Investigation Widens in Nigeria Oil Case Involving Halliburton

A widening investigation here has implicated some of the world’s largest oil services firms in an alleged scheme to bribe Nigerian officials to win $5.3 billion in contracts to build a natural gas complex in the African country.

As details of the case unfolded, one of the key players, Houston-based Halliburton Co., said that the questionable conduct occurred almost entirely before it became a partner in the multinational consortium that built the complex.

But information obtained by The Times, including documents from a French investigation, shows that Halliburton, through a subsidiary, was more involved in some of the suspicious deals than it has acknowledged. In his deposition to an investigating judge, Jeffrey Tesler -- a British lawyer who served as the consortium’s agent in Nigeria and the central figure in the alleged bribery scandal -- stated that Halliburton fought to retain him even after a consortium partner moved to have him dismissed.

French investigators, along with others in the United States and Nigeria, are trying to determine whether Tesler managed a slush fund from which he funneled bribes to Nigerian officials.

Payments are alleged to have come from $176 million that the consortium paid to Tesler in five contracts signed between 1995 and 2002. Four of the five contracts were signed after Halliburton joined the consortium in 1998 through its purchase of Dresser Industries.

The documents show that one of the consortium’s contracts with Tesler was signed in 1999, while Dick Cheney, now vice president of the United States, was Halliburton’s chief executive. No evidence has emerged that Cheney, who headed the company from 1995 to 2000, was aware of any wrongdoing.

During last week’s debate between vice presidential candidates, Democrat Sen. John Edwards blasted Halliburton and referred to the Nigeria case in noting that the company was being investigated “for having bribed foreign officials” during Cheney’s tenure as CEO. Cheney replied that there was “no substance” to Edwards’ allegations.

Wendy Hall, a Halliburton spokeswoman, said an internal investigation found evidence that the consortium had considered bribing Nigerian officials, but those discussions took place before Halliburton joined the partnership. A Halliburton investigation so far has not found that bribes were paid, she said.

Hall said company lawyers interviewed Tesler several times and that he denied making illegal payments. She said the consortium had severed ties with Tesler.

Cheney’s office referred questions about the Nigeria case to Halliburton. Hall said the company found no evidence that would implicate Cheney.

An attorney for Georges Krammer, a former executive with another consortium member, the French firm Technip, said that although the alleged bribery scheme was believed to have been hatched before Halliburton’s involvement, Tesler made questionable payments after Halliburton became involved in the project.

“The plan was to corrupt Nigerian officials,” Olivier Schnerb, Krammer’s attorney, said in an interview at his Paris office.

Tesler declined requests for an interview. His Paris attorney, Thierry Marembert, did not respond to questions from The Times. In previous comments to the media, Marembert denied any wrongdoing on Tesler’s part and said $130 million in payments Tesler received from the consortium were for his fees. The remainder, he said, was used to support and promote the natural gas project.

Schnerb ridiculed Marembert’s claims that Tesler received $130 million in fees. “I would like to see the time- sheets,” he said.

The project began in the early 1990s, when M.W. Kellogg, a subsidiary of Dresser Industries, formed a consortium with Technip, Snamprogetti of Italy and JGC of Japan to bid on a contract for the natural gas complex in energy-rich Nigeria.

The consortium, known as TSKJ, won a $2.2-billion contract in 1995, beating out a group led by San Francisco-based Bechtel Group Inc. That same year, according to the copies of Tesler’s deposition and other documents obtained by The Times, Tesler was retained to find subcontractors and help arrange meetings with Nigerian officials -- including its military ruler at the time, Gen. Sani Abacha, who was notorious for corruption and human rights abuses.

Tesler is little known in British legal circles. His office, a rundown storefront in a poor North London neighborhood of African and Caribbean immigrants, sits next to a Somali butcher shop.

Although he had visited Nigeria only once, Tesler said in a deposition before French investigating magistrate Renaud Van Ruymbeke that he had worked “pretty permanently” on Nigerian-related business since 1977.

Documents show that he was hired -- over the objections of Technip, which preferred another candidate -- after meeting with A. Jack Stanley, the head of Kellogg’s operations in Nigeria, and other company officials. According to an internal consortium memo, he “reported directly to Kellogg” and had worked on projects for that company since the 1980s.

The original contract called for payments of $60 million to Tri-Star Investments, a Gibraltar-based firm Tesler established to help manage the consortium’s Nigerian business.

