Halliburton Fires Two Top Execs Over Kickback Scheme

by Julio Godoy

(IPS) PARIS -- French officials are not rejoicing publicly but they seem to be drawing some quiet satisfaction over a decision by the U.S. oil giant Halliburton to fire two high-ranking executives for taking several million dollars in kickbacks.

French prosecutors launched investigations a year ago into a gas field project in Nigeria where Halliburton's main subsidiary, Kellogg Brown and Root (KBR), together with partners from Italy, France and Japan were said to have paid out $180 million in illegal commissions.

KBR and its partners founded a join venture to construct a gas liquefaction plant in Bonny Island in Nigeria at a cost of six billion dollars. The joint venture was named TSKJ after the four first letters of the names of the partner companies. The other three are the French and Italian companies Technip and Snamprogetti, and the Japan Gasoline Corporation.

Several executives from these companies have since come forward to say that the companies agreed on the creation of a slush fund to pay out illegal commissions. Executives from Technip particularly are cooperating actively with the French prosecution.

Negotiations between the four companies and the Nigerian government continued from 1995 when the consortium was founded until 2000. Halliburton was then headed by U.S. Vice President Dick Cheney.

Prosecutors in Paris discovered the Halliburton payoffs while investigating similar illegal payments made by the French oil giant Elf Aquitaine over oil projects in Nigeria. The Elf Aquitaine inquiry has been going on since 1995. As the first signs of the Halliburton affair appeared in June 2003, French prosecutors extended their investigation to this case.

"Without our investigation into the illegal dealings over the gas factory in Bonny Island, the U.S. Securities and Exchange Commission would have never surveyed KBR practices in Nigeria," a French judicial official told IPS.

Following French investigations Halliburton announced June 18 that it had fired two executives, William Chaudan and Albert J. "Jack" Stanley, close associate of Cheney and until last December president of KBR. Halliburton said both had obtained "improper personal benefits" in Nigeria.

During his inquiry French judge Renaud van Ruymbeke was able to establish that illegal payments to the tune of $180 million were made by TSKJ through London-based lawyer Jeffrey Tesler.

The French prosecution established that this money was a slush fund for illegal payments to government officials and corporation executives both in Nigeria and in the United States.

Tesler, identified as a legal adviser to Halliburton, and also a close associate of Cheney for the past 20 years, told judge van Ruymbeke that he paid five million dollars to Stanley and at least 800,000 dollars to Chaudan.

The payments were made through a complex net of bank accounts in tax havens in Monaco, Switzerland, and Jersey Island. The judge has not established yet where the rest of the 180 million dollars went.

The judge did establish that Tesler was managing the slush fund while also working as adviser to Nigerian dictator Sani Abacha who died in 1998.

Executives testified that Tesler had no role to play in the gas field project other then serving as middleman between the companies and the Nigerian government.

Georges Krammer, a top executive of Technip and another Technip executive Christopher Welton were among those who gave evidence to the judge about a slush fund. The project is continuing, with the gas liquefaction plant in Bonny Island being managed by the oil giant Shell.

Krammer also told Van Ruymbeke that Halliburton had imposed Tesler as the intermediary between TSKJ and the Nigerian government in the face of objections by the other partners.

Halliburton says it has now cut all relations with Tesler and that it will begin legal action against him.

The Nigerian gas field is not the only corruption affair haunting Halliburton. In recent weeks the U.S. Congress has begun to examine the KBR billing system in projects in Iraq to establish whether the company has been overcharging the U.S. government for fuel deliveries.

The U.S. government has given KBR two contracts in Iraq that could bring the company more than 18 billion dollars in profit. The projects cover services for the occupation forces.

U.S. Democratic leaders accuse Cheney of intervening on behalf of the company, in which he still has shares, to obtain juicy government contracts.

Representatives of the Democratic Party openly accused the Bush government at hearings last week of giving contracts to Halliburton for partisan reasons.

"Halliburton was selected for the oil contracts in Iraq by political appointees in the Bush administration, and not by procurement officials," said Henry Waxman, Democrat Congressman from California.

In implicit acknowledgement of corruption, Halliburton has also fired several top executives in its Iraq businesses.

The corruption cases do not stop at Nigeria or Iraq. Halliburton has been attacked for its hand in the construction of a gas pipeline in Peru funded with public money from state- owned export credit agencies in Europe and in North and South America.

The Peruvian gas project of Camisea which Halliburton is building is also causing an environmental catastrophe in the western Amazon jungle, critics say.

The $1.5 billion project which comprises two 714 km and 540 km pipelines will link two gas fields located in the Urubamba Valley in Peru's southeastern Amazon rainforest to the western Pacific coast.

"The Camisea project has a disastrous environmental, social, and human rights record," Aaron Goldzimmer of the U.S.-based Environmental Defense told IPS in Paris. "Indigenous communities in the Peruvian Amazon region are facing diseases unknown until the pipelines construction began."

The pipeline is also reported to have polluted the region's rivers, leading to the loss of fish, game and clear water, and provoking food shortage.

Other corruption cases are surfacing meanwhile. French officials are investigating a scandal involving one of its top corporations, Vivendi.

Vivendi's former chief executive officer Jean-Marie Messier was incarcerated in Paris Monday. He is charged with manipulating the company's stock prices in 2002 to conceal huge losses under his management.

Vivendi became a private conglomerate in 1995 after more than 100 years as supplier of public services, mainly water.

Messier is accused of massive buying of Vivendi's stocks with the help of private banks to stop a collapse of share prices in March 2002. But he had to admit later that the company closed the year 2001 with more than $14 billion loss. Messier was sacked in July 2002.

Vivendi was compared with the U.S. power firm Enron described then as another symbol of casino capitalism and a stock exchange imposter juggling billions of dollars for dubious private interests at the expense of public services.