Former Officer and Director of Kellogg, Brown & Root, Inc. Pleads Guilty to FCPA Charges

In September 2008, Albert Stanley, a former officer and director of Kellogg, Brown & Root, Inc. (KBR), a global engineering and construction services company based in Houston, Texas, pleaded guilty to conspiracy to violate the FCPA in connection with a decades long scheme to bribe Nigerian foreign officials in order to obtain engineering, procurement, and construction (EPC) contracts worth more than $6 billion.

As set forth in the criminal information, between March 1991 and June 2004, Stanley served in various capacities as an officer and director of KBR, a wholly-owned subsidiary of Halliburton Company, and KBR’s predecessor, The M.W. Kellogg Company, a wholly-owned subsidiary of Dresser Industries, Inc, including serving on the steering committee of a joint venture in which these companies, at various times, had an interest. As a member of the joint venture steering committee, Stanley was involved in making decisions whether to hire consultants to assist the joint venture in winning EPC contracts.

According to the criminal information, the joint venture hired Consultant A (a citizen of the United Kingdom) to help it obtain business in Nigeria, including by offering to pay and paying bribes to high level Nigerian foreign officials, including employees of The Nigerian National Petroleum Corporation (an entity owned and controlled by the Government of Nigeria). The joint venture paid Consultant A’s company over $130 million for use in bribing Nigerian foreign officials. In addition, the joint venture hired another consulting company headquartered in Japan to also help it obtain business in Nigeria, including by offering to pay and paying bribes to Nigerian foreign officials. The joint venture paid the Japanese consulting company over $50 million for use in bribing Nigerian foreign officials. According to the criminal information, these improper payments assisted the joint venture in obtaining four EPC contracts to build the Bonny Island (Nigeria) Liquefied Natural Gas Project valued at over $6 billion.

By pleading guilty to the criminal information, Stanley acknowledged that he willfully and knowingly conspired and agreed with others to make improper payments to Nigeria foreign officials in order to obtain and retain business related to the Bonny Island Project. The criminal information details meetings Stanley participated in with his co-conspirators during which discussions occurred as to the use of particular consultants to pay bribes to Nigerian officials to secure support for the joint venture to obtain and retain contracts in connection with the Bonny Island Project. According to the criminal information, the primary purpose of the joint venture consulting contracts was to facilitate the payment of bribes to Nigerian officials and the criminal information details the use of bank accounts in The Netherlands, the U.S., Switzerland, Monaco, and Japan for this purpose.

In addition to pleading guilty to conspiring to violate the FCPA, Stanley also pleaded guilty to conspiracy to commit mail and wire fraud in connection with a kickback scheme he participated in with a consultant in connection with LNG projects around the world in which he received approximately $10.8 million in kickbacks from the consultant.

Under a plea agreement which was accepted by the court, Stanley faces a seven year prison sentence and the payment of $10.8 million in restitution and he has agreed to cooperate in ongoing investigations related to the above conduct.

In a parallel SEC enforcement action based upon the same conduct, the SEC charged Stanley with violating the FCPA’s anti-bribery provisions and the FCPA’s books and records and internal control provisions. Among other things, the SEC alleged that Stanley, while an executive of KBR and the predecessor entities listed above (all of which had shares listed on the New York Stock Exchange at various times relevant to the conduct at issue), concealed the improper payments to the Nigerian foreign officials and approved sham consulting contracts for purposes of funneling money to the foreign officials. The SEC also alleged that Stanley and others falsely characterized the payments to the consultants as legitimate “consulting” or “service” fees and that he knowingly circumvented internal accounting controls. Without admitting or denying the SEC’s allegations, Stanley consented to entry of a final judgment enjoining him from future FCPA violations and he also agreed to cooperate with the SEC’s ongoing investigations related to the above conduct.

• View the press release from the U.S. Department of Justice 
• View the U.S. Department of Justice Criminal Information
• View the Plea Agreement
• View the litigation release from the U.S. Securities and Exchange Commission 
• View the Complaint