KBR Exec’s Plea Is Sign of U.S. Crackdown on Overseas Bribery

From:
Frank Vogl
Member of the Board of Directors, Transparency International
Co-founder of TI and TI Vice Chairman 1993-2000

Dear ProPublica Editors:

Major broad issues of international crime, global trade and lack of law enforcement, are entwined in your story on the guilty plea of Albert Stanley. As you reported, this former senior executive of a fully owned subsidiary of Halliburton was involved in the payment of over $180 million in bribes to Nigerian officials between 1995 and 2004 relative to $6,000 million of contracts. The schemes he used also provided him with substantial kickbacks from the officials who received the bribes and awarded the contracts.

The scale of the contracts is formidable and begs the question whether the U.S. authorities will prosecute more senior officials in Halliburton than Mr. Stanley?  For part of the period when the bribes were being paid, for example, now US Vice President Richard Cheney served as Halliburton’s CEO.

The payment of bribes in contracts involving the energy operations in developing countries by multinational corporations has long been a major cause of concern. A report on this topic was published by Transparency International in April of this year and it shows considerable lack of transparency by some of the U.S.’s largest energy companies.

http://transparency.org/news_room/latest_news/press_releases/2008/2008_04_28_prt_report_launch

Mr. Stanley used agents in London and in Japan to funnel the bribes (respectively for $130 million and $50 million) to the Nigerians.  Significantly, even though the UK and Japan have passed national laws consistent with the OECD Anti-Corruption Convention, neither of them have indicated any ongoing investigations into any aspect of the Halliburton case. This is not surprising, the UK has not brought a single anti-corruption case in the last two years and Japan’s total is just one. For a complete overview of the lamentable level of international enforcement of the OECD Anti-Corruption Convention please see the June 2008 report by Transparency International.

http://transparency.org/news_room/latest_news/press_releases/2008/2008_06_24_oecd_progress

The case involving Mr. Stanley is a scandal. It deserves far greater public attention. Despite U.S. Justice Department and Securities and Exchange Commission claims of increasing the cases of corruption that they are investigating and prosecuting, subject to the Foreign Corrupt Practices Act, not a single CEO of a major US multinational corporation has landed in prison. This is in sharp contrast to the stiff penalties given to CEOs involved in companies like Tyco, WorldCom and Enron, that fiddled corporate accounts, cheated shareholders and enriched themselves. Bribing foreign government officials should be seen as just as grave a crime – but at the moment it is not.

The Halliburton case involves the laundering of bribes through bank accounts in New York, London, Switzerland, Japan, Gibralta and Amsterdam. So far there are no indications of anti-money laundering cases being brought against the companies engaged in the bribery.

There are also suggestions in the court papers related to the Halliburton case that other bribes may have been paid with regard to winning contracts in Yemen, Malaysia and Egypt, but so far details have not been publicly disclosed.

Let me underscore that, speaking for many of my colleagues involved in Transparency International around the world, we want to encourage ProPublica to spare no effort to report on and to expose the massive bribe-paying by multinational corporations around the world and on the very modest enforcement by so many governments of the OECD Convention.

Transparency International will spare no effort to strengthen public awareness of the corporate criminal actions, the frequent indifference of major governments, and the bribe-taking by so many public officials in Eastern Europe and in developing countries.

Bribery of the kind pursued by Halliburton does irreparable damage to the notion of fair international trade. It creates cynicism in the trade field and may well encourage firms to use bribers as part of their regular business operations. The massive bribe payments lead officials in developing countries to totally misuse public funds with the result that vital priorities for which such funds are needed, from anti-poverty programs, to ones that provide basic infrastructure, water, education, housing and health services to the general public are wrecked.  The crimes by people like Albert Stanley and the firms that employ such people are thus not victimless and the punishments, once this is fully appreciated, should be far harsher.

Sincerely,

Frank Vogl

Member of the Board of Directors, Transparency International
Co-founder of TI and TI Vice Chairman 1993-2000