Bribery scandal rocks Big Oil
A former Halliburton exec has pleaded guilty to being in cahoots with crooked foreign officials. He's now helping US investigators, and a much wider crackdown is expected to unfold.
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In the world of Big Oil, Albert "Jack" Stanley was legendary for winning billion-dollar contracts in Third World countries as the Halliburton (HAL, news, msgs) executive who knew all the secrets of deals in places like Malaysia, Egypt and Yemen.
In the wake of his admission in a guilty plea last week that he had resorted to bribes, kickbacks and high-level corruption to secure deals in Nigeria, however, Stanley now lies at the center of a widening scandal in the oil industry that has implications for corporations and governments across the globe.
Stanley's case is the first in what federal officials believe will be a string of indictments in coming months against U.S. corporate executives who have participated in bribing foreign officials in recent years.
By agreeing to cooperate with prosecutors, Stanley, who ran KBR (KBR, news, msgs) when it was a subsidiary to Halliburton, promises to become a hammer for federal investigators seeking to crack open additional cases under a 30-year-old statute designed to halt overseas corporate corruption. About 80 cases involving major corporations accused of overseas bribery were under investigation as of last year, a high-level Justice Department official said.
In addition, Stanley's cooperation may provide a new tool for encouraging industrial countries in Europe and Asia to get more serious about enforcing anti-bribery laws against corporations based there. The $182 million in bribes were allegedly paid not just by Halliburton but by its partners, an international consortium of engineering companies from France, Italy and Japan. The United Kingdom has jurisdiction, too, because much of the bribery scheme was, according to court documents, hatched in London, where Stanley maintained a sumptuous home.
"We are very pleased to see that there has been an uptick in enforcement not only in the U.S. but in other countries as well,'' said Patrick McCormick, a spokesman for Transparency International-USA, an anti-corruption group funded by donations from government development agencies and private businesses and foundations. "We are hoping that (this case) is a sign of things to come."
A nightmare unfolding
The intensifying level of this government effort, pushed by a Republican administration normally friendly to business, cuts two ways for American business executives.
For those who may have been involved in bribery to secure construction contracts or equipment sales in developing countries around the world, it represents a nightmare.
The active involvement of the FBI is particularly worrisome to such people. In contrast to white-collar investigations handled by the Justice Department and the Securities and Exchange Commission, the FBI is believed to be prepared to use techniques more familiar to investigations of organized crime, including wiretapping and undercover agents.
Stanley's high profile and punishment -- he faces a potential seven-year sentence, the longest in the history of the federal statute outlawing the bribing of foreign officials -- also signal the federal government's willingness to seek long prison terms rather than fines and court injunctions.
For those who fret that they have been losing out to foreign competitors in jurisdictions less likely to prosecute bribery, it offers hope that the playing field will soon be leveled.
Stanley has already acknowledged paying bribes to unnamed senior Nigerian officials, although reports have identified the primary recipient as Nigeria’s late president, Sani Abacha. Stanley also has admitted receiving kickbacks of $10.8 million from contracts that Halliburton and predecessor companies signed with governments in Nigeria, Malaysia, Egypt and Yemen. Government officials in those countries, with the exception of Abacha, have not yet been implicated, according to a person familiar with the investigation.
Stanley's testimony may also pose concerns for Vice President Dick Cheney, who ran Halliburton between 1995 and 2000, when Stanley was appointed as KBR's chief executive officer. Cheney has consistently denied wrongdoing.
Law enforcement officials familiar with the investigation said that in previous interviews,
Stanley repeatedly said that then-CEO Cheney had no knowledge of the bribes. At the time, however, Stanley was not a cooperating witness, a stance that changed in June when he was confronted with evidence of his involvement in the bribery scheme.The vice president's office declined to comment, citing the continuing litigation. Larry Veselka, Stanley's lawyer, said his client will cooperate fully in any investigation. A judge will determine Stanley's final sentence depending on his compliance with the plea agreement.
"He's going to cooperate with wherever they want to go and whatever they want him to do,'' Veselka said Thursday.
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