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United States v. Kellogg Brown & Root LLC

 
:
Halliburton and KBR, Inc. - Kellogg Brown & Root LLC
:
DOJ Criminal
:
February 6, 2009
:
United States v. Kellogg Brown & Root LLC
:
U.S. v. Kellogg Brown & Root LLC, No. 09-071 (S.D. Tex. 2009)
:
The Halliburton/KBR investigation originated from an overseas corruption investigation. In 2003, the French press reported that a French investigating magistrate had opened an investigation into a joint venture formed by KBR Inc.'s predecessor and several foreign companies.
Kellogg Brown & Root LLC was charged as a "domestic concern" in the DOJ proceedings. By contrast, the SEC charged KBR Inc., the parent company of Kellogg Brown & Root LLC, as an agent of an issuer in the related SEC proceedings.
The DOJ charges listed KBR's foreign joint venture partners as unindicted co-conspirators.
During much of the relevant period, KBR was a subsidiary of Halliburton. In 2006, when it spun off KBR through a IPO, Halliburton agreed to indemnify KBR, Inc. for penalties arising from the then-pending FCPA investigation. Thus, Halliburton is liable for $559 million of the $579 million total penalty in the SEC and DOJ proceedings. This combined penalty is the largest sanction to date imposed on a U.S. company in a FCPA enforcement action.
Due to KBR's separation from Halliburton, both Halliburton and KBR are required to retain independent corporate monitors. KBR will retain a monitor for three years, while Halliburton is only required to retain a monitor for 60 days to review its compliance controls and policies.
Jurisdiction is based in part on correspondent accounts.
:
Energy (Non-Utility)-Oil & Gas-Exploration/Production
:
Nigeria
:
1994; 1995; 1996; 1997; 1998; 1999; 2000; 2001; 2002; 2003; 2004
:
Officials of Nigeria's executive branch; Officials of the government-owned company responsible for developing and regulating Nigeria's oil and gas industry (Nigerian National Petroleum Company); Officials of government-controlled company formed to develop the Bonny Island Project (Nigeria LNG Limited)
:
Anti-bribery (Domestic Concern), Conspiracy - Anti-Bribery
:
Compliance Monitor, Fine, Plea
:
Pursuant to the master separation agreement between Halliburton and KBR, Inc., Halliburton agreed to indemnify KBR, Inc. for certain FCPA-related matters, and Halliburton will pay $382 million of the $402 million fine. As part of the plea agreement, Kellogg Brown & Root LLC will retain an independent corporate monitor for a term of three years.
:
402,000,000
:
0
:
Base Fine: $235.5 million (value of the benefit received). Total Culpability Score: 8 (Base Offense of 5 plus Size of Organization and Participation of High-Level Individuals of 5 minus Cooperation of 2). Fine Range: $376.8 million - $753.6 million.
:
Domestic Concern
:
U.S.
:
Contract Procurement/Retention
:
6,000,000,000
:
Cash, Wire/check
:
Sales Agent/Consultant
:
180,000,000
:
Japan, Monaco, Nigeria, Switzerland
:
Japan, Monaco, Netherlands, Switzerland, United States
:
"Mails or means or instrumentality of interstate commerce:" The SEC alleged that certain corrupt payments were routed through banks in New York. Although it was unnecessary to allege correspondent account jurisdiction because Kellogg Brown & Root LLC is a domestic concern, the fact that the DOJ included the correspondent account jurisdictional claim may signal that U.S. authorities believe that they have the jurisdictional basis to bring charges against non-U.S. companies even in the absence of evidence of traditional jurisdictional facts. Here, the DOJ criminal information listed KBR's foreign joint venture partners as unindicted co-conspirators.
:
Yes
:
France, Nigeria, Switzerland, United Kingdom