Contractor tells Serious Fraud Office of its own misconduct

26 February 2010

British engineering contractor MW Kellogg is to come clean to the Serious Fraud Office about corruption offences the firm itself engaged in, Building reported.

The London-based construction and process engineering company, which is jointly owned by US engineer Kellogg Brown Root (KBR) and Japanese JGC corporation , has been under investigation by the SFO for more than three years.

The SFO is investigating corruption among UK construction companies, targeting their international operations in particular, and is encouraging firms to admit to misconduct in return for more lenient treatment.

According to Building, Kellogg will tell the SFO about corruption in Nigeria during the construction of the Bonny Island natural gas plant in the Niger delta. The company is set to admit to the offences in return for less harsh penalties from the SFO.

An investigation by the Financial Times, reported by Building, revealed that KBR had admitting using Kellogg as a conduit in an “intential effort” to “insulate itself” from American laws against bribing foreign public officials. The allegations were made in US government case documents.

Last year KBR and Halliburton, at that time a co-owner of Kellogg, paid a $579m (£378m) fine in the US for using a $130m fund to bribe Nigerian officials to win more than $5bn of construction work at Bonny Island. The fine was the biggest ever imposed on US companies for bribery.

The SFO’s successful corruption cases over the last 12 months include bridge building firm Mabey and Johnson, which was fined £6.6 m after it pleaded guilty to charges of corruption relating to its activities in Jamaica and Ghana in 1993 and 2001.

Amec and Balfour Beatty have also been fined, although the SFO deemed both firms' activities to be insufficiently serious to warrant prosecution, so both cases were settled on a civil basis.


It's not just the banks then!

R J Kilduff, 26 February 2010

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