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Who is Jeffrey Tesler?
Who is Jeffrey Tesler?

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Published by: Environmental Capital on Jan 18, 2012
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01/18/2012

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Out of Africa: In Halliburton Nigeria Inquiry, A Search for Bribes to a Dictator --- Consortium Paid$132 Million To a Mysterious Lawyer, Got Natural-Gas Contracts --- A Note Names Gen. Abacha
 By
Russell Gold
in Port Harcourt, Nigeria, and Charles Fleming in London2,814 words29 September 2004The Wall Street JournalJ A1English(Copyright (c) 2004, Dow Jones & Company, Inc.) Corrections &Amplifications
 
HALLIBURTON Co. acquired Dresser Industries Inc. and its M. W. Kellogg unit in September 1998. Agraphic that accompanied a page-one article yesterday incorrectly stated that the acquisition occurred inFebruary 1998.
 
(WSJ Sept. 30, 2004)
 
(END)
 
Jeffrey Tesler's law office sits in a rundown immigrant neighborhood in north London and has weeds growingout of the roof. His firm has helped sex shops settle zoning problems and young African immigrants get outof scrapes with the police.
 
It's an unlikely place to find the man at the center of a scandal involving Halliburton Co. and a late Nigeriandictator reputed to have stolen at least $3 billion from his country.
 
Investigators on three continents suspect the 56-year-old Mr. Tesler may have been the link through which aconsortium including a company that is now part of Halliburton funneled money to Nigerian officials in returnfor multibillion-dollar contracts to build energy facilities in the African country.
 
Handwritten notes by a former executive involved in the project discuss channeling $40 million through Mr.Tesler to the dictator, Gen. Sani Abacha, a person who has read the notes said yesterday. However, thenotes don't say whether Gen. Abacha actually received the money, this person said.
 
The affair has already caused one head to roll. In June, Halliburton fired Albert J. "Jack" Stanley, thechairman of one of its two business units, after announcing that he took "improper" payments from Mr.Tesler that investigators said totaled $5 million. In the U.S., the Department of Justice and the Securities andExchange Commission are investigating whether Halliburton violated the U.S. Foreign Corrupt Practices Act,which forbids companies from bribing foreign officials. U.S. and foreign authorities are also investigatingHalliburton's three partners in the consortium.
 
The Nigeria affair has received less attention than the one involving alleged overcharging by Halliburton onU.S. government contracts in Kuwait and Iraq. But it also involves big money and a core business for Halliburton: acting as general contractor for large energy projects in distant parts of the globe. In this case,the project was a plant to super-cool natural gas and turn it into a liquid that could be loaded onto tankers tofeed the world's hunger for energy.
 
 As that hunger grows and oil in politically stable parts of the world dries up, energy companies areincreasingly looking toward less-stable nations such as Nigeria where corruption is often pervasive. Despitethe Foreign Corrupt Practices Act and similar antibribery laws in Europe, the pressure to cut deals isenormous.
 
 At the center of the Nigeria imbroglio is a mysterious dealmaker whose work sheds light on the tangled waysenergy projects in Africa take shape. Mr. Tesler developed connections with Nigeria's ruling elite in the1980s, helping them with routine business affairs such as buying homes and investing in Britain. By his ownaccount, Mr. Tesler has visited Nigeria only once for a single day. But he earned a reputation amongmultinational companies as a man who could make things happen there.
 
Page 1 of 4 © 2012 Factiva, Inc. All rights reserved.
 
"The big companies found out that this guy can deliver. If you talk to him, it's as good as talking to thepresident," says Nuhu Ribadu, executive chairman of Nigeria's Economic and Financial Crimes Commission,which is leading the Nigerian investigation. The Nigerian government is trying to recover the billions lootedby dictator Gen. Abacha, who died of a heart attack in 1998.
 
Vice President Dick Cheney was Halliburton's chief executive from 1995 to 2000 and named Mr. Stanley, therecently fired executive, to a top post at the company in 1998. Otherwise Mr. Cheney hasn't been linked tothe Nigerian dealings. Halliburton bought the parent of the company involved in the dealings, M.W. Kellogg,in 1998. Mr. Cheney's lawyer didn't respond to requests for comment.
 