The consortium paid Tri-Star through LNG Servicos, a company set up on the Portuguese island of Madeira.

“Madeira was picked [by the consortium] because it is a tax paradise with rigid secrecy laws,” said Schnerb, the French attorney. “LNG Servicos was a corrupting machine.”

He said that in Abacha’s Nigeria, winning a contract without paying bribes was “as rare as a flying fish” and that the dictator “was the No. 1 person to be paid off.”

Halliburton became part of the consortium in September 1998, when it acquired Dresser. After the Dresser takeover, Kellogg was merged with Brown & Root, a Halliburton unit, to form Kellogg Brown & Root.

Cheney named Stanley chairman of the Kellogg Brown & Root subsidiary, and he continued to oversee the Nigeria project.

In March 1999, TSKJ won a second contract, worth $1.4 billion, to build additional facilities at the natural gas complex. Twelve days after that contract was finalized, the consortium signed its second deal with Tri-Star, this one for $37.5 million, the copies of the documents show.

That same year, Tesler said in his deposition, Technip sought to replace him with one of its own consultants but was overruled by the other consortium members, led by Kellogg Brown & Root, at a meeting in London.

Hall, the Halliburton spokeswoman, said that all the consortium partners had agreed at that 1999 meeting to retain Tesler. She disputed that Technip had been opposed to keeping him on. Hall said she did not know whether Cheney was aware of the decision to retain Tesler.

Technip declined to comment. The other two partners did not respond to requests for comment.

In 2002, two years after Cheney resigned from Halliburton to become the Republican vice presidential candidate, the consortium won a third contract for the project, this one worth $1.7 billion. The bribery allegations emerged that year after Krammer told French investigators that the consortium had established a “slush fund” to bribe Nigerian officials.

An ensuing investigation uncovered the first two contracts between the consortium and Tri-Star, as well as three others in July 2001, December 2001 and June 2002, the copies of the documents show.

The French investigation triggered inquiries in Nigeria and the United States, where the Justice Department and the Securities and Exchange Commission have ongoing investigations.

U.S. investigators are trying to determine if Halliburton and its partners violated the Foreign Corrupt Practices Act, which prohibits American companies from bribing foreign officials. Cheney would be legally liable only if he knew that illegal payments were made. Technip, whose shares trade on the New York Stock Exchange, also could be sanctioned in the United States.

The bribery investigation marks the third time this year that U.S. authorities have scrutinized Halliburton’s activities while Cheney was in charge.

In August, the company paid a $7.5-million fine to settle a Securities and Exchange Commission examination of accounting practices that appeared to boost revenue for six fiscal quarters in 1998 and 1999. The government is also investigating whether a Halliburton subsidiary violated federal sanctions by operating in Iran after restrictions on doing so were put in place in 1995.

In his deposition, Tesler said he made payments to Nigerian officials, including two $75,000 transfers to M.D. Yusuf, chairman of the company that awarded the original contract to the consortium and operated the natural gas complex. The payments were made before Halliburton acquired Dresser.

Tesler said Yusuf had provided assistance to the consortium, including helping to arrange meetings between TSKJ officials and Abacha.

Yusuf told The Times that he had accepted payments from Tesler, whom he described as an “old business friend,” but said they were loans unrelated to the natural gas project.

“I have occasionally taken money from [Tesler], but I always return it,” he said by phone from Nigeria. “I have nothing to do with bribery.”

Le Figaro, a Paris daily, reported this year that Tesler deposited several million dollars in a Swiss bank account controlled by Stanley, who retired last year as chairman of KBR -- as Kellogg Brown & Root is now known -- but remained on contract as a consultant.

Tesler acknowledged in his deposition that he made payments to Stanley and to an offshore account controlled by Wojciech Chodan, a KBR consultant involved in the Nigeria project.

Most of the money to Stanley came from funds paid to Tri-Star under the March 1999 contract, according to the deposition.

Tesler said the money sent to Stanley was used to obtain Nigerian currency needed for the project.

The payments to Chodan, Tesler said in his deposition, were for his help in lining up subcontractors.

In June, Halliburton severed all ties with Stanley and Chodan. Hall said in an e-mail that the two men were dismissed because they had violated the company’s codes of business conduct.

Lee Kaplan, Stanley’s attorney, declined to comment. Stanley and Chodan could not be reached.