FCPA Watch: Indictment Unsealed Against KBR Middlemen

Originally published March 10, 2009

Keywords: Foreign Corrupt Practices Act, FCPA,

Kellog Brown & Root, KBR, Nigeria, Bonny Island, Haliburton,

Tesler, Chodan

The Indictment of two UK citizens charged with helping

Houston-based Kellogg, Brown & Root (KBR) participate in a

decade-long scheme to bribe Nigerian government officials was

unsealed on March 5, 2009. Between 1995 and 2004, KBR was awarded

engineering, procurement and construction (EPC) contracts worth $6

billion to build liquefied natural gas (LNG) facilities on Bonny

Island, Nigeria.

In February 2009, KBR pleaded guilty and agreed to pay a $402

million fine for Foreign Corrupt Practices Act (FCPA)

violations. KBR and its former parent company, Halliburton

Company, also settled FCPA proceedings with the US Securities &

Exchange Commission and agreed to disgorge $177 million. (See

Mayer Brown Client Alert, "

FCPA Watch: KBR and Halliburton Agree to Pay US$402 Million Fine to

Settle FCPA Charges in Nigerian Bribery Case.")

The now

unsealed Indictment shows that on February 17, 2009, a federal

grand jury in the US District Court for the Southern District of

Texas indicted UK citizens Jeffrey Tesler and Wojciech Chodan and

charged each with one count of conspiracy to violate the FCPA and

ten counts of violating the FCPA. The Indictment seeks a

forfeiture of $132 million from the defendants.

According to a Department of Justice press release, the Indictment was kept under

seal until Tesler was arrested by London police on March 5,

2009. An arrest warrant has been issued in the United States

for Chodan, and the United States is seeking extradition of the

defendants from the United Kingdom.

Indictment

According to the allegations in the Indictment, in 1991, KBR and

three other companies formed a joint venture for the purpose of

bidding on and, if successful, working on the Bonny Island Project.

In 1995, Tesler was hired as an agent of the joint venture. Between

1995 and 2004, Nigeria LNG Ltd., (NLNG) awarded the joint venture

four EPC contracts to build LNG facilities on Bonny Island. The

largest shareholder of NLNG with 49% of the company was the

government-owned entity Nigerian National Petroleum Corporation

(NNPC).

The Indictment further alleges that the joint venture held

"cultural meetings" where Chodan, a former sales vice

president and consultant for KBR's UK subsidiary, and other

co-conspirators discussed paying bribes to Nigerian government

officials through Tesler and other...