 Authorities have yet to prove bribery took place. Mr. Tesler declined to be interviewed but his lawyer in Parissays Mr. Tesler did nothing wrong. The lawyer acknowledges that Mr. Tesler received large sums from theconsortium including Kellogg, which became part of Halliburton's Kellogg Brown &Root unit. But he says themoney -- $132 million, according to Halliburton -- represented advisory and other legitimate fees. No one in the affair has been charged with any crime.
 
Mr. Tesler's London office offers no hint of the huge fees he has received over the past decade. The law firmof Kaye Tesler &Co. stands next door to a Somali butcher. A prominent sign in the firm's windows advertisesthe use of a photocopier and fax machine, available to passers-by for 15 pence. Michael Kaye, who foundedthe firm with Mr. Tesler in 1975, still works in the office, although he said in a brief telephone interview thatthe two have ended their partnership.
 
Mr. Tesler has told French investigators that he helped some 20 or 30 senior Nigerian government andmilitary officials with their London affairs, including a former member of the Nigerian cabinet who purchaseda large house in Surrey, according to people familiar with the investigation.
 
Mr. Tesler's relationship with M.W. Kellogg began in the mid-1980s when he unsuccessfully tried to broker the sale of Kellogg's minority interest in a Nigerian fertilizer plant to the Nigerian government. By 1994,Kellogg's interest had turned to a long-delayed proposal to build a natural-gas complex on the Nigeriancoast. Kellogg and three other firms formed a consortium bidding to become the complex's generalcontractor.
 
Each of the four firms held a 25% stake in the consortium and veto power over its decisions. Kelloggengineers and financial officials held many top positions. Two of the partners, Technip SA of France andJGC Corp. of Japan, have said Kellogg managed the consortium. The fourth member, the Snamprogetti unitof Italy's ENI SpA, declined to comment other than to say it has been contacted by the SEC.
 
Halliburton says it was an equal partnership, with none of the four having more power than the others. Theconsortium was competing against a group led by U.S. construction giant Bechtel Group Inc.
 
The Nigerian state oil company teamed up with Royal Dutch/Shell Group to form a company called NigeriaLNG Ltd. (LNG stands for liquefied natural gas.) Nigeria LNG put the contract up for bidding. The bids wereopened in Lagos on Sept. 12, 1994, and the Kellogg consortium's was for about $2 billion -- 5% lower thanBechtel's, according to a briefing paper sent to Nigeria LNG's full board by a board committee examining thebids.
 
It looked as if the Kellogg consortium had the inside track to land the deal. But negotiations on a finalcontract failed to get rolling. Nigeria's oil minister had a falling-out with the dictator, Gen. Abacha, and wasreplaced on March 20, 1995, by Dan Etete.
 
Two days later, Mr. Tesler signed a contract to serve as a consultant to the Kellogg consortium. The six-page contract, signed by an M.W. Kellogg executive on behalf of the consortium, called on Mr. Tesler toobtain government permits, maintain good relations with government officials and provide advice on salesstrategy. Mr. Tesler agreed in the contract not to bribe any government officials, a standard proviso.
 
Halliburton says Mr. Tesler had already been working behind the scenes to convince Nigerian officials thatthe plant was a good idea. The contract was a reward for that work and an incentive to keep up theprodding, says James Doty, an outside lawyer conducting an internal investigation at Halliburton. "He wasinvesting sweat equity and he wanted a contract," says Mr. Doty. The two sides agreed on a fee of $60million, payable to Mr. Tesler only after the Kellogg consortium began to get paid.
 
But Mr. Etete, the new oil minister, was a tough customer. He immediately began to use his influence over the natural-gas complex for personal gain, according to Michael Weston, a Shell technical adviser to theproject. Mr. Etete "asked at every meeting for something," including plane tickets for his son to travel to theU.S. and payments for a medical treatment abroad, says Mr. Weston, adding that Shell turned down therequests.
 
Page 2 of 4 © 2012 Factiva, Inc. All rights reserved.
 
What happened next is unclear. Investigators in Nigeria and France suspect that Mr. Tesler promised tofunnel big sums to Nigerian officials if they sealed the deal with the Kellogg consortium. Investigators basethese suspicions, among other things, on the known corruption of Gen. Abacha's government, the hugewindfall that Mr. Tesler could expect if a deal was done and a collection of notes turned up last month by theHalliburton internal investigation. The notes indicated that officials of the consortium discussed a scheme tobribe Nigerian officials.
 
