CORRECT: Halliburton Agrees To Pay $35 Million To Settle Nigeria Bribery Case
December 21 2010 - 4:43PM
Dow Jones News
Halliburton Co. (HAL) said Tuesday it has agreed to pay $35
million to the Nigerian government to settle bribery allegations
related to the construction and expansion of its Bonny Island
natural gas liquefaction facility, in which its former subsidiary
KBR Inc. (KBR) had a 25% stake.
The deal comes two weeks after nine people and entities were
indicted on the allegations, including former Halliburton chief
executive and U.S. Vice President Dick Cheney. The charges were
dropped Friday as an anti-graft agency spokesman said a settlement
had been reached.
Under the pact, all lawsuits and charges against Halliburton,
KBR and associated persons, including Cheney, have been dropped and
the Nigerian government agreed not to file further criminal or
civil charges. In addition to paying $32.5 million as part of the
settlement, Halliburton will pay $2.5 million in government legal
fees and aid in Nigeria's efforts to recover funds frozen in a
Swiss bank account of a former joint-venture agent.
A lawyer for Cheney, Terrence O'Donnell, said the charges
against the former vice president were "baseless."
Halliburton and KBR, which separated in 2007, paid a combined
$579 million to the U.S. government last year to settle similar
allegations related to Nigeria. KBR pleaded guilty to charges in
the case and the government agreed not to prosecute
Halliburton.
Earlier this month, former KBR consultant Wojciech J. Chodan
pleaded guilty in Houston to bribing Nigerian officials to win
contracts to design and build the Bonny Island facility, according
to the U.S. Justice Department. The 72-year-old U.K. citizen
admitted that he and co-conspirators paid out $182 million over 10
years in order to secure contracts worth more than $6 billion.
Chodan faces up to five years in prison and has agreed to
forfeit $726,885. Sentencing is scheduled for Feb. 22 in
Houston.
The $35 million settlement amounts to about 4 cents a share for
Halliburton, said Scott Burk, an analyst with Oppenheimer &
Co.
"It's modest enough that we don't think it's going to have an
impact on Halliburton," Burk said. "It seems like it will be
worthwhile to just not have to worry about it going forward."
Nigerian anti-graft officials last week said the settlement
would total $250 million. Halliburton representatives did not
immediately respond to requests for comment on the discrepancy.
Fred Enochs, a partner at Washington-based consultancy TD
International, said that with Nigerian elections looming next
spring, investigators there likely faced pressure from politicians
and government officials to settle the matter without a trial,
which may have divulged the names of those on the receiving end of
illegal payments.
"They certainly didn't want to see that happen - especially with
an election coming up," said Enochs, who was formerly with the
Central Intelligence Agency and a director at Enron Corp.
Energy companies have become increasingly targeted in bribery
probes, particularly those stemming from dealings in Nigeria.
At the same time earlier this month that Nigeria's Economic and
Financial Crimes Commission said it was probing Halliburton,
investigators said they were also looking into alleged bribery by
Royal Dutch Shell PLC (RDSA, RDSA.LN).
Seven companies, including Shell, agreed in November to pay a
combined $236 million to settle allegations by U.S. investigators
that they or their contractors bribed foreign officials to obtain
import permits for drilling equipment and other materials into
countries including Nigeria.
Among the companies involved in that settlement were offshore
drillers Noble Corp. (NE), Transocean Ltd. (RIG, RIGN.VX) and Pride
International Inc. (PDE).
Earlier this fall The Wall Street Journal reported the U.S.
Department of Justice had begun looking into allegations of bribery
in Yemen by Halliburton's larger oil field services rival
Schlumberger Ltd. (SLB).
Halliburton shares recently rose 16 cents to $40.31. The stock
has gained approximately 33% this year.
-By Ryan Dezember and Tess Stynes, Dow Jones Newswires;
713-547-9208; Ryan.Dezember@dowjones.com
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