Shareholders Sue Halliburton, KBR, Alleging Litany of Misdeeds

[babylonsister]

Institutional Investor Sues Halliburton and Former KBR Unit, Alleging Litany of Misdeeds and Government Fines Has Damaged Shareholders


NEW YORK and HOUSTON, May 14 /PRNewswire/ -- In what is believed to be the first legal action brought by shareholders against oilfield services provider Halliburton Company (NYSE: HAL) and its one-time subsidiary KBR, Inc. (NYSE: KBR), a municipal pension fund has filed a lawsuit alleging that poor oversight and lack of internal controls at the two companies enabled a pervasive environment of misdeed and corruption, resulting in enforcement actions and substantial government penalties that have severely damaged investors' holdings.

The complaint, brought by the Policemen and Firemen Retirement System of Detroit, catalogs a litany of wrongdoing by KBR, including massive waste and overbilling of services provided to American forces in Iraq; bribery in Nigeria to win government contracts; and multiple instances of fraud, corruption, and misconduct in both its domestic and foreign operations.

Shareholders accuse Halliburton's board of directors of breach of fiduciary duty in failing to rein in years of shoddy business practices and criminal activity that resulted in massive fines, penalties and settlements paid to the federal government.

According to the complaint, the full extent of misdeeds was successfully hidden by the two firms until KBR was spun off as an independent company in 2006. The shareholder suit, which covers the period both before and after the spinoff, was filed in a Texas state court by leading shareholder and corporate governance law firm Grant & Eisenhofer, along with noted plaintiffs' counsel The Lanier Law Firm in Houston.

Named as defendants are 32 former and current directors of Halliburton and KBR -- the majority of the companies' two boards -- including ex-Vice President Dick Cheney, former Secretary of State Lawrence Eagleburger, and Robert Crandall, past president and chairman of American Airlines.

The complaint states, "As fiduciaries ... the Halliburton defendants were required to exercise prudent supervision over the management, policies, practices, controls, and financial and corporate affairs of Halliburton and KBR, which Halliburton controlled." The plaintiffs are asking for a jury trial and intend to seek damages.

Largest Criminal Fines Ever in an FCPA Action tied to Nigeria

Following a series of U.S. government investigations and lawsuits, Halliburton and KBR have paid more than $650 million in fines, penalties, and settlements -- including the largest fine ever assessed by the U.S. Commerce Department and the largest settlement ever paid by U.S. companies for violations of the Foreign Corrupt Practices Act.

more...

http://www.examiner.com/p-346687~Institutional_Investor_Sues_Halliburton_and_Former_KBR_Unit__Alleging_Litany_of_Misdeeds_and_Government_Fines_Has_Damaged_Shareholders.html

[Canuckistanian]

1. Cheney as one of the defendants? Woohoo!

Fantastic!

[babylonsister]

3. I can only hope this goes somewhere, anywhere! nt

[Moondog]

2. Interesting.

Stockholders' derivative actions are a much underused tool, IMO. It will be interesting to see where this one goes.

[dixiegrrrrl]

4. Join me in the Neener Neener dance....

:bounce: :bounce: :bounce: :bounce: