Former KBR CEO Sentenced for Foreign Bribery and Kickback Schemes
The Justice Department announced on February 23, 2012 that Albert “Jack” Stanley, a former chairman and chief executive officer of Kellogg, Brown & Root Inc. (KBR), was sentenced on February 23, 2012 to 30 months in prison for conspiring to violate the Foreign Corrupt Practices Act (FCPA) by participating in a decade-long scheme to bribe Nigerian government officials to obtain engineering, procurement and construction (EPC) contracts and for conspiring to commit mail and wire fraud as part of a separate kickback scheme. Stanley has also been ordered to serve three years of supervised release following the prison term and to pay $10.8 million in restitution to KBR, the victim of the separate kickback scheme.
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KBR Part of Joint Venture that was Awarded $6B worth of EPC Contracts
KBR was a member of the TSKJ joint venture (named for the first letters of the names of the companies involved), along with Technip S.A., Snamprogetti Netherlands B.V., and JGC Corporation. Between 1995 and 2004, TSKJ was awarded four EPC contracts, valued at more than $6 billion, by Nigeria Liquefied Natural Gas (LNG) Ltd. to build the LNG facilities on Bonny Island. The government-owned Nigerian National Petroleum Corporation was the largest shareholder of NLNG, owning 49 percent of the company.
Paid $183M in Bribes to Nigerian Officials to Obtain & Retain Contracts
From approximately 1994 through June 2004, the joint venture companies, Stanley, two co-conspirators, and others agreed to pay bribes to a wide range of Nigerian government officials in order to obtain and retain the EPC contracts. To pay the bribes, the joint venture hired two agents -- Jeffery Tesler, a licensed solicitor, and Marubeni Corporation, a Japanese trading company. The joint venture hired Tesler as a consultant to pay bribes to high-level Nigerian government officials, and hired Marubeni to pay bribes to lower-level Nigerian government officials.
At crucial junctures preceding the award of the EPC contracts, Stanley and other co-conspirators met with successive holders of a top-level office in the executive branch of the Nigerian government to ask the office holders to designate a representative with whom TSKJ should negotiate bribes to Nigerian government officials. TSKJ paid approximately $132 million to a Gibraltar corporation controlled by Tesler and $51 million to Marubeni during the course of the bribery scheme for use, in part, to pay bribes to Nigerian government officials.
Co-Conspirators Sentenced to Combined 21 Months in Prison and $45K in Fines
Two of Stanley's co-conspirators were also sentenced. Jeffrey Tesler was sentenced to 21 months in prison, followed by two years of supervised release. Tesler also was ordered to pay a $25,000 fine and was previously ordered to forfeit $148,964,568. Wojciech J. Chodan, a former salesman at KBR’s U.K. subsidiary, was sentenced to one year of probation and ordered to pay a $20,000 fine. Chodan was previously ordered to forfeit $726,885. All three defendants fully cooperated with the department’s investigation, which resulted in more than $1.7 billion in penalties, disgorgement and forfeitures. The defendants’ substantial assistance in the investigation and prosecution of other defendants was reflected in the sentences the court imposed.
Related Criminal and Cases Bring Total in Penalties to $1.1 Billion
KBR’s successor company, Kellogg Brown & Root LLC, pleaded guilty in February 2009 to FCPA-related charges for its participation in the scheme to bribe Nigerian government officials. Kellogg Brown & Root LLC was ordered to pay a $402 million fine and to retain an independent compliance monitor for a three-year period to review the design and implementation of its compliance program.
In another related criminal case, the department filed a deferred prosecution agreement (DPA) and criminal information against (i) Technip in June 2010, in which Technip agreed to pay a $240 million criminal penalty and to retain an independent compliance monitor for two years (see ITT's Online Archives 10062929 for summary); (ii) Snamprogetti in July 2010, which also agreed to pay a $240 million criminal penalty (see ITT's Online Archives 10070803 for summary); (iii) JGC in April 2011, in which JGC agreed to pay a $218.8 million criminal penalty and to retain an independent compliance consultant for two years (see ITT's Online Archives 11040729 for summary); and (iv) Marubeni in January 2012, in which Marubeni agreed to pay a $54.6 million criminal penalty and to retain a corporate compliance consultant for two years (see ITT's Online Archives 12011812 for summary).