Topics in Global Markets Mired in Corruption

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Topics in Global MarketsMired in Corruption

• MASSA Massimiliano
• PALAZZI Cristina
• HAUGAN Anders Steinsland
• WORKMAN Sydney

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'Kellogg, Brown Root' (KBR)
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Controversy and some problems
The Army's actions came under fire from California Congressman Henry Waxman, who, along with Michigan Congressman John Dingell, asked the General Accounting Office to investigate whether the U.S. Agency for International Development and The Pentagon were circumventing government contracting procedures and favoring companies with ties to the Bush administration
KBR's maintenance work in Iraq has been criticized after reports of soldiers electrocuted from faulty wiring.29 Specifically, KBR has been charged by the Army for improper installation of electrical units in bathrooms throughout U.S. bases. CNN reported that an Army Special Forces soldier, Staff Sergeant Ryan Maseth, died by electrocution in his shower stall on January 2, 2008. Army documents showed that KBR inspected the building and found serious electrical problems a full 11 months before his death.
As of June 9, 2008, 81 American and foreign KBR employees and subcontractors have been killed, and more than 380 have been wounded by hostile action while performing services under the company's government contracts in Iraq, Afghanistan and Kuwait. Family members of injured or killed employees have sued the company in relation to the 2004 Iraq KBR convoy ambush
Jamie Leigh Jones testified at a Congressional hearing that she had been gang-raped by as many as seven co-workers in Iraq in 2005 when she was an employee of KBR, and then falsely imprisoned in a shipping container for 24 hours without food or drink.3536 KBR was a subsidiary of Halliburton at the time. Jones and her lawyers said that 38 women have contacted her reporting similar experiences while working as contractors in Iraq, Kuwait, and other countries.
On August 28, 2008, defense contractor KBR, Inc. and a Jordanian subcontractor were accused of human trafficking in a federal lawsuit filed in Los Angeles.40 The suit alleged that 13 Nepali men were recruited by Daoud Partners to work in hotels and restaurants in Jordan, but upon arrival all 13 men had their passports seized by the contractor and were sent to Iraq to work on the Al Asad Airbase
Political connections and corruption
Bribing Nigerian officials
Waxman allegations
Professional negligence
Employee safety
Sexual assault and abuse
Human trafficking lawsuit
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Level of Corruption in Nigeria 1996
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Dick Cheney
Political connection
Albert Jack Stanley
Richard Bruce "Dick" Cheney (b. 30 January 1941)
was Vice President of the United States to George
W. Bush.
Albert 'Jack' Stanley was, until December 2003,
chairman of Halliburton Company subsidiary
Kellogg Brown and Root. For several months
afterwards, until his termination, he served as a
"consultant." He is also a longtime friend and
associate of US vice-president Dick Cheney.
June 1995 Albert Jack Stanley is promoted to
president and chief operating officer of M.W.
Kellogg after serving as executive vice president
since 1991 July 1996 M.W. Kellogg promotes
Albert Jack Stanley to chairman, president and
chief executive officer he also becomes vice
president of operations for the parent, Dresser
Industries. December 2003 Albert Jack Stanley
retires as chairman of Kellogg Brown Root, but
retains a position as consultant for Halliburton.
August 1995 Dick Cheney is hired as CEO of
Halliburton, three years before he directs the
merger of Halliburton with Dresser Industries and
M.W. Kellogg. February 1998 Halliburton and M.W.
Kellogg's parent, Dresser Industries, agree to a
7.7 billion merger directed by Dick Cheney. M.W.
Kellogg is merged with Halliburton's Brown Root
subsidiary to form Kellogg, Brown Root. Albert
Jack Stanley is named as chairman of the new
subsidiary.
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Political connection
Jefferey Tesler
Sani Abacha
The lawyer Jefferey Tesler (1948), who is known
for his contacts and friendly relations with the
Nigerian government, including its dictator Gen.
Sani Abacha (1993-1998)
Wojciech Chodan

• November 1994 Wojciech Chodan, an executive at
  Kellogg and later a consultant for Kellogg Brown
  Root, meets with London lawyer Jefferey Tesler
• March 1995 TSKJ formally hires Mr. Tesler as
  agent

