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Documents Reveal Details of Alleged Labor Trafficking by KBR Subcontractor

The Najlaa Episode Revisited

By DAVID ISENBERG and NICK SCHWELLENBACH

KBR Labor Protest

A laborer participating in the December 2008 protest speaks to a reporter.

In December 2008, South Asian workers, two thousand miles or more from their homes, staged a protest on the outskirts of Baghdad. The reason: Up to 1,000 of them had been confined in a windowless warehouse and other dismal living quarters without money or work for as long as three months.

In a typical comment made by the laborers to news organizations at the time, Davidson Peters, a 42-year-old Sri Lankan man, told a McClatchy Newspapers reporter that "They promised us the moon and stars...While we are here, wives have left their husbands and children have been shut out of their schools” because money for their families back home had dried up.

The men came to Iraq lured by the promise of employment by Najlaa International Catering Services, a subcontractor performing work for Houston-based KBR, Inc. under the Army’s Logistics Civil Augmentation Program (LOGCAP) III contract.

Now, a cache of internal corporate and government documents obtained by POGO offer insight into this episode of alleged war zone human trafficking by companies working for the U.S.—and suggest that hardly anyone has been held accountable for what may be violations of U.S. law.

The subcontractor, Najlaa, appears to have suffered no repercussions for its role in luring hundreds of South Asian workers to Iraq with promises of lucrative jobs only to turn around and warehouse at least 1,000 of them in dismal living conditions without work—and pay—for several months. In fact, Najlaa continues to win government contracts.

Despite strongly worded “zero tolerance” policies against human trafficking, the U.S. has directly awarded contracts to Najlaa after the December 2008 protests, including one contract that lasts through 2012.

The Najlaa Incident: An Accountability Case Study

The freshly unearthed documents show that for several months, KBR employees expressed exasperation at Najlaa’s apparent abuse of the laborers and said the subcontractor was embarrassing KBR in front of its main client in Iraq: the U.S. military. But despite its own employees’ strongly worded communications to Najlaa, to this day, KBR continues to award subcontracts to the company.

KBR's responsible official for preventing trafficking-in-persons said in an email that Najlaa rehired three former KBR employees who were terminated against the terms of Najlaa's subcontract with KBR. It is not clear if these employees were alleged to have engaged in human trafficking, and what, if any, repercussions these employees faced besides their termination. KBR did not address POGO's questions on these three former KBR employees directly.

Additionally, the documents raise questions about government officials’ response in the wake of the 2008 protests by Najlaa employees. Although, at the time, the press reported that the U.S. government was investigating alleged trafficking by Najlaa, it has not led to any prosecution or termination of the subcontract. A Sri Lankan company that supplied laborers to Najlaa told POGO it complained about Najlaa’s abusive practices to both KBR and the U.S. government, but said that U.S. law enforcement agencies never followed up.

Najlaa International Catering Services

Najlaa International Catering Services (Najlaa), based in Kuwait, is part of the Eastern Solutions Group whose CEO is Bill Baisey. Baisey is of Palestinian descent and has Jordanian and U.S. citizenship. He lives in Jabriya, Kuwait but also has a U.S. address, according to a person who knows Baisey. The source also said Baisey’s given name is Fathallah Balbeisi, with possible variations in spelling such as “Balbaisey,” and is known by both names in Kuwait. Eastern Solutions is registered in the state of Louisiana under the name of Nidal A. Balbeisi. Nidal is Baisey’s brother, according to the source, who asked for anonymity. In a restaurant ad, Nidal said he is of Palestinian origin and also claims in a New York Times article to have lived in Kuwait for some time. In Arabic, Najlaa is a female name, which means waif-eyed.

Baisey has already been in trouble with the law. On October 27, 2009 the Iraqi government issued two warrants authorizing his arrest. The first warrant was for fraud. The warrant holder is Sabah Ali who heads the company Myland, which leases cars to Victory Base Complex. Sabah claims he sold Baisey the trucks around September 2008 but wasn't paid for them. The second warrant authorizes arresting Baisey for defrauding Myland Co. After the warrants were issued, Baisey left Iraq to evade arrest and is currently based in Kuwait, according to sources.

Najlaa did not respond to multiple emailed queries to the contact email address listed on its website, emails to its CEO Bill Baisey, or to emails to its parent company Eastern Solutions Group. The Louisiana phone number for its U.S. office is currently disconnected.

Najlaa also has a contract with the Army for housekeeping services in Kuwait and according to sources, has other contracts directly with the Army. Since 2006, Eastern Solutions has been awarded at least 25 direct contracts with the Army for various work in Iraq and Kuwait worth around $4 million, according to USAspending.gov.

A Two-Tiered System?

