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KBR Accused of Kickbacks, Gouging, Unsafe Practices in Iraq

Last week, the Department of Justice announced it had joined a whistleblower lawsuit accusing Kellogg, Brown & Root Services Inc. (KBR) and two of its Kuwaiti subcontractors of corruption on an Iraq logistics services contract. The lawsuit alleges KBR and Kuwaiti firms La Nouvelle General Trading & Contracting Company and First Kuwaiti Trading Company engaged in a kickback scheme and overbilled the U.S. Army on the Logistics Civil Augmentation Program (LOGCAP) III contract.

According to the government’s complaint, KBR “acted, at a minimum, with reckless disregard or deliberate ignorance” of the truthfulness of its LOGCAP billing claims submitted during the early years of the Iraq War. The government alleges that, from 2002 through 2004, KBR employees Stephen Lowell Seamans, Jeff Alex Mazon, and Anthony J. Martin took kickbacks from La Nouvelle and First Kuwaiti in exchange for awarding them subcontracts. During that time, according to the lawsuit, KBR submitted wildly inflated claims for payment under those subcontracts and sought reimbursement for goods and services that were grossly deficient or not provided at all.

For example, KBR is alleged to have awarded La Nouvelle a subcontract to supply fuel tankers at more than three times their actual cost, while La Nouvelle allegedly rewarded Mazon, who awarded the subcontract, with a $1 million kickback. KBR is also alleged to have billed the government for vehicles that either were never delivered or had been returned to the subcontractors for being unfit to perform the required tasks.

But the lawsuit isn’t just about dollars and cents. One of the most disturbing allegations is that KBR used refrigerated trucks to transport ice and food without properly sanitizing them after they were used to store corpses.

All three KBR employees eventually admitted taking kickbacks or making false statements and were punished. Seamans pleaded guilty in 2006 and was sentenced to one year in prison. Mazon, after two trials ended with deadlocked juries, pleaded guilty in 2009 and was sentenced to one year of supervised release. Martin pleaded guilty in 2007 and was sentenced to a year and a day in prison. Seamans and Martin were also ordered to pay $380,000 and $200,000 in restitution, respectively.

The government is suing KBR, La Nouvelle, and First Kuwaiti under the False Claims Act and the Anti-Kickback Act. The lawsuit was originally filed by Bud Conyers, who worked as a truck driver for KBR in Iraq. His ghastly claim about U.S. troops’ food being transported in contaminated mortuary trucks made national news several years ago.

First Kuwaiti—which gained notoriety for its questionable labor practices and shoddy construction work on the