KBR To Pay UK $11.2 Million Penalty To Settle Bribe Case

   DOW JONES NEWSWIRES 
 

A subsidiary of KBR Inc. (KBR) reached an $11.2 million civil settlement with the U.K. Serious Fraud Office, after KBR pleaded guilty to criminal charges for bribing Nigerian government officials for a decade.

The engineering, construction and defense-services provider and Halliburton Co. (HAL), which separated itself from KBR in 2007, settled federal charges totaling $579 million with the U.S. Department of Justice and the Securities and Exchange Commission in early 2009.

That ended a long-running U.S. investigation into an elaborate bribery scheme which helped KBR executives obtain more than $6 billion worth of construction contracts in Nigeria.

Under the terms of the agreement announced Wednesday with the U.K. agency, KBR's M.W. Kellogg Ltd. will also pay the costs of the investigation and has agreed to overhaul its internal audit and control measures to ensure its compliance systems are in accordance with U.K. law.

KBR also stated that under its indemnity agreement with Halliburton, 55% of the total settlement costs would be reimbursed to KBR. KBR doesn't anticipate a financial impact from the settlement as the liability was either covered under that pact or was provisioned at the time of KBR's purchase of its interest in M.W. Kellogg.

"This settlement was expected and closes out an unfortunate part of KBR's past," said Chairman and Chief Executive William P. Utt. He added the company has since conducted its business with transparency.

According to the U.S. Justice Department, KBR was part of a four-company joint venture that received the contracts. As part of its plea in the U.S., the company admitted to conspiring with those partners to promise and pay bribes. They also admitted to paying tens of millions of dollars in consulting fees to two agents for use in bribing government officials.

KBR shares were up 2% to $34.30 in recent trading.

   -By John Kell, Dow Jones Newswires; 212-416-2480; [e-mail]