-known and long-standing engineering firm, and a subsidiary of DRESSER INDUSTRIES.  In 1998, HALLIBURTON, which already at that time had a subsidiary named BROWN & ROOT,  acquired DRESSER as a new subsidiary, and joined KELLOGGS to its existing Brown & Root component to form KELLOGGS, BROWN & ROOT (KBR). 

Enter TSKJ, a four-company partnership formed with equal (25%)  ownership stake between Technip-Coflexip  SA of France [http://www.technip-coflexip.com], Snamprogetti B.V of Netherlands [http://www.snamprogetti.it],  an affiliate of Milan, Italy-based ENI SpA] , Japan Gasoline Corporation (JGC, http://www.jgc.co.jp) and KBR  [http://www.halliburton.com/ ]  Notice that the first letters of each company spell TSKJ.  In 1994, it formed Madeira, Portugal-registered  company called LNG Services. In December 1995, this company  (fully controlled by TSKJ) entered into agreement with Nigeria LNG Limited, which is owned by the Nigerian National Petroleum Corporation (NNPC; 49%; http://www.nnpc-nigeria.com), Shell Gas B.V. (an affiliate of Royal Dutch/Shell; 25.6%), Cleag Limited (an affiliate of Total of France; 15%), and Agip International B.V. of Italy  (10.4%) to build and expand a liquefied natural gas (LNG) facility project worth $4 billion (or N540 billion, at N135 to the dollar.)  Other contracts on the project were awarded to KBR and the other partners in 1999 and 2002.  Some of the projects have been completed, the first in 2000.                             

http://www.halliburton.com/news/archive/2000/kbrnws_030100a.jsp                         http://www.halliburton.com/news/archive/2000/kbrnws_030100.jsp http://www.halliburton.com/news/archive/2001/kbrnws_103101.jsp  http://www.halliburton.com/news/archive/2002/kbrnws_032202.jsp          http://www.halliburton.com/news/kbrnws_032202.jsp

STRIKE NUMBER TWO

The most current allegation, being reviewed under US’s  Foreign Corrupt Practices Act (FCPA) by both the Department of Justice (DOJ) and Securities and Exchange Commission (SEC) of the United States and announced June 11, 2004, is that bribes (about $180m, or roughly N24.3 billion) were paid by TSKJ  between 1995 and 2002 to Nigerian officials in connection with this $4bn  LNG plant through another company called Tristar,  operated by a British lawyer, Jeffrey Tesler, alleged to be connected with high government officials such as former Oil Minister Dan Etete and military head of state late General Sani Abacha.

General Abacha was in power in Nigeria from November 1993 to June 1998;  General Abdusalam Abubakar was head of state from June 1998 to May 1999; and former general Chief Olusegun Obasanjo has been civilian president from May 1999 to date.

STRIKE NUMBER ONE 

Meanwhile in May 2003, in a separate issue,  Halliburton disclosed that it owed as much as $5 million (N675 million)  in taxes to Nigeria. The company said an internal audit discovered that KBR paid $2.4 million to an entity owned by a Nigerian national to get favorable tax treatment in the country in 2001 and 2002.  The company claimed that an official from a local tax authority fraudulently presented himself as a consultant.   That allegation is undergoing separate investigation by the SEC.

We will be watching both investigations closely.

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BIBLIOGRAPHY:

http://groups.yahoo.com/group/AlukoArchives/message/360

MONDAY QUARTERBACKING:  Taking on the Halliburton Mess (A Compilation)

May 2003

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http://www.halliburton.com/news/archive/2004/corpnws_061104.jsp

FOR IMMEDIATE RELEASE: June 11, 2004

HALLIBURTON ANNOUNCES SEC INVESTIGATION REGARDING NIGERIAN JOINT VENTURE

HOUSTON, Texas - Halliburton (NYSE:HAL) announced today that the United States Securities and Exchange Commission (SEC) has commenced a formal investigation into payments made in connection with TSKJ's construction of a natural gas liquefaction facility in Nigeria. TSKJ is a private limited liability company registered in Madeira, Portugal whose members are Technip SA of France, Snamprogetti Netherlands B.V., which is an affiliate of ENI SpA of Italy, JGC Corporation of Japan, and Kellogg Brown & Root, each of which owns 25% of the venture. The United States Department of Justice and the SEC have met with Halliburton to discuss these matters and have asked Halliburton for cooperation and access to information in reviewing these matters in light of the requirements of the United States Foreign Corrupt Practices Act. While Halliburton does not believe that it has violated the Foreign Corrupt Practices Act, Halliburton's own internal investigation of these matters is ongoing and there can be no assurance that government authorities would not conclude otherwise.

As previously reported, a French magistrate has been investigating this matter. Representatives of Halliburton have recently met with the French magistrate to express their willingness to cooperate with the investigation.

TSKJ and other similarly owned entities have 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 Corporation, Shell Gas B.V., Cleag Limited (an affiliate of Total), and Agip International B.V.

