Financial Times: SEC widens Nigeria bribery probe with Shell subpoena: “The SEC declined to say if the Shell subpoena indicated it was looking into the activities of the consortium that owns and operates the plant on Bonny Island.”: Thursday 13 October 2005
By Thomas Catan and Michael Peel
Published: October 13 2005
The US Securities and Exchange Commission has subpoenaed documents from Royal Dutch Shell and several other international companies as part of a widening international probe into a $170m alleged bribery case at a Nigerian gas plant.
The case, which is seen as an important test of rich countries' commitment to tackling alleged corporate bribery, is being probed in France, the US and Nigeria.
The companies involved have denied wrongdoing and said they are not themselves under investigation for participating in bribery. Shell said it was co-operating voluntarily with the SEC investigation.
The SEC declined to say if the Shell subpoena indicated it was looking into the activities of the consortium that owns and operates the plant on Bonny Island. Shell is the largest private shareholder in the project, in which its partners are Total of France, Italy's Eni and the Nigerian government.
Investigations have so far centred on the activities of TSKJ, the plant's main building contractor. TSKJ is an international consortium that includes a subsidiary of Halliburton, the oil services company formerly headed by Vice-President Dick Cheney of the US.
Japan's Marubeni conglomerate, which acted as a subcontractor on the project, has also been asked for documents, though it declined to say by whom. In August the SEC served a subpoena on a Halliburton subcontractor, Chicago Bridge & Iron, CB&I disclosed in August.
Marubeni said it was close to finishing an internal investigation with the help of an outside lawyer. The probe had so far found no evidence that Marubeni officials had been involved in bribery, the company said.
International investigators into the allegations say privately they are pressing ahead vigorously after months of quiet action. The authorities are looking with particular interest at handwritten notes discovered by Halliburton a year ago. The company said the notes showed the building consortium had "considered payments to Nigerian officials". The notes, handed to investigators by Halliburton, were described as a "big breakthrough" by one person with knowledge of the probe.
"They are a contemporaneous account dating back to the earliest days of who, what, when and how the bribery may have occurred," the person said.
The allegations first arose more than two years ago, when a former TSKJ executive told a French judge the consortium had operated a multi-million dollar offshore slush fund to win the plant building contracts.
More than $12bn (€10bn, £6.8bn) has so far been invested in the plant, which supercools natural gas into liquid form so it can be shipped abroad on tankers. TSKJ picked up about $7bn worth of building contracts between 1995 and 2004.
In June 2004 Halliburton severed links with two former employees for having taken "improper personal benefits" in connection with the project. One of the men, Jack Stanley, was the former chairman of KBR, a Halliburton subsidiary and partner in TSKJ.
Halliburton had become involved in TSKJ through its 1998 takeover of Dresser Industries - after the first gas plant building contract was signed, but before subsequent project expansion deals were agreed.
The language used in the notes surrendered by Halliburton strongly suggests that TSKJ officials were eager to conceal what they were doing. The contents of the documents, which have been seen by the Financial Times, were first reported in Africa Confidential, a London-based newsletter.
The minutes of a December 1994 meeting of TSKJ executives detail a concern that companies based in Madeira - the offshore haven where TSKJ was registered - must be audited and describe "significant [financial] action". "Creates difficulties re 'cultural' agreements," the minutes warn.
The notes state that "all services" will cost the consortium $180m, with a further $60m allocated to "culture". This appears to refer to a payment made to the consortium's London-based agent, Jeffrey Tesler. Under a 1995 agreement, also seen by the FT, the consortium agreed to pay Mr Tesler $60m to finance his work towards winning the crucial first plant building contract. Mr Tesler, who later won three more contracts worth a further $111.5m to help the consortium win expansion projects, has denied using the money to pay bribes.
In the notes, the TSKJ partners - KBR, Technip of France, Italy's Snamprogetti and JGC of Japan - discuss a series of possible "secret" and "open" agency payments. One proposal is rejected because it might leave the consortium open to blackmail, while another is discarded because it "sets up a 'wrong' paper trail".
Both Halliburton and Technip, which speaks on behalf of TSKJ, declined to comment on the notes.
One section raises questions on whether the consortium developed a plan to offer bribes to Nigerian officials including directors of the gas plant, which is quarter-owned by Shell.
The minutes of a December 1993 "cultural meeting" list seven people - including Don Etiebet, Nigeria's then petroleum minister - next to the phrase: "cover directly". Beneath, four other surnames - including those of gas plant directors Victoria Ihonde, Olutoyin Olakunri and Hamman Tukur - are listed next to the words "already covered".
A note below says: "M requested approval and commitment for $30[m] for the above. Excludes [military dictator General Sani] Abacha, extra for Etiebet."
The notes do not say whether the proposals were agreed or implemented.
Ms Ihonde told the FT she was never offered nor took a bribe. She said the words "already covered" could refer to informal meetings between building consortium officials and gas plant board members, adding: "I can assure you money did not change hands - well, as far as I know."
Ms Olakunri also said she had no knowledge of any bribery. Yushau Shuaib, spokesperson for the government institution now headed by Mr Tukur, said his boss had denied involvement in a bribery plot.
Mr Etiebet said he was never offered a bribe by the consortium, whose officials he met only twice while he was minister. Shell said it had no evidence of improper behaviour by the former directors or other gas plant officials.
Total, another partner in the project, said it "firmly" rejected corruption but had "no way of knowing" how payments it made towards the building work were being used. The plant's other partners did not respond to questions about the case.
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