Labor trafficking is one of the highest profile human rights issues raised by the U.S. government’s mass reliance on third-country nationals hired by contractors and their subcontractors, particularly in Iraq. It often appears that a two-tiered system of treatment exists—one for Western contractor employees and another for recruits from non-Western countries, which often arrive via specialized manpower suppliers.

The U.S. government’s contracting rules, known as the Federal Acquisition Regulation (FAR), specifically prohibit trafficking in persons, or TIPS. The pertinent provisions of the FAR were created, in part, in response to past scandals concerning sex trafficking by contractor employees in the former Yugoslavia and labor trafficking in Iraq. Labor trafficking falls within the rubric of TIPS and indicators of it include poor working and living conditions; delayed compensation or an employer’s failure to uphold the original terms of compensation; taking of a laborer’s passport, which limits freedom of movement in a foreign country; contractual terms that impose coercive restrictions; and threats.

“At the heart of this phenomenon are the myriad forms of enslavement – not the activities involved in international transportation,” according to a 2010 State Department report on trafficking. The Najlaa episode may involve one of two types of abuse practices: bonded labor or debt bondage. Bonded labor is “a form of trafficking in persons,” according to the State Department report. “Workers around the world fall victim to debt bondage when traffickers or recruiters unlawfully exploit an initial debt the worker assumed as part of the terms of employment.”

“Abuses of contracts and hazardous conditions of employment for migrant laborers do not necessarily constitute human trafficking,” the report notes. “However, the attribution of illegal costs and debts on these laborers in the source country, often with the support of labor agencies and employers in the destination country, can contribute to a situation of debt bondage.” This is possible even when the “worker’s status in the country is tied to the employer as a guestworker in the context of employment-based temporary work programs.” A 2004 memo by the Secretary of Defense is direct: “Trafficking includes involuntary servitude and debt bondage. These trafficking practices will not be tolerated in DoD contractor organizations or their subcontractors in supporting DoD operations.”

An Estimated Quarter of a Million Victims

There are no definitive numbers on the scale of labor trafficking. However, writing in Fraud magazine, supply chain compliance consultant Sindhu P. Kavinamannil and former federal prosecutor Sam McCahon estimate that “DOD contractors and their subcontractors in Iraq have victimized more than 250,000 men. That number does not include other agencies, such as the U.S. Agency for International Development, which uses TCN-contracted labor in support of its operations.” TCN stands for third country nationals.

The laborers’ protest in December 2008 did not mark the first time questions were publicly raised about Najlaa and KBR’s commitment to protecting their laborers’ well being in Iraq. A lawsuit brought by the family of deceased Najlaa employee Tareq Alhalabi in federal court in Houston alleged that KBR, Najlaa and other companies put Alhalabi at unnecessary risk leading to his wrongful death. The lawsuit was filed in late October 2008 and was dismissed in July 2010 due to inactivity on the part of the plaintiffs.

Other episodes of alleged labor trafficking by KBR subcontractors were recounted at a Wartime Contracting Commission hearing last year. Two referrals of suspected misconduct by KBR or its subcontractors were sent to Defense Criminal Investigative Service from April 2009 through March 2010 by the Defense Contract Audit Agency (DCAA) involve allegations of possible trafficking, according to information made available at another hearing before the Commission by DCAA Director Patrick Fitzgerald.

A July 2010 CENTCOM Contracting Command memo to all contractors in Iraq reveals evidence of broader contractor disregard for laborers. “[E]ight third country nationals (TCNs), several from countries whose current domestic laws prohibit their citizens from working in Iraq, were discovered to have been left behind by their previous employers at various contractor controlled camps (aka ‘mancamps’) throughout Iraq,” the memo states. “This raises numerous concerns about whether contractors are complying with travel and work restrictions.”

The Road to Man-Camp: Trouble from the Outset?

KBR Labor Protest

Men living in makeshift tents outside the Baghdad Airport, lured to Iraq by the prospect of work (December 1, 2008).

The third country national labor force that moves dirt, serves meals, cuts hair, cleans laundry, builds buildings, takes out the trash, and provides numerous other services for the U.S. military to this day in Iraq and Afghanistan, and other places such as Kuwait, is created and put in place by an extensive network of companies. The most visible to the American public are the big U.S. prime contractors (or “primes”), such as KBR, that have a direct contractual relationship with the U.S. government. The primes typically subcontract out a great deal of work to an often bewildering array of subcontractors (who often, in turn, hire other subcontractors). One special type of subcontractor is the manpower supplier. In order to provide the labor force for projects in Iraq, Najlaa contracted with several manpower suppliers from India, Sri Lanka, Nepal, Bangladesh, Dubai, Iraq and Kuwait. To understand the conditions these workers face in Iraq, you have to understand how they got there—and what price they paid to get there.