Halliburton, founded in 1919, is one of the world's largest providers of products and services to the petroleum and energy industries. The company serves its customers with a broad range of products and services through its Energy Services and Engineering and Construction Groups. The company's World Wide Web site can be accessed at www.halliburton.com.

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SEC Investigating Halliburton
By ECT News Business Desk
E-Commerce Times
06/11/04 9:25 AM PT

The SEC is investigating payments made in connection with construction of a liquefied natural gas facility in Nigeria. The U.S. Department of Justice and the SEC have met with Halliburton and have requested that Halliburton cooperate and offer access to information so they can look into matters in light of the requirements of the United States Foreign Corrupt Practices Act.

Halliburton of Texas said Friday the U.S. Securities and Exchange Commission has begun a formal investigation into a venture in Nigeria.

Halliburton said the SEC is investigating payments made in connection with TSKJ's construction of a liquefied natural gas facility in Nigeria.

TSKJ is a private limited liability company registered in Madeira, Portugal, whose members are Technip SA of France, Snamprogetti Netherlands B.V., which is an affiliate of ENI SpA of Italy, JGC Corporation of Japan and Kellogg Brown & Root, each of which owns 25 percent of the venture.

Feds Seek Halliburton Cooperation

Department of Justice and the SEC have met with Halliburton to go over these matters and have requested that Halliburton cooperate and offer the agencies access to information so they can look into these matters in light of the requirements of the United States Foreign Corrupt Practices Act.

While Halliburton said it does not believe it has violated the Foreign Corrupt Practices Act, the company's own internal investigation continues and there can be no assurance government authorities would not conclude otherwise.

In a statement today, the company said, "While Halliburton does not believe that it has violated the Foreign Corrupt Practices Act, Halliburton's own internal investigation of these matters is ongoing and there can be no assurance that government authorities would not conclude otherwise."

French Allege Bribes
 

French authorities have alleged that Kellogg Brown & Root (KBR), a Halliburton's subsidiary, paid $180 million in bribes to win the project during Vice President Dick Cheney's term as head of the Houston parent company.

A French magistrate has also been investigating this matter. Representatives of Halliburton have recently met with the French to express their willingness to assist with the investigation.

Founded in 1919, Halliburton is a provider of products and services to the petroleum and industries. The company offers a range of products and services through its Energy Services and Engineering and Construction Groups.

THIS DAY

June 13, 2004

US Probes Fresh Nigerian 'Brokerage' Payment
Halliburton
By Lanre Issa-Onilu with agency report

United States regulators have launched a formal investigation into allegations that Halliburton joint venture paid bribes in form of "brokerage fee" to win in Nigeria, a multi-billion dollar construction project in connection with the Nigeria Liquefied Natural Gas (NLNG) plant.

This investigation is coming on the heels of a similar allegation of a brokerage deal which penultimate week led to the withdrawal of Vodacom of South Africa, an affiliate of Vodafone, the world's largest mobile telephone operator. The company pulled out of Nigeria barely two months after officially taking over the management of former Econet Wireless Nigeria (EWN). It had accused some directors of the Nigerian company of an "unsalutory brokerage" payments on the investments of three state governments, namely Lagos, Delta and Akwa Ibom.

On the NLNG issue, the Houston-based Halliburton, one of the biggest providers of field and engineering services to the energy industry, said it met with the Securities and Exchange Commission and the Justice Department to discuss the matter.

The allegations were unearthed by a French investigating magistrate, Judge Renaud van Ruymbeke, last year. According to people familiar with the investigation, the judge has several contracts signed by TSKJ with a company named Tristar, operated by a British lawyer, Jeffrey Tesler. TSKJ is a Portugal-registered consortium equally owned by Halliburton's Kellogg Brown & Root, Technip SA of France, Eni SpA affiliate Snampro-getti Netherlands and JGC Corp. of Japan.

Tesler is known to be lawyer to several Nigerians, including Chief Dan Etete, former Petroleum Minister under the late General Sani Abacha whose administration awarded the contract. THISDAY checks at the weekend reveal that Etete may have been cooperating with French investigators on the issue..
 
Guardian

June 13, 2004

US Govt Probes Halliburton Saga
FROM LAOLU AKANDE,
NEW YORK

UNITED States authorities are now taking a keener interest in the over $150 million scandal involving a US firm in a Nigerian gas complex project.

Indeed, more details have emerged on the possible involvement of US oil service company, Halliburton, in the alleged scandal involving the oil company, its French partners and others in Nigeria.

Last week, reports stated that the French probe into the scandal had revealed that the head of a Halliburton subsidiary, KBR, which was involved in the project, might have received a $5 million kickback that had been traced to his accounts.

A statement from the oil service company in Houston, Texas on Friday announced that the US government had opened formal investigation into payments made in connection with the construction of a natural gas liquefaction facility in Nigeria, an apparent reference to the $5 million scam.

The statement noted that the US Department of Justice and the Security Exchange Commission (SEC) officials had "met with Halliburton to discuss these matters and have asked Halliburton for cooperation and access to information in reviewing these matters in light of the requirements of the United States Foreign Corrupt Practices Act."

