KBR Subsidiary Finalizes Civil Settlement with UK Serious Fraud Office

February 17, 2011

KBR announced that its wholly-owned subsidiary, M.W. Kellogg Limited reached civil settlement with the UK Serious Fraud Office. The agreement was granted by the High Court under the Proceeds of Crime Act 2002 and stems from KBR’s violations under the Foreign Corrupt Practices Act occurring between 1994 and 2004, prior to KBR becoming an independent public company in April 2007. The FCPA violations were previously settled with the U.S. Department of Justice and Securities Exchange Commission in February 2009.

MWKL reported concerns to the SFO under the agency’s self-referral scheme and fully cooperated with the subsequent investigation. The SFO recognized that while the company did benefit from funds acquired as a result of unlawful conduct, MWKL took no part in criminal activity.

Under the terms of the civil settlement agreement, MWKL will pay approximately US$11,238,886 (£7,000,028) within fourteen days in full and final settlement of the case. The amount equals the share of dividends payable from profits generated by contracts obtained for work on the Bonny Island Project (picture). The company 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 UK law.

Under KBR’s indemnity agreement with Halliburton, 55 percent of the total settlement costs will be reimbursed to KBR. KBR does not anticipate a financial impact from the settlement as this liability is either covered under KBR’s indemnity agreement with Halliburton or was provisioned at the time of KBR’s purchase from JGC of its 44.94 percent interest in MWKL.

“This settlement was expected and closes out an unfortunate part of KBR’s past. We have since moved forward, conducting our business with transparency, accountability and discipline in our continued efforts of being the global contractor of choice,” said William P. Utt, KBR President, Chairman and CEO.

[mappress]

Source: KBR, February 17, 2011;