Fines are Peanuts: Time to Debar Halliburton and KBR too

The folks over at the Department of Justice who have been handling the massive Halliburton/KBR bribery case associated with the Bonny Island, Nigeria liquid natural gas (LNG) plant could not have been too pleased to read about a proposed settlement in the news a couple of weeks ago, since the settlement had not yet been approved for release.

I don't know of any cases involving the Foreign Corrupt Practices Act where Justice and the SEC let the story out in advance. So you have to wonder why Halliburton chose to leak the story.

Perhaps to please their shareholders? (The same day the rumor broke, the company's shares jumped 2 percent).

According to the Reuters story, Halliburton is expected to pay a $559 million fine (including $387 million to DoJ, and $177 to the SEC in "disgorgement").

While that might sound like a lot (and of course it is), remember that it won't even be the largest fine ever for bribery. That goes to German engineering conglomerate Siemens, which agreed to pay $800 million in December to settle claims related to bribery.

I's worthy asking why the DoJ would want to reach such a settlement, given that there was an apparent pattern of bribery beyond just what happened in Nigeria (more on that below) and, if the companies themselves don't feel the pain, how will their behavior change?

Moreover, how is this justice? After all, this is a company that makes most of its profits on the back of U.S. taxpayers. And under federal contracting law, the government is required to contract only with "responsible" contractors.

Other companies that do business with the government can expect to be treated much more harshly.

For example, the other day there was a sign that things would be different in the new administration when the USDA moved to debar the Peanut Corporation of America (PCA) and its subsidiary Tidewater Blanching LLC
from doing business with the federal government, after an outbreak of salmonella that killed eight people was tied to unsafe operations at their plant. And today we learn that the FBI raided the plant.

So why the double standard for a company that has a much deeper rap sheet? E.g., the New York Times reported on Saturday that even while KBR is under criminal investigation for the electrocution of at least two soldiers in Iraq, it was granted another $35 million contract.

If the Obama administration wants to demonstrate that it is serious about cracking down on corporate crime and protecting American troops (let alone taxpayers or the appearance of fairness and consistency in the execution of enforcement policy) it will move to debar Halliburton, as I and my colleagues at HalliburtonWatch have been suggesting for years, along with members of Congress and POGO, the nation's leading government contract watchdog.

Cheney's no longer around, so now what's the excuse?

Which reminds me about another thing that's so bothersome about the bribery case.

Albert "Jack" Stanley, the former KBR chief executive officer who pleaded guilty in September, also said that bribes were used to grease the way for other LNG projects.

Some of which were funded with U.S. taxpayer dollars through the Ex-Im bank.

Stanley's plea suggests that there was a pattern of law-breaking activities at KBR. How could that have escaped the notice of top executives? Then CEO Dick Cheney appointed Stanley to be the CEO of KBR when he was at Halliburton. Moreover, current Halliburton CEO David Lesar (a former Arthur Andersen accountant) was Stanley's supervisor. How does a professional accountant not notice tens of millions of dollars in bribes when going over the numbers?

Could that have anything to do with why Lesar decided to relocate the company's headquarters to Dubai, the offshore tax-haven and 'comfort zone' for bribery and other scams. After all, the U.S. has no extradition treaty with UAE.

In the course of their investigation, did Justice ever ask Lesar and Cheney about their knowledge of these activities? How plausible is it that they didn't know?

Remember how Cheney said in a video that he "got good advice" from Arthur Andersen?

Either way, it's time to sever the taxpayers' relationship with these criminogenic companies. The attorney general and his colleagues should move to debar Halliburton and KBR. Otherwise, it will be hard to take the settlement seriously.

To learn more about the history of KBR/Halliburton/Cheney, btw, be sure to pick up our friend Prataap Chatterjee's new book, Halliburton's Army.

Comments

[FillyPino]

What's sad is how many other organizations give these companies business as well. For example, Duke U. recently hired KBR to build its new hospital and has used it in the past to build its law school. I guess the lawyers that graduate from the law school can defend Duke in the lawsuits that occur when a patient gets electrocuted in the hospital showers or a female employee is sexually assaulted by a construction worker. You would think that Duke is the last group that would be looking for more drama after the lax case and the incident with the washing of surgical equipment in elevator fluid.

[LeRoyHolt]

Isn't KBR the most fined company of it's kind? Going back to the 1970 as Brown &Root?

[GreatNews27]

You really expect the Department of Jokes to enforce the law??? Don't make me laugh, that's what they are for.

[Robert Mackey - Huffpost Blogger]

Good stuff. There are plenty of other companies that can fill those contracts, without the drama.