On Friday, March 11, Jeffrey Tesler, who had challenged extradition from the UK to the US, relented in his fight and pleaded guilty to one count of conspiracy to violate the FCPA and one substantive violation of an FCPA antibribery provision. In 2009, the DOJ initially charged Tesler in an 11 count indictment consisting of a conspiracy charge and ten substantive FCPA charges.
A UK citizen, resident and licensed attorney, Tesler owned and controlled Tri-Star Investments Ltd. (Tri-Star), a Gibraltar corporation. TSKJ, a joint-venture comprised of Technip, S.A., M.W. Kellogg, Brown & Root (and then Kellogg Brown & Root Inc., collectively, KBR), Snamprogetti Netherlands B.V., and an engineering and construction company headquartered in Yokohama, Japan (identified in press reports as JGC Corporation) engaged Tesler and Tri-Star to assist in securing four engineering, procurement, and construction (EPC) contracts to build liquefied natural gas (LNG) facilities on Bonny Island, Nigeria.
Between 1995 and 2004, Nigeria Liquefied Natural Gas Limited (NLNG) awarded TSKJ the four EPC contracts collectively valued at more than $6 billion. The government-owned Nigerian National Petroleum Corporation (NNPC) was the largest shareholder of NLNG, owning 49 percent of the company.
According to court documents, TSKJ hired, Tesler, Tri-Star and a Japanese trading company, to bribe a range of Nigerian government officials, including top-level executive branch officials, to assist TSKJ in obtaining the EPC contracts. At crucial junctures preceding the award of the EPC contracts, KBR’s former CEO, Albert “Jack” Stanley, and others, met with top-level Nigerian executive branch officials to confirm that TSKJ should use Tesler as its agent and to learn or confirm the identity of a representative with whom TSKJ and Tesler should negotiate bribes for the officials. TSKJ paid approximately $132 million in “consulting fees” via correspondent accounts in New York City to Tesler and Tri-Star and more than $50 million to the Japanese trading company in furtherance of the bribery scheme. According to court documents, these monies were intended to be used, in part, for bribes for the Nigerian officials.
Tesler served as an agent of TSKJ and of its members, including KBR, and reported to Stanley, among others. As such, Tesler acted as an agent of a domestic concern.
The court scheduled Tesler’s sentencing for June 22, 2011. At sentencing he faces five years in prison for each count. Tesler also faces a fine of $250,000 or twice the gain or loss realized for each count. Finally, as part of his plea agreement, Tesler agreed to forfeit nearly $149 million in proceeds traceable to the illegal conduct.
In 2010 Wojceich Chodan, Technip and Snamprogetti each resolved enforcement actions arising out of their respective roles in the Bonny Island scheme. In 2009, the Halliburton Company, Kellogg Brown and Root LLC, and KBR, all resolved FCPA enforcement actions arising out their roles in the Bonny Island conspiracy. In 2008, Stanley, pleaded guilty to conspiring to violate the FCPA for his role in the Bonny Island scheme. To date, the Bony Island investigation has produced penalties, disgorgement, and forfeiture, in excess of $1.42 billion – the largest ever to arise out of one investigation.
Tesler’s prosecution, like those of Stanley, Chodan, KBR, Technip, Snamprogetti, and reportedly ongoing settlement discussions with JGC, highlights the Government’s focus on industry-wide investigations and its thoroughness in such investigations.
The Bonny Island prosecutions also demonstrate the significant international cooperation that is now becoming commonplace in FCPA enforcement actions. The DOJ specifically commended the assistance provided by authorities in the United Kingdom, France, Italy and Switzerland in the Tesler enforcement action.