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The story

• 1994 M.W. Kellogg and three other companies
  form a partnership known as TSKJ submit a bid to
  Nigeria LNG to build a natural gas plant in
  Nigeria owned by the Nigerian government
• 1995 TSKJ formally hires Mr. Tesler as agent
  TSKJ's bid has still not been accepted by Nigeria
  LNG. The employment contract was given to Mr.
  Tesler as a reward for his prodding of Nigerian
  officials. The employment contract provided that
  Mr. Tesler would be paid 60 million if Nigeria
  awarded the construction contract to TSKJ. TSKJ
  is finally awarded the 2 billion contract.

The beginning

• 1999
• The TSKJ partners, with KBR acting as the lead
  partner, agree to reappoint Mr. Tesler as its
  agent. Kellogg wanted Mr. Tesler, with whom it
  had a long-term relationship. But the
  representative from the French partner, wanted a
  different agent.
• Halliburton announces the Nigerian government
  awarded a 1.2 billion contract to TSKJ to expand
  the construction of the natural gas plant

Starting tension inside
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The story

• 2003 French magistrate initiates investigation
  of suspicious payments made by TSKJ.
• A preliminary investigation by the Police
  Judiciaire of France found that LNG Services, a
  company indirectly owned by the four partners in
  the Nigerian joint venture, made four payments
  totaling at least 166 million at times that
  roughly coincide with the award of contracts.
• 2004 Halliburton fires Albert Jack Stanley
  after investigators say he received 5 million in
  "improper" payments from Mr. Tesler.

Investigation
2004 Nigeria's parliament votes unanimously to
summon Halliburton CEO to answer questions over
its bribery investigation. It issues a report
recommending that Halliburton and TSKJ be
disqualified from bidding on future government
projects. The Wall Street Journal reports on
newly disclosed evidence by Halliburton,
including notes written by M.W. Kellogg employees
during the mid-1990s in which they discussed
bribing Nigerian officials. 2006 A former
Halliburton employee says he has evidence proving
the company has embarked on a campaign to
cover-up all wrongdoing,
Evidences
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The judgement
THE COMPANY

• Halliburton and its former subsidiary Kellogg
  Brown Root (KBR) agreed to pay a 579 million
  penalty after allegations that KBR bribed
  Nigerian government officials to obtain contracts
• This was the largest corruption settlement ever
  paid by a U.S. company
• The second biggest fines ever imposed, after the
  800 million US settlement by Siemens, the German
  conglomerate

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JEFFREY TESLER AND WOJCIECH CHODAN
ALBERT JACK STANLEY,

• The United Kingdom Government has set the pace in
  bringing Jeffrey Tesler, and Wojciech Chodan,
  indicted in the case of the U.S. Justice
  Department
• Both have been charged in the US with one count
  of conspiracy to violate and ten counts of
  violating the FCPA.
• They face a maximum sentence of 55 years in
  federal prison, if convicted

• Former CEO of KBR, Albert "Jack" Stanley pleaded
  guilty to bribery. He was accused of securing a
  massive natural gas contract in Nigeria, which
  involved 180 million U.S. dollars in the payment
  of bribes
• He now has a sentence of seven years in prison
  and forfeiture of about 10 million

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Sources

• Next http//234next.com/csp/cms/sites/Next/News/5
  395403-147/The_Halliburton_bribe_takers__.csp
• Truthout http//www.truth-out.org/021209T
• Frontline/world http//www.pbs.org/frontlineworld
  /stories/bribe/2009/04/nigeria-corruptions-collate
  ral-damage.html
• Revenuewacth http//www.revenuewatch.org/news/new
  s-article/nigeria/nigeria-halliburton-bribes-and-d
  eceit-zero-tolerance-corruption
• The punch http//www.punchng.com/Articl.aspx?thea
  rticArt200904125181789
• All business http//www.allbusiness.com/crime-law
  /criminal-offenses-crimes-against/12146780-1.html
• http//www.halliburtonwatch.org/about_hal/nigeria_
  timeline.html