Najlaa had agreements with its suppliers to charge the individual laborers a fee of approximately $2,000 to $3,000 to cover the costs of medical screening, airline travel costs from their home country to Baghdad and all entry visa fees for the United Arab Emirates and Iraq, according to the source familiar with KBR and Najlaa (the source requested anonymity out of fear of retaliation). Najlaa would, therefore, not incur any costs to mobilize its labor force.

Sam McCahon, the former federal prosecutor and a former general counsel for Agility, a Kuwaiti-based contractor, believes the recruitment fees charged to laborers are grossly inflated. “The cost of a medical exam, visa and airfare from the Indian subcontinent would amount to approximately $500 USD maximum, not $2,000-$3,000,” he told POGO. The source, mentioned above, said the cost breakdown should be: $250 for medical screening, $350 for airfare and $100 for Iraq’s visa entry fee. McCahon said that labor recruiters are typically only responsible for getting workers to Dubai, Kuwait, or Jordan, and that subcontractors then usually have to get them into Iraq. McCahon has written on trafficking by U.S. contractors and has on-the-ground experience interviewing dozens of laborers.

$2,000 to $3,000 is a crushing amount for many of these laborers to pay. The only reason many agree to pay is due to the fact that the recruiting firms often lie or mislead the laborers into thinking they will make far more money than they usually do—assuming they even get work.

"We do not have any money to celebrate Christmas…I have spent three months without getting anything. We have been turned into beggars."

-- Sanjaya Jayawardhana, a 29-year-old father who was brought into Baghdad by Najlaa

Early Warning Signs

Documents show there were signs that something was wrong at the camp for Najlaa’s laborers in the months before the December 2008 protests. KBR awarded subcontracts to Najlaa in July and September 2008 to provide food services at 18 dining facilities (DFACs) at various military camps in Iraq under the Army’s Logistics Civil Augmentation Program (LOGCAP) III program. Najlaa was to begin its food service at these DFACs in November 2008.

Even before Najlaa was slated to serve its first meals at the dining facilities, KBR rescinded some of the awards to the subcontractor because KBR believed Najlaa was “endangering the performance of DFAC Services by the scheduled first meal served dates,” according to a September 19, 2008 KBR letter to Najlaa. “Najlaa has failed to mobilize personnel, materials, equipment or Temporary Labor Camp requirements” to many of the sites, the letter states. “[O]nly marginal progress has been made at the remaining sites.”

When Najlaa started moving labor power in place, other problems arose.

According to a November 10, 2008, email to Najlaa CEO Bill Baisey from Alaa N. Habib, a manager with Elite Home Group, which provided temporary housing for Najlaa’s laborers, a storm of discontentment was building up among the laborers. As Habib wrote, “your people made big and dangerous problems in my camp and with my people, Many of my assists [sic] broken and some of my people injured. We tried to know the reasons, it is appeared that they want to work or take a salary from your company.”

The same day, 2008 KBR conducted a special inspection at the Najlaa Temporary Labor Camp and discovered a host of problems. “Living accommodations were not kept in a clean, orderly and sanitary condition,” the inspection found, and “[n]o Subcontractor employees had protective body armor to include a Kevlar ballistic helmet and a ballistic vest with inserted plates and these items are not onsite and readily available.” The lack of body armor is troubling since insurgents in Iraq have killed many subcontractor laborers on base or traveling on convoys. To insurgents, third country national laborers are seen as part of the soft underbelly of the U.S. presence in Iraq, meaning they are seen as vital to U.S. efforts, but are not protected the way U.S. servicemembers are. The KBR inspection found that laborers had inadequate living space as well.

Within weeks, KBR acted on their findings. On November 20, 2008, a KBR manager sent an email to Baisey, providing a “formal notification that Kellogg Brown & Root Services, Inc is formally rescinding the Notices of Award and subcontracts issued to Najlaa International Catering Services for DFAC Services” at some KBR sites.

The email added that “KBR will report suspected Trafficking in Persons violations discovered at various labor camps to the appropriate authorities.”

It is fair to say that Bill Baisey was not happy. An email he sent that day to other Najlaa managers said, “See this shit,” referring to the KBR cancellation of its work with Najlaa.

Then, on November 24, 2008, KBR manager William Young told Baisey that conditions at several Najlaa sites “are endangering performance of the Subcontracts and jeopardizing the lives of all personnel.” Young also stated that unless Najlaa could correct the deficiencies within 10 days, “KBR may terminate these subcontracts for default.”