But Halliburton insists that it has not violated the Foreign Corrupt Practices Act, stressing that "Halliburton's own internal investigation of these matters is ongoing and there can be no assurance that government authorities would not conclude otherwise."

Halliburton officials have also recently met with the French magistrate to express their willingness to cooperate with the investigation.

Halliburton and other international firms from France, Italy and Japan together formed a consortium called, TSKJ and 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 Corporation, Shell Gas B.V., Cleag Limited (an affiliate of Total), and Agip International B.V. in the 1990s.

The four partners chose to incorporate the consortium in Madeira, long known as a tax haven, to run the project.

The French Judge is also considering indicting current US Vice President Dick Cheney, who was CEO of Halliburton at the time the alleged scandal took place, for misuse of corporate funds, which is actionable under French laws, whether a CEO knew about the deal or not.

The US SEC and the Justice Department, equivalent of Nigeria's Justice Ministry, have asked Halliburton, "cooperation and access to information" in the investigations into the millions of dollars' worth of payments, made in the project as required by the US Foreign Corrupt Practices Act, which prohibits bribing foreign officials.

Wendy Hall, Halliburton's Director of Public Relations, told the press that the renewed US probe "was prompted by news reports that $5 million or more tied to the deal went into a Swiss bank account controlled by Albert 'Jack' Stanley, who retired last year as head of the Halliburton subsidiary, KBR, "according to a report by Dallas Morning News, Texas State leading newspaper yesterday.

Hall cleared Halliburton of any wrongdoing, saying the company "never authorised any such accounts nor any transfers to such accounts."

A French Judge, Reynaud Van Ruymbeke, is probing payments to a Gibraltar company, owned by London lawyer Jeffrey Tesler, by one of the companies while the Nigerian natural gas complex project was on.

Tesler was named as a commercial consultant on the project. The French daily, Le Figaro, had reported that Tesler also testified to Van Ruymbeke last month about the payments and was to return with documents to the French Judge. A former Nigerian Petroleum Minister has also been mentioned as a witness in the French probe.

Payments to Tristar, Tesler's company, is reported to be totaling $166 million and roughly coinciding with the sum of contracts for the construction of the facility paid to bank accounts in Geneva and Monaco.

The French newspaper also reported that an investigation by authorities in Switzerland showed that the amounts Tesler transferred to the account controlled by Stanley, head of Halliburton's subsidiary involved in the alleged scandal, equaled three to five per cent of the sums Tesler's company received.

But Tesler's Paris lawyer, Thierry Marembert, was recently reported in The Wall Street Journal as denying that the payments were bribes.

U.S. Firm Halliburton Acknowledges Bribe To Nigerian Official

allAfrica.com

May 9, 2003
Posted to the web May 9, 2003

Jim Cason
Washington, DC

Halliburton, the giant Texas based energy company once directed by Vice President Dick Cheney, acknowledged this week it paid a $2.4 million bribe to a Nigerian government official in return for tax breaks related to operations in the West African country.

"One of our foreign subsidiaries operating in Nigeria made improper payments of approximately $2.4 million to an entity owned by a Nigerian national who held himself out as a tax consultant when in fact he was an employee of a local tax authority," Halliburton disclosed in a public filing with the Securities and Exchange Commission, the federal agency which regulates publicly trade companies.

"We have reported to the SEC that the payments were made to obtain favorable tax treatment and clearly violated our Code of Business Conduct and our internal control procedures."

In the "10-Q filing" to the SEC for the first quarter of 2003, Halliburton insisted that no senior officers were involved in this incident and that several employees who allegedly were involved in the bribe have been fired. The story was first reported today by the British newspaper The Guardian.

"We are cooperating with the SEC in its review of the matter," Halliburton wrote in making this disclosure. "We plan to take further action to ensure that our foreign subsidiary pays all taxes owed in Nigeria, which may be as much as an additional $5 million, which has been fully accrued."

Although the filing did not specify the dates the bribes were paid, the company said in response to a query from AllAfrica that the payments were made during 2001 and 2002 by the Halliburton subsidiary Kellogg Brown and Root. Cheney was chief executive officer of Halliburton from 1995 to 2000, when he left to join the Bush campaign.

Full Statement in the text reads:

Improper payments reported to the Securities and Exchange Commission.

We have reported to the SEC that one of our foreign subsidiaries operating in Nigeria made improper payments of approximately $2.4 million to an entity owned by a Nigerian national who held himself out as a tax consultant when in fact he was an employee of a local tax authority. The payments were made to obtain favorable tax treatment and clearly violated our Code of Business Conduct and our internal control procedures. The payments were discovered during an audit of the foreign subsidiary. We have conducted an investigation assisted by outside legal counsel.

Based on the findings of the investigation we have terminated several employees. None of our senior officers were involved. We are cooperating with the SEC in its review of the matter. We plan to take further action to ensure that our foreign subsidiary pays all taxes owed in Nigeria, which may be as much as an additional $5 million, which has been fully accrued. The integrity of our Code of Business Conduct and our internal control procedures are essential to the way we conduct business.