KBR Says Obeying U.S. Laws Puts Company At a 'Competitive Disadvantage'

By Jason Leopold

In a recent Securities and Exchange Commission filing, former Halliburton unit KBR complained that it will be at a “competitive disadvantage” to win “large-scale” international contracts because it is being forced to comply with U.S. laws. 

Last month, KBR pleaded guilty to violating the Foreign Corrupt Practices Act (FCPA) and admitted that it paid $180 million in "consulting fees" to two agents for use in bribing Nigerian government officials to win a lucrative construction contract for the Bonny Island natural gas liquefaction plant while former Vice President Dick Cheney headed the corporation. KBR paid a $402 million fine as part of its plea deal.

Under the terms of the plea agreement, KBR agreed to retain an independent compliance monitor for three years to ensure it is abiding by U.S. laws, limit its use of foreign agents, and promised to file regular reports on the compliance program with the Department of Justice.

     KBR, which was spun off from Halliburton into a separate company in 2007, said in a 10-K filing with the SEC, however, that “limitations on our use of agents as part of our efforts to comply with applicable laws, including the FCPA, could put us at a competitive disadvantage in pursuing large-scale international projects.”“Most of our large-scale international projects are pursued and executed using one or more agents to assist in understanding customer needs, local content requirements, and vendor selection criteria and processes and in communicating information from us regarding our services and pricing,” the company said in its quarterly filing, which was first reported by Footnoted.org, an investigative business news website whose reporters dig through SEC filings and pull out important nuggets of information.

“As a result of our settlement of the FCPA matters…a monitor will be appointed to review future practices for compliance with the FCPA, including with respect to the retention of agents. Our compliance procedures and our requirement to have a monitor may result in a more limited use of agents on large-scale international projects than in the past. Accordingly, we could be at a competitive disadvantage in successfully being awarded such future projects, which could have a material adverse effect on our ability to win contracts and our future revenue and business prospects