The U.S. Struggles to Combat Trafficking In Its War Zone Supply Chain

The U.S. government, while leading the world in crafting laws and regulations meant to fight human trafficking, has struggled with how best to combat trafficking as it exists within its war-fighting supply chain overseas. Before the U.N. General Assembly in 2003, President George W. Bush sternly spoke out against the scourge of human trafficking and announced a tough “zero tolerance” stance that embraced prosecution and debarment of contractors for trafficking violations. But despite aggressive-sounding policies and laws criminalizing human trafficking, the U.S. government has not prosecuted one war zone contractor trafficking case, according to a comprehensive survey of law enforcement agencies conducted by the Center for Public Integrity last year. There is no evidence of any contractors that have been debarred for trafficking violations.

Justice Department spokesman Alejandro Miyar told the Center for Public Integrity last year that the agency “investigates all credible allegations of human trafficking.” He offered no details.

Contractual remedies appear to be wanting as well. Two Pentagon Inspector General reports, one in 2010 and another in 2011, found that about half of two samples of contracts examined did not contain anti-trafficking clauses.

The 2011 report examined a sample of construction and service contracts awarded in FY 2009 and FY 2010 for $5 million or more of work within Central Command’s area of responsibility (specifically, Iraq, Kuwait, Afghanistan, Qatar, and Bahrain). Only 53 percent of the 368 contracts the Inspector General analyzed contained the correct Combating Trafficking in Persons (CTIP) clause, which is required by law.

“Noncompliance with the requirement to include the CTIP clause in contracts has two negative effects. First, contractors remain unaware of the U.S. Government’s ‘zero tolerance’ policy and self-reporting requirements regarding CTIP,” the IG report notes. “Second, contracting offices were potentially unable to apply applicable remedies to correct contractor violations when the CTIP clause was not properly present.”

U.S. Government Officials, Criminal Investigators Take Notice

In early December 2008, U.S. Embassy officials in Iraq “confirmed media reports of some 1,000 third country nationals (TCN) living in transit housing facilities, ‘man camps,’ near the Baghdad airport while waiting for employment with MNF-I [Multi National Forces-Iraq] contractors,” according to a January 2009 State Department cable. The cable’s contents, marked “SBU,” or sensitive but unclassified, said the laborers worked for “Najlaa Catering Company, a subcontractor of MNF-I contractor Kellogg, Brown and Root (KBR).” Najlaa “procures such workers through independent labor brokers who operate in the workers’ home countries,” the cable said.

“KBR has fully cooperated with the Defense Contract Management Agency (DCMA) and MNF-I Criminal Law Division to investigate possible trafficking in persons (TIP) and human rights violations,” the cable stated. The U.S. Embassy “is seeking ways to ensure USG [U.S. Government] contractor and subcontractor compliance with appropriate labor, health, and safety standards.” It was also noted that there could be “corrupt, but lucrative, relationships between labor brokers, subcontractors and GOI [government of Iraq] officials.”

The FBI took notice too. An email from FBI Special Agent Michael F. McMahon with the International Contract Corruption Task Force on December 15, 2008, addressed reports that many Najlaa employees had not been paid.

“We have learned many of the TCN [third country national] service personnel employed by Najla [sic] at the Coalition Café have not been paid - in some cases for several months,” McMahon wrote to two KBR employees, including KBR’s Rita D. Wellborn, who was a company point person on human trafficking. “It may be that some of your personnel (KBR) in the field aren’t aware of the role of the TIPS program, or if they are, perhaps you have already heard of the situation with Najla [sic].” TIPS, as mentioned earlier, is a reference to “trafficking in persons.”

“On its face the issue of non-payment of wages can be rather nebulous. If, however, there is an effort underway to withhold wages for purposes of controlling the behavior of these men - there would likely be consequences,” McMahon wrote.

The FBI did not respond to a voicemail and an email from POGO requesting comment.

After the Protests

Baisey still did not appear to get the message after two months. On January 10, 2009, Derrick White, a KBR subcontracts supervisor, told Baisey that problems still existed. White wrote, “this matter is being tracked by the highest levels of both LOGCAP III and the United States military,” and demanded Baisey respond by the next day.

Baisey forwarded the comment to his colleagues and wrote: “This is a very bad one, we need to be very careful in responding to this one and our response must be acceptable.”

The following day KBR sent Baisey emails detailing how they felt Najlaa’s poor performance was giving them a “black eye” with their primary client, the U.S. military. Mark Brannen, a KBR deputy program manager, was blunt with Baisey, who denied a raft of allegations levied against Najlaa in an email earlier that day on January 11, 2009. “[T]he US Government is extremely upset at KBR right now and most of that frustration comes from Najlaa,” Brannen wrote. “Your man camp outside BIAP has become a corporate embarrassment that has the visibility of the US Ambassador to Iraq, the Army Leadership here at Victory Base and our Defense Contract Administrators.”