The notes were taken by Wojciech Chodan, an executive at Kellogg and later a consultant for Kellogg Brown&Root. Among some 450 pages of scribbled jottings, there is a reference to a November 1994 meetingbetween Mr. Tesler and Mr. Chodan at which they discussed channeling $40 million of Mr. Tesler's first $60million to Gen. Abacha, says a person who has read the notes. This person says the notes don't say how or when the money would be delivered. Mr. Chodan declined to be interviewed.
 
None of this is proof that bribes were given. Mr. Tesler's Paris-based lawyer, Thierry Marembert, says Mr.Tesler didn't use any money from the consortium for bribes. The lawyer says most of the money is still sittingin Swiss bank accounts.
 
What is known is that less than nine months after Mr. Tesler signed on with the Kellogg consortium, NigeriaLNG decided to award it the $2 billion contract to build two units to turn the gaseous fuel into liquid. Theproject quickly became a success. Surging demand for the liquefied gas prompted Nigeria LNG to beginbuilding a third unit in 1999, a fourth and fifth in 2002 and a sixth in July of this year.
 
Mr. Tesler shared in the good fortune. Nigeria LNG hired the consortium to build each extension. And in1999 and 2001, the consortium rehired Mr. Tesler to continue his work. By this time Kellogg was part of Halliburton. Mr. Tesler was paid a total of $132.3 million from 1996 through earlier this year, according toHalliburton, with more than half of it coming from the 1999 and 2001 contracts.
 
(MORE)
 
In a letter to Nigerian police earlier this year that was seen by The Wall Street Journal, French investigatorswrote that the payments "are likely to constitute a criminal infraction of misuse of corporate funds." Theletter, which sought Nigerian cooperation in the French investigation, says Mr. Tesler's commissions "appear completely unjustified" by the work he performed. French authorities don't have jurisdiction over Halliburtonin this case but are sharing information with U.S. authorities.
 
Mr. Tesler's lawyer says that he earned the money by assisting with "public relations and local developmentissues" in Nigeria and advising consortium executives on such topics as how to appease local officials andprevent civil unrest over the project.
 
In 1997 or 1998, Nigeria LNG's then-chairman, Mohammadu Dikko Yusufu, visited London. Mr. Yusufucalled Mr. Tesler and said he was short of funds, according to people familiar with Mr. Tesler's statements toinvestigators. These people say Mr. Tesler told the investigators that he gave Mr. Yusufu a $70,000 "loan"that was never repaid.
 
The connection between Mr. Tesler and the Nigerian project might have remained a secret had it not beenfor a seemingly unconnected investigation in France into the consortium's French member, Technip. ATechnip official, Georges Krammer, was charged with embezzlement in an unrelated matter. When Techniprefused to defend him, Mr. Krammer decided to air what he believed was other dirty linen at Technip, sayshis lawyer, Julian Schnerb. Among his revelations: the payments to Mr. Tesler. Technip declined tocomment, citing the continuing inquiry.
 
Mr. Krammer's tip led French and Swiss investigators to examine Mr. Tesler's bank accounts, where theymade a surprising discovery: evidence that Mr. Tesler was kicking back some of his payments to executivesof the consortium and its subcontractors. In June of this year, French investigators traced about $5 millionfrom bank accounts of Mr. Tesler's company to a Swiss bank account of Mr. Stanley, who was head of M.W.Kellogg and later of Halliburton's Kellogg Brown &Root unit.
 
Halliburton fired Mr. Stanley in June. At the time he was Kellogg Brown &Root chairman, having steppeddown as a full-time executive in December 2003. His lawyer declined repeated requests for comment.
 
Mr. Tesler's lawyer, Mr. Marembert, says there's an innocent explanation for the $5 million. He says thedollars were deposited in exchange for Nigerian naira, the country's currency, because Mr. Tesler neededlocal funds to carry out his work in Nigeria. The naira at that time was not a convertible currency, creatingproblems for foreigners seeking to work there, and Mr. Stanley had offered to help Mr. Tesler obtain thecurrency, Mr. Marembert said.
 
The French probe has pinpointed another payment suggesting close ties between Mr. Tesler and the oil
Page 3 of 4 © 2012 Factiva, Inc. All rights reserved.

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