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NIGERIA: Ex-Halliburton unit in bribery probe

by Michael Peel in London and Matthew Green in LagosThe Financial Times
May 9th, 2008

US anti-bribery investigators are targeting a former Halliburton subsidiary over its work on a key Royal Dutch Shell project in Nigeria, widening a corruption probe into the country’s troubled oil industry.

The US investigation into Halliburton’s Nigerian operations – which covers a period when it was headed by Dick Cheney, US vice-president – has uncovered evidence of bribery and is now looking at a range of payments made in a number of countries over the past 20 years, according to the company.

The developments highlight the growing problems the investigation is creating for Halliburton and the western multinationals it has worked for in a nation whose oil industry is plagued by production disruptions and is the focus of increasing competition from Chinese companies.

The US authorities say they have evidence that an agent used by Halliburton’s former KBR subsidiary made payments to Nigerian officials in connection with the Shell project, according to a filing made by Halliburton to the US Securities and Exchange Commission at the end of last month. Halliburton and KBR have suspended the agent and another agent who had worked for KBR on “several current projects and on numerous older projects going back to the early 1980s”, the filing says.

Shell said it was aware of the Halliburton filing and was “looking into the matter”. Ann Pickard, regional executive vice-president for Shell in Africa, told the Financial Times it was the company’s policy to co-operate with requests for information from government investigators, although she had no knowledge of any possible inquiry relating to the EA project.

The EA oil and gas field began operations in 2002 using a giant production and storage vessel known as the Sea Eagle, whose 170,000 barrel-a-day capacity is vital to Shell as its Nigerian production has been heavily disrupted by armed militants.

The US investigation relating to the EA field is an offshoot of ongoing criminal and civil probes into allegations that KBR and its partners in a consortium known as TSKJ agreed to pay more than $170m of bribes to win billions of dollars of construction work on a giant Nigerian gas liquefaction plant also operated by Shell.

According to hundreds of pages of handwritten notes compiled by a TSKJ agent – divulged to investigators by Halliburton and detailed in next week’s issue of Africa Confidential magazine – members of the consortium discussed the allocation of money for “culture” and debated the merits of making “secret” and “open” payments to agents.

The latest Halliburton filing says investigators have confirmed they have evidence that TSKJ agents made payments to Nigerian officials. Halliburton declined to comment. The company, which was headed by Mr Cheney between 1995 and 2000, acquired KBR in 1998 and sold it last year.

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