“During the meeting today the United Nations offered to fly all of your employees from the BIAP camp to their homes at no cost to Najlaa. Najlaa refused,” Brannen further wrote. “I can only assume that your decision not to accept the UN’s offer was based upon some misguided idea that the Taji DFAC decision was negotiable. This is not the case.”

Brannen ended his email with a stern warning: “The US Military has become increasingly less tolerant of subcontractors operating on their Coalition Bases. The recurring complaints by your employees across various sites about their conditions and the mounting issues at BIAP, could lead to a debarment of Najlaa from all MNF-I bases in Iraq,” he wrote.

M. Faizer Mackeen, Chairman of Transtours, the company that supplied the laborers to Najlaa, explained what happened to the workers. “After three or three and a half months of staying under the poor conditions, these workers were forcibly repatriated,” Mackeen told POGO. He said that the workers themselves paid out of their own pocket to go home and that neither KBR nor Najlaa reimbursed them. “Even the cost of recruitment and sending these workers to the destination was not refunded,” he said. “It was not resolved peacefully, but by force.”

“These Najlaa workers were located on a transitory camp for which KBR and the U.S. government had neither responsibility nor authority, and which was located outside of any military base in Iraq,” KBR told POGO through a spokeswoman. It also said, “KBR continues to work closely with our subcontractors, including the regular inspection of foreign nationals’ living camps on the various bases on which we operate, to ensure that all subcontractors are in compliance with both the U.S. government and KBR Code of Business Conduct.”

“The subcontractor fabricates the story with the belief that no one will ever be able to make contact with the recruiter to validate the account. The reason the subcontractors ‘warehouse’ laborers is because the prime contractor typically makes payment to the subcontractor based on man days provided.”

-- Former federal prosecutor Sam McCahon

The Blame Game

It did not take long for the blame game to start once the media started to pay attention.

On December 4, 2008, Deborah Haynes, a reporter with The Times of London, contacted Baisey with queries regarding the laborers and their claims that they were victims of human trafficking. Baisey forwarded Haynes’ email to Najlaa employees, and wrote, “what do you suggest we do.. Respond or what. Please let me [sic] so we can prepare some thing if you guys elect for us to respond.. In all cases I agreed that we will not mention KBR at any point of time.”

The next day Baisey emailed Rushdi Al Ayad, the director of Transtours, and wrote that “your staff have been creating riots and threatening other staff who wants [sic] to leave the site back to their home country to beat them. This is not acceptable.”

“These people never paid [Najlaa] any money to come to Iraq.. this was done between you and them,” Baisey wrote, adding that Najlaa’s “responsibility for these people starts when they move into the working location inside the camp, yet we are working diligently now to overcome the problem.”

Al Ayad disagreed. “[Y]our contention that your responsibility commence [sic] once they moved into their working locations inside camp cannot be accepted in spite of the fact they have arrived on your visa and may be you have your contractual obligation with KBR and not with us,” Al Ayad wrote. “I have boarded these workers on you [sic] instruction and confirmed acceptance by you and your company, so the responsibility lies with you and your company,.” A few weeks later, on December 18, Al Ayad contacted KBR’s Houston offices with issues he had with Najlaa.

He also denied trafficking the men. “I or my company did not traffic these people illegally to Baghdad, but on your full authority and fully legalized,” Al Ayad wrote in the email to Baisey.

Baisey refused to accept Al Ayad’s denials. “Even if I accept the content of your email which I don’t, then these people are under the 3 months probation period.. the company has the right to terminate them during this 90 days,” he wrote, adding, “The circumstances we are currently in is not of our own making. Yet the people on the ground are not making it any easier to solve the issue at hand.”

“[W]e have to sort out this issue now and have to get these people under control,” Baisey also wrote.

After the Sunday Times ran an article on some of the workers, Al Ayad followed up with an email to Baisey on December 7, 2008. Given the newspaper coverage, the issue needs “your serious attention as our labour license and reputation at stake because of your action and will be facing legal actions by the government authorities,” he wrote. “[Y]ou have been acting against your promise, to provide employment in Kuwait until the camps in Iraq are ready for placement.”

To Sam McCahon, the former federal prosecutor, Najlaa’s position “does not ring true.”

“The subcontractor responsible for requesting the person to perform the labor is responsible for their welfare while they are in country. In the case of Kuwait, it is a law that the contractor must provide transportation, food, accommodations, medical care and compensation. In the case of Iraq, everyone who works on a military base must have a sponsor,” he said.

“How could a labor supplier on the Indian subcontinent, who has never even traveled to Iraq, much less be allowed to live in the Green Zone or a military base, be responsible for the welfare of the workers whom it retained? Clearly, this is a cover-up and ruse by the subcontractor,” McCahon said.

