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U.S.A.: Former Workers At Halliburton Are Probe Target

The Justice Department is looking into whether former Halliburton Co. employees conspired with other companies to rig bids for large overseas construction projects, according to the company.

by Russell GoldThe Wall Street Journal
March 2nd, 2005

The Justice Department is looking into whether former Halliburton Co. employees conspired with other companies to rig bids for large overseas construction projects, according to the company.

The antitrust probe has grown out of a continuing investigation into whether a consortium of companies that included Halliburton bribed officials in Nigeria to win a lucrative contract to build a liquefied natural-gas plant there. Halliburton disclosed the bid-rigging investigation in its annual 10-k filing with the Securities and Exchange Commission.

Halliburton says the federal investigation has "uncovered" information suggesting that several employees may have been involved in coordinated bidding for large construction projects as early as the mid-1980s. Halliburton also said it and federal investigators had broadened their probes to determine if Halliburton and other companies had broken antitrust laws.

"We don't believe at this point in time there have been any antitrust violations," says Halliburton spokeswoman Wendy Hall. She said the company was cooperating in the investigation. The company didn't provide further information. A Justice Department spokesman declined to comment.

The antitrust and Nigeria investigations are focused on various former employees including Albert J. "Jack" Stanley, once chairman of Halliburton unit Kellogg Brown & Root, according to the 10-K filing. Mr. Stanley was fired in June. The company said at the time the reason was because he had received "improper" payments from an agent of the Nigeria construction consortium. Mr. Stanley's lawyer didn't return calls seeking comment.

The four companies in the consortium had veto power over decisions, though other members said employees of Halliburton and predecessor companies held key management positions. Halliburton says it was an equal partner.

The antitrust probe is looking into Mr. Stanley's activities dating to the mid-1980s, when he worked for construction firm M.W. Kellogg. In 1988, Kellogg was acquired by Dresser Industries Inc., which was acquired by Halliburton in 1998, in a deal put together by Dick Cheney, now the U.S. vice president but at the time Halliburton's chief executive.

In addition to being a major provider of oilfield services, Halliburton, of Houston, has a giant construction and government-contracting unit called Kellogg Brown & Root. KBR is one of the world's largest overseas construction firms and specializes in building large and complex facilities -- from chemical plants to railroads -- in remote corners of the globe. Earlier this year, Halliburton said it would sell KBR to boost the market value of its core oilfield unit. The company, however, said it could take several quarters before the unit is separated from the rest of the company.

Halliburton already faces a raft of investigations. These include a federal grand jury that is looking into whether the company violated U.S. sanctions against doing business in Iran. The company says its operations in Iran complied with U.S. law. Another ongoing investigation is trying to determine whether Halliburton overcharged the military for running dining halls in Iraq, where it has a multibillion dollar contract to provide logistical support for the troop deployment. The company says it is working with the military on this issue.

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