UPDATE 2-KBR pleads guilty in Nigerian bribery case

Wed Feb 11, 2009 8:26pm GMT

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(Adds related SEC settlement, KBR and Halliburton comment)

By Chris Baltimore

HOUSTON Feb 11 (Reuters) - KBR Inc (KBR.N), the former engineering subsidiary of Halliburton Co (HAL.N), pleaded guilty on Wednesday to federal charges it paid $180 million in bribes to Nigerian officials in a decade-long scheme to secure $6 billion in contracts.

Appearing in U.S. District Court in Houston, KBR General Counsel Andrew Farley admitted that the company paid bribes to high-ranking Nigerian officials between 1994 and 2004 to secure four contracts for a KBR joint venture to build and expand Nigeria's Bonny Island liquefied natural gas terminal.

Under a deal reached with the U.S. Justice Department, Houston-based KBR and Halliburton will pay a $402 million fine, of which Halliburton has agreed to pay $382 million.

In a separate settlement with the U.S. Securities and Exchange Commission, Halliburton will disgorge $177 million in profits to settle parallel criminal charges that its former subsidiary violated the Foreign Corrupt Practices Act (FCPA).

Together, the $579 million in sanctions is the highest combined settlement ever paid by U.S. companies under the act, the SEC said.

Halliburton was not directly charged with any crimes, and had agreed, as a condition for the two firms to separate in 2007, to indemnify KBR against potential fines from the federal probe, which was launched in 2003.

"KBR has agreed that Halliburton's indemnification obligations with respect to the DOJ and SEC investigations have been fully satisfied," Halliburton said in a statement.

KBR Chief Executive William Utt said the violations were "a regrettable and unfortunate chapter in KBR's rich and storied history," and said none of the allegations involved current KBR managers or employees.

After a Justice Department attorney summarized the five counts in the government's case in an art-filled Houston courtroom, U.S. District Judge Keith Ellison asked KBR's Farley, "Is that true?"

"Yes, your honor," Farley replied, entering a guilty plea on behalf of the company.

The bribes -- some delivered in a briefcase stuffed with $100 bills -- were paid to officials in Nigeria's executive branch as well as the state-owned Nigerian National Petroleum Corp, the Justice Department said.

The scheme involved partner companies from Italy, France and Japan, and huge sums of money wired through banks in Amsterdam and New York to accounts in Monaco and Switzerland.

KBR also used shell companies in Portugal, referred to by the government as Madeira Companies 1, 2 and 3, in an effort to avoid breaking the FCPA law, the government said.

Albert "Jack" Stanley, a former KBR chief executive, pleaded guilty last September to charges stemming from the Nigeria bribes and agreed to cooperate with investigators. Stanley, who had worked under former U.S. vice president Dick Cheney when he headed Halliburton, will be sentenced on May 6. (Reporting by Chris Baltimore; Editing by Jeffrey Benkoe, Gary Hill)

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