“The subcontractor fabricates the story with the belief that no one will ever be able to make contact with the recruiter to validate the account. The reason the subcontractors ‘warehouse’ laborers is because the prime contractor typically makes payment to the subcontractor based on man days provided.”

Najlaa: "An Unknown Risk"?

Najlaa’s loss to rival Tamimi Global Co. Ltd., a Saudi-based firm, over an Army contract awarded after the December 2008 protests also highlights a major weakness in U.S. oversight of subcontractors.

KBR told POGO in a statement that it shared information on Najlaa’s performance with the U.S. government, but this information does not seem to have made it to the government’s system for tracking contractor past performance.This came to light when Najlaa protested the Army contract award to Tamimi. In an April 2010 decision, the Government Accountability Office (GAO), when reviewing the protest, found that Najlaa “received an unknown risk rating under the past performance factor” by Army procurement officials when comparing bids. However, the significant performance problems KBR had with Najlaa, as well as Najlaa’s mistreatment of workers, were well known by the U.S. military and KBR.

The GAO issued a report in 2009 that evaluated the federal government’s use of its Past Performance Information Retrieval System (PPIRS), the system used by procurement officials to analyze contractor past performance. “At the subcontractor level, apart from evaluating a prime contractor’s management of its subcontractors,” the GAO found, “historically, the federal government has had limited visibility into subcontractor performance despite the increased use in subcontractors.”

Did Najlaa Defraud the Government?

There could be more to this story than trafficking violations. Consider the employment contract between Naljaa and an employee. A contractual clause requires the employees to pay $2,500 if they resign “before completion of one year of service” – that one year of service entails working 12 or more hours a day for seven days a week. This cost is covered by the mobilization cost KBR should have paid Najlaa; it could be considered a double dip by Najlaa as they might be getting paid twice for the same cost—once by KBR, and again by the employee—according to a source familiar with KBR’s subcontracting practices, who was not willing to be named. Keep in mind, as mentioned earlier, that individual laborers paid $2,000 to $3,000 in recruitment fees to pay for travel and other expenses from their home countries to Iraq.

McCahon, the former federal prosecutor, told POGO that “from a legal perspective, the ramifications are far greater than double dipping. The process, depending on how it is executed, may constitute procurement fraud against the government.”

He added, “if the subcontractor never incurred the cost, mobilization or demobilization but was reimbursed for the same, then there would be a fraud against the government.”

It is customary for KBR to pay its subcontractors an average amount of $2,500 per person as a mobilization fee and approximately the same amount to demobilize, according to a person who is familiar with KBR’s subcontracting practices in Iraq and Kuwait. McCahon said “It is my understanding that the LOGCAP contract does allow for a mobilization/demobilization fee to the subcontractors.”

McCahon believes there also could be a kickback arrangement between Najlaa and its labor suppliers.

 “The whole scenario seems to be missing some elements and sounds more like a subcontractor’s efforts to conceal a kickback by explaining the direct payment of money to a recruiter,” said McCahon. “Why would an agreement between the sub and recruiter specify the amount charged by the recruiter to the laborer?” Najlaa utilized several manpower recruitment companies that recruited from various parts of South Asia.

Najlaa did not respond to multiple requests for comment over several weeks.

Ex-KBR Employees Ended Up at Najlaa

Around the time of the protests, emails show that KBR discovered that some of its employees who were terminated were working for Najlaa. Najlaa was not to retain any former KBR management employees within a year of their departure from KBR, according to KBR emails.

“[Y]ou will need to make sure Najlaa removes these three men from any of the contracts that are supporting KBR until one year from their termination date,” KBR’s Mark Brannen wrote to other KBR employees on December 29, 2008.

Earlier, in an email to other KBR employees, KBR’s Rita D. Wellborn, who was a company point person on trafficking in persons, wrote, “former KBR expats” who “were terminated after investigation” in February 2008. “They are now direct hires for Najlaa,” she noted.

“KBR’s business ethics and values expressly state that our employees, subcontractors, and business partners be treated with dignity and respect,” KBR told POGO. “Employees, contractors, and subcontractors are expected and required to adhere to KBR’s entire code of business ethics—the KBR Code of Business Conduct (COBC). When KBR becomes aware of potential violations of our COBC, we investigate the issue and take appropriate action to address what happened and prevent recurrence.”

KBR did not specifically address POGO’s question on the termination of employees in its response.

Has Najlaa Changed Its Tune?

