KBR to pay £ 7 million bribery fine

17 February 2011

KBR has reached a £ 7 million (US$ 11.2 million) settlement with the UK Serious Fraud Office (SFO) over the role its UK subsidiary, MW Kellogg, played in bribing Nigerian government officials to win construction contracts.

The payment comes on top of the US$ 579 million that Halliburton, KBR's former parent, paid to the US Department of Justice (DoJ) in 2009 as part of a guilty plea settlement for violating the US Foreign Corrupt Practices Act.

KBR was part of the four-company TSKJ consortium that won US$ 6 billion of work to construct and extend the Bonny Island liquefied natural gas (LNG) facilities in Nigeria.

However the joint venture bribed Nigerian government officials in a scheme which lasted from 1994 to 2004, and the companies involved - KBR, Technip, Snamprogetti (now part of Saipem) and JGC - have so far paid out almost US$ 1.4 billion in fines to the US Department of Justice (DoJ) and the Nigerian government as a result.

In the UK, the SFO said the High Court had ordered KBR's subsidiary, MW Kellogg, to pay the penalty under Britain's Proceeds of Crime Act, depriving the company of any financial benefit it received as dividends from its parent.

The authority added that MW Kellogg had reported concerns about its US parent's conduct and fully cooperated with the subsequent investigation.

Under KBR's indemnity agreement with Halliburton, 55 % of the total settlement costs will be reimbursed to KBR.

William Utt, KBR president, chairman and CEO said, "This settlement was expected and closes out an unfortunate part of KBR's past. We have since moved forward, conducting our business with transparency, accountability and discipline in our continued efforts of being the global contractor of choice."

The news comes ahead of the 22 February sentencing in the US of former MW Kellogg commercial vice president Wojciech Chodan for his role in the orchestration of the TSKJ bribery ring on 22 February.

UK citizen Mr Chodan was extradited to the US on 3 December, and pleaded guilty to conspiring to violate the Foreign Corrupt Practices Act (FCPA) on 6 December. He faces up to five years in prison.

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