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Senior KBR executive was arrested as part of SFO probe, court hears
17 Apr 2018 12:00 am by Martin Coyle
The president of KBR’s oil and gas business, Jan Egil Brændeland, was arrested as part of the Serious Fraud Office's investigation into the company, a London court heard today.
Details of the arrest, which hadn't previously been made public, emerged during a legal challenge brought by the US oil engineering company, which today claimed the UK’s fraud agency had “cut across” all safeguards designed to protect documents held by companies overseas.
Brændeland hasn't been charged with any offense. The company confirmed the arrest in a statement to MLex, saying that he was released soon afterwards. It added it doesn't tolerate illegal or unethical practices by its employees. No further information about the arrest was made at the High Court today.
KBR is challenging the SFO’s attempts to access 21 years’ worth of documents held by its US arm. The SFO is investigating suspected corruption by the company’s British subsidiary and executives. KBR’s US arm isn’t under investigation.
The probe is connected to the company’s relationship with Monaco-based oil services company Unaoil.
The documents sought include KBR contracts, entire e-mail records from some former and current company executives, and other information. The SFO first requested the data in April 2017 when it opened its investigation, which is ongoing.
KBR’s US arm has resisted the SFO’s attempts to access the 27 tranches of documents, after previously indicating that it would hand over the information.
In the judicial review hearing, Richard Kovalevsky, the lawyer representing KBR, said the SFO was increasingly using its “Section 2 powers” to access documents held by companies overseas.
Section 2 of the Criminal Justice Act 1987 allows the agency to search property and require persons to answer questions and produce documents relating to its investigation.
“This cuts across all the recent safeguards that have been built over many years. Under the Criminal Justice Act once the prosecutor has the documents it can use them in any criminal trial and distribute them widely,” said Kovalevsky. The SFO doesn’t have to return the documents once it has acquired them, Kovalevsky added.
KBR’s lawyer said the SFO could use other powers, under the UK’s Mutual Legal Assistance regime, which offer greater safeguards to the use of the evidence. A MLA allows the SFO to formally request evidence located overseas.
Lawyers representing KBR have written to the SFO saying the UK arm has no power over information held in the US.
The SFO isn't attempting to question KBR executives in the US at all.
Jonathan Hall, representing the SFO, said the UK’s ability to investigate overseas corruption was a matter of “significant public interest.”
“If Section 2 is limited to the UK then the UK would be in the astonishing position of being unable to investigate its own companies or citizens,” he said.
In court documents, the SFO said the accessing of documents and information in other jurisdictions was entirely routine and in most instances companies could send the data by "pressing a button or sending an email”
The SFO said that KBR had had a “change of heart” regarding its cooperation with the UK. Having initially stated that the whole group would collaborate, the company refused to hand over US-held documents. It has continued to refuse to do so, despite being served with a Section 2 notice, the SFO said.
KBR isn’t challenging the “reasonableness” of the SFO’s probe, court documents say.
The SFO added that UK lawmakers wouldn’t have intended to confine the UK’s ability to obtain overseas documents from those countries where it had a MLA agreement. Otherwise people would simply put documents in jurisdictions that were out of reach of the SFO, the court document said.
The SFO hadn’t used MLA powers in this case because it wasn’t clear whether the US authorities would be able to provide assistance in the case due to the timescale involved, Hall told the court today.
This isn’t the first time the SFO’s investigative powers have been tested in this way. In January 2017, Unaoil executive Saman Ahsani failed in a bid to force a review of Section 2 after the SFO ordered him to hand over documents located abroad.
The judges reserved judgment.
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