Najlaa is still winning contracts—such as a recent $3 million contract to provide food services for the U.S. Agency for International Development (USAID) in Baghdad from February 2010 to February 2012. The USAID Office of Inspector General (OIG) reviewed (note: it did not conduct a more rigorous audit) Najlaa’s arrangement and one other company’s in a December 2010 report. The report found “no indication that contractors and subcontractors on the two USAID/Iraq contracts that employ low-skilled, low-wage third-country nationals engaged in trafficking in persons.” The USAID OIG report did not explicitly note any problems with Najlaa. The company appears to have changed its tune to some degree, based on the USAID OIG’s observations. The OIG found:

  • “Employees maintained possession of their passports at all times. Their employment agreement explicitly forbids Najlaa from withholding their passports except when required for necessary administrative procedures”; and
  • “According to the employees and their employers, their movement was not restricted beyond normal security procedures. The employees are free to leave their housing compound during their 1 day off each week.”

The OIG report corroborates some information shared by a person intimately familiar with Najlaa’s corporate practices. For instance, “If employees resign or are terminated before the completion of the full year of the agreement, they become responsible for the cost of transportation to their home countries.” Some critics of labor trafficking by war zone contractors consider this kind of provision to be questionable since it can pressure laborers to put up with unacceptable conditions in order to go back home without paying the often-onerous cost of travel.

The Aftermath: Where’s the Accountability?

Najlaa did not respond to multiple emailed queries to the contact email address listed on its website, emails to its CEO Bill Baisey, or to emails to its parent company, Eastern Solutions Group. The Louisiana phone number for its U.S. office is currently disconnected. In one of the earliest news reports on the December 2008 protests by laborers, Naljaa told The Times of London, “We work to very strict rules. We do not accept people being mistreated or mishandled.” More recently, a representative of a Najlaa’s associated firm in Amman, Jordan told The New Yorker which briefly mentioned the December 2008 protests, that “the workers’ mistreatment had been due to a temporary ‘cash money problem.’”

A spokeswoman for U.S. Forces Iraq (U.S.F-I), the successor organization to MNF-I, said “U.S.F-I does not have any records prior to Operation New Dawn. Operation Iraqi Freedom records are held at CENTCOM and I forwarded your query to them.” According to the State Department cable mentioned earlier, MNF-I Criminal Law Division investigated the alleged labor trafficking and other problems involving Najlaa laborers.

The spokesman for the U.S. military’s Central Command (CENTCOM) told POGO that “We do not have any documents regarding these allegations here. These were not CENTCOM contracts—U.S. Army Logistics Civil Augmentation Program (LOGCAP) managed food service in theater. Any investigation findings would have been forwarded to them.” After he said he contacted several other government offices, the spokesman added that he could not “find a public affairs office that has situational awareness of this” and recommended POGO file a Freedom of Information Act (FOIA) request for more information. CENTCOM is responsible for the region of the world where the alleged labor trafficking and worker abuses by Najlaa took place. According to a DOD-specific provision of the Federal Acquisition Regulation, military commands such as CENTCOM are supposed to be notified of instances where there are indications of human trafficking by DOD contractors and subcontractors in their area of responsibility. CENTCOM said there were no responsive documents in response to a FOIA request filed last year for documentation of all trafficking instances in their possession, pursuant to the Federal Acquisition Regulation provision.

POGO also emailed and called Army Sustainment Command (ASC), which is responsible for LOGCAP, but was told by a spokeswoman that “after checking with subject matter experts in ASC, this is not an issue specific to KBR or LOGCAP. You need to contact Central Command, Tampa, Florida, since their area of responsibility includes Southwest Asia.” As mentioned above, CENTCOM told POGO that investigative findings related to LOGCAP would be forwarded to LOGCAP, i.e. the Army Sustainment Command.

While Najlaa has not responded to numerous requests for comment, Mackeen, the chairman of Transtours, one of Najlaa’s labor suppliers, provided an extensive emailed reply to POGO.

“Najlaa never paid any recruitment fees or cost of air ticket to Transtours, but workers agreed to incur initial expenses like medical, transport, and administrative cost and other expenses. Transtours was expecting Najlaa to make payment as agreed with them, which was not paid at all.”

Mackeen told POGO that Najlaa approached Transtours and several other manpower suppliers in Asia and said that “Transtours was called upon to recruit Sri Lanka workers via Dubai and Kuwait, as recruitment of workers directly from Sri Lanka was not permitted at that time of period.” He added that Najlaa sent one of its officials to Sri Lanka to interview and select prospective personnel.

Mackeen said Transtours submitted complaints “to the U.S. Army and other authorities” asking them to stop payments to Najlaa until the laborers and Transtours were paid, but said the complaints were not acknowledged and that there were no inquiries. POGO was provided with copies of the complaints Mackeen said he provided to the U.S. government.

250,000

 

 

Estimated minimum number of men victimized by DOD contractors and their subcontractors in Iraq, according to supply chain compliance consultant Sindhu P. Kavinamannil and former federal prosecutor Sam McCahon.

Mackeen placed some of the blame at KBR’s feet. He said since the U.S. puts a great deal of emphasis on human rights he is “confident that this matter will be taken up” eventually and is “very happy to receive” POGO’s questions.

A Pentagon Inspector General (IG) report noted “one report of preliminary investigative activity of a contractor in Iraq” in fiscal year 2009 for labor trafficking violations. The case was briefed to the Justice Department and prosecutors “determined facts and circumstances did not warrant further action.” The “contractor took corrective action,” the Pentagon IG said. The Pentagon IG did not respond to POGO’s query asking whether the contractor was Najlaa, although Najlaa was a defense contractor suspected of labor trafficking in fiscal year 2009 that had come under investigation.

KBR’s response mirrors some of the language (e.g. “corrective action” was taken) used in the Inspector General report. “Najlaa responded without delay to KBR’s demand for corrective action, and the matter was resolved appropriately. KBR fully disclosed the incident to our U.S. government clients including all remedial actions taken by both KBR and Najlaa,” KBR told POGO in an emailed statement via a spokeswoman. However, KBR’s statement that Najlaa “responded without delay” to KBR is not borne out by the numerous KBR emails to Najlaa that POGO has obtained. POGO asked KBR about this inconsistency in a follow-up question. POGO gave KBR over two weeks to respond. KBR eventually did email a statement that said “Najlaa has been a supplier of ours since 2004, and when challenges have arisen in providing support to the military, we have brought them to their attention and worked with them to appropriately resolve.” KBR also emailed that “We continue to work with Najlaa and other subcontractors today in providing much needed services to our troops.”

KBR Headquarters

KBR Tower in Houston, TX

In its communications with POGO, KBR put a great deal of emphasis on its code of conduct. However, at least in the case of Najlaa, KBR says neither it nor the U.S. military is responsible. There is a litany of reasons to believe they do have responsibility: as recounted above, emails by its very own employees on the ground in Iraq to Najlaa suggest otherwise. The chain of contracting down the manpower suppliers is fueled by U.S. taxpayer dollars, billions of which KBR receives. Unrest by the labor force of a DOD subcontractor in a country with an ongoing major military operation can be detrimental to U.S. interests. It should be no wonder that elements of the U.S. military in Iraq were angered by the conditions of the Najlaa laborers, and KBR employees threatened to cut off Najlaa’s subcontracts as a result. Ultimately, however, Najlaa did not lose its business with KBR or the U.S. government.

POGO has confirmed in conversations with sources that have requested anonymity that federal investigators this year have begun re-examining allegations of trafficking and other possible misconduct by Najlaa and other companies. However, Transtours’ CEO told POGO via email in late April that the U.S. government investigators had still not contacted his company.

Revisiting the December 2008 episode isn’t just a historical exercise. Besides its continuing work with KBR, Najlaa is still winning government contracts, such as a recent $3 million contract to provide food services for the U.S. Agency for International Development (USAID) in Baghdad from February 2010 to February 2012.

According to a 2006 State Department report on human trafficking, a “DOD investigation, prompted by late 2005 media allegations of labor trafficking in Iraq, identified a number of abuses, some of them considered widespread, committed by DOD contractors or subcontractors of third country national (TCN) workers in Iraq.” The State Department said in response to the investigation that the “Department of Defense has responded swiftly with a number of measures to closely monitor the hiring and employment of foreign laborers.” The DOD’s response, the State Department assured, would “ensure the U.S. employs a ‘zero tolerance’ policy against human trafficking.” But clearly having policies on the books alone did not ensure anything -- besides the Najlaa episodes, there have been many instances of alleged trafficking and third country national worker abuse. Is it really “zero tolerance” when there are no repercussions?

David Isenberg has been an observer and commentator on private military and security contracting since its modern birth in the 1980s. He is the author of the book Shadow Force: Private Security Contractors in Iraq. His blog The PMSC Observer is the leading online resource for news and current events pertaining to subject of private military and security. Nick Schwellenbach is POGO's Director of Investigations.

Photo credit for photos of protesters, men living in temporary camp: Adam Ashton/MCT/Landov. Photo of KBR tower: WhisperToMe.

By: Nick Schwellenbach
Director of Investigations, POGO

Nick Schwellenbach At the time of publication, Nick Schwellenbach was Director of Investigations for the Project On Government Oversight.

Topics: Contract Oversight

Related Content: Human Trafficking, Iraq & Afghanistan Reconstruction Contracts

Authors: Nick Schwellenbach

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