Halliburton Finds Hot Water in Nigeria

Halliburton (HAL) has severed ties with another controversial figure.

The scandal-plagued company, best known for its ties to Vice President Dick Cheney, announced Friday that it has terminated a former division executive suspected of bribery. Jack Stanley, who officially retired as chairman of Halliburton's KBR division last year, has been stripped of his duties as a consultant amid a probe of a multibillion-dollar liquid natural gas project in Nigeria.

Halliburton fired Stanley, along with another unidentified consultant, just weeks after The Wall Street Journal reported that French investigators had found $5 million of suspected bribery money in a Swiss bank account bearing the former chairman's name. Stanley presided over KBR when it was chosen to help build, and later expand, a Nigerian LNG project that ranks as one of the largest in the world.

French authorities, now aided by investigators in the U.S. and other countries, are questioning whether a venture partially owned by KBR paid up to $180 million in bribes -- a portion of it kicked back to Stanley -- in order to land the megadeal.

On Friday, Halliburton finally pointed the finger at the two consultants for violating company policy by allegedly collecting "improper personal benefits." But the company, which remains at the mercy of multiple government agencies involved in the probe, simultaneously continued to profess its own innocence.

"Halliburton continues to cooperate with the United States Department of Justice and the [Securities and Exchange Commission] in connection with these matters, and its own internal investigation is continuing," Halliburton stated. "The company noted, however, that it does not believe it has violated the Foreign Corrupt Practices Act, although there can be no assurance that the government or the company's internal investigation will conclude otherwise."

Halliburton's stock, often immune to negative headlines, slid 1.6% to $29.72 on Friday.

Halliburton has come under fire, most notably, for its huge contracts in Iraq. Critics believe that Halliburton has enjoyed favoritism -- landing deals outside the competitive bidding process -- due to Cheney's role as the company's former CEO. They have accused Halliburton of bilking the government for everything from soldier meals to monogrammed towels and have sparked multiple investigations into the company as a result.

Analysts have, nevertheless, downplayed any real threat to Halliburton's operations. Even so, the bribery investigation is somewhat unusual. As the Financial Times noted in early March, the probe focuses on potential wrongdoing carried out when Cheney was clearly in charge. And it is being led by foreign authorities without close ties to the Bush-led American government.

Halliburton has hired some powerful help, however. The company confirmed to various media outlets in February that it had retained Baker Botts -- a prestigious law firm with deep ties to the Bush family -- to lead its internal investigation into the Nigerian deal.

KBR originally landed a piece of the Nigerian LNG project in 1995. It won a big expansion contract in 1999 and still another in 2002. Nigeria, known for widespread bribery and violence, is considered one of the most corrupt countries in the world.

According to the Financial Times, foreign investigators are now scrutinizing $180 million in questionable payments made by the KBR venture over that same time frame. Cheney served as CEO of Halliburton during much of that period.

Halliburton now actually lists Cheney's ties to the company as a potential risk factor. But for now, it is finding fault with others -- namely Stanley and his former sidekick -- instead.

"While we do not know all of the facts related to the issue, we are taking these actions in response to the facts that we do have and to protect our investors, employees, customers and vendors as several investigations proceed," CEO Dave Lesar announced on Friday. "It is important to the company that clients, suppliers and host countries know Halliburton's Code of Business Conduct is expected to be followed in every country in which the company operates."

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