Halliburton's Bribery Scandal In Nigeria Lawsuit: U.S. v. Jeffrey Tesler and Wojciech J. Chodan

Tuesday, April 20, 2010

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 Defendant:                       Halliburton and KBR, Inc. - Chodan, Wojciech J.
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 Matter Type:                     DOJ Criminal
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 Date Filed:                         February 17, 2009
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 Full Case Name:                 U.S. v. Jeffrey Tesler and Wojciech J. Chodan
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 Citation:                             U.S. v. Tesler and Chodan, No. 09-098 (S.D. Tex. 2009)
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Related Parties:                  Halliburton Company; KBR, Inc.; Kellogg, Brown & Root, LLC; Stanley, Albert Jackson; Tesler; Jeffrey
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Noteworthy:                           If arrested, the U.S. will seek to extradite Mr. Chodan to the U.S. to stand trial. If      extradition is sought, this will be one of the few known cases in which the U.S. has requested extradition of a foreign national who acted as an agent for a U.S. company. In addition, jurisdiction is based in part on correspondent accounts.
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 Industry:                                  Energy (Non-Utility)-Oil & Gas-Exploration/Production
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Country:                                  Nigeria
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Date of Conduct:                    1994; 1995; 1996; 1997; 1998; 1999; 2000; 2001; 2002; 2003; 2004
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Officials:                                  Officials of Nigeria's executive branch; Officials of the government-owned company responsible for developing and regulating Nigeria's oil and gas industry (Nigerian National Petroleum Company); Officials of government-controlled company formed to develop the Bonny Island Project (Nigeria LNG Limited)
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 Facts:                                       The M.W. Kellogg Company and its successor company, Kellogg, Brown & Root Inc. (jointly "KBR"), were part of a four-company joint venture seeking to obtain contracts to build liquefied natural gas facilities on Bonny Island, Nigeria. From 1988 until 1998, Mr. Chodan, a U.K. citizen, was a sales vice president for M.W. Kellogg Ltd., which was 55% owned by KBR. From 1998 until June 16, 2004, he was engaged as a consultant by M.W. Kellogg Ltd. Mr. Chodan reported to Albert Stanley, the former CEO of KBR, Inc., and assisted KBR in winning four Bonny Island contracts. Beginning in 1999, Mr. Chodan allegedly served on the board of managers of a Portugal-based company owned by the joint venture partners ("Madeira Company 3") that allegedly entered into contracts with consultants for the purpose of bribing Nigerian government officials.

Mr. Chodan and his co-conspirators (including Mr. Stanley) allegedly held "cultural meetings" to discuss the use of particular agents to pay bribes to Nigeria government officials. One agent discussed was Mr. Jeffrey Tesler, a U.K. solicitor with a shell company (Tri-Star) located in Gibraltar and bank accounts in Switzerland and Monaco, hired by the joint venture to bribe Nigerian government officials to obtain contracts from the Nigerian National Petroleum Corporation. The consulting contract between Madeira Company 3 and Tri-Star allegedly indicated that Tri-Star would be paid for marketing and advisory services when in fact the primary purpose was to facilitate bribes. Between 1995 and 2004, the joint venture allegedly paid Mr. Tesler over $130 million for use in bribing Nigerian government officials. Mr. Tesler allegedly met with senior officials to discuss the amount of payments necessary to secure the officials' support for the joint venture bid. At the request of an official of the Nigerian National Petroleum Company, Mr. Tesler allegedly worked with a subcontractor to funnel payments to a political party in Nigeria. Mr. Chodan allegedly worked with Mr. Tesler to determine how to structure the corrupt payments and to decide which officials should be included in the arrangement. Mr. Chodan and Mr. Tesler allegedly discussed avoiding U.S.-owned banks and placing only non-U.S. citizens on the board of a company owned by the joint venture partners.

Through Madeira Company 3, the joint venture also allegedly hired a consulting company headquartered in Japan to assist it in obtaining business, including by offering and paying bribes to government officials. Between 1996 and 2004, the joint venture allegedly paid the company $50 million.

 In 2003, Mr. Chodan allegedly caused a draft memorandum to be emailed to two KBR executives in Houston. The memorandum, which was to be released to French authorities investigating potential crimes in connection with the Bonny Island Project, included allegedly false statements about Mr. Tesler's assistance to the joint venture.

The DOJ filed an eleven-count indictment under seal against Mr. Chodan and another defendant, Mr. Tesler, on February 17, 2009. The court ordered the indictment unsealed on March 5, 2009. The indictment charged Mr. Chodan with one count of conspiring to violate the anti-bribery provisions of the FCPA, one count of violating the anti-bribery provisions of the FCPA based on an email communication (Mr. Tesler was also charged with one count of violating the anti-bribery provisions of the FCPA based on an email communication), and eight counts of violating the anti-bribery provisions of the FCPA based on payments transferred through U.S. correspondent accounts. The indictment also contained forfeiture allegations seeking $132 million from Mr. Chodan and Mr. Tesler if convicted of one or more of the counts. As of April 8, 2009, there is an outstanding U.S. warrant for Mr. Chodan's arrest. If arrested in a foreign jurisdiction, the DOJ has stated that it will seek Mr. Chodan's extradition.

FCPA Statutory Provision:                Anti-bribery (Domestic Concern), Conspiracy - Anti-Bribery
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Disposition:                                       Fugitive
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Total Sanction ($):                            Not stated.
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 Term of Imprisonment (months):        0
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Defendant Jurisdiction Basis:              Agent of Domestic Concern
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Role / Responsibility:                            Senior Sales
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 Defendant (U.S. or Foreign):               Foreign
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 Type of Business to be Obtained:        Contract Procurement/Retention
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 Value of Business to be Obtained ($):  Not stated.
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Manner:                                               Cash, Wire/check
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Intermediaries:                                     Sales Agent/Consultant
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 Amount of Payments ($):                     Not stated.
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 Payment Country:                                Nigeria, Monaco, Switzerland, Japan ______________________________________________________________________________

Bank Account Country:                        Japan, Monaco, Netherlands, Switzerland, United States
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Element Explanation:                            "Mails or means or instrumentality of interstate commerce": The indictment cites an email that Mr. Chodan caused to be transmitted to or through Houston as the basis for an anti-bribery charge. In addition, eight of the charges are based solely on correspondent account jurisdiction allegations.
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M&A Case:                                 no ______________________________________________________________________________
Related Foreign Investigations:           Nigeria, United Kingdom, Switzerland, France
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Documents


Source: http://www.fcpa.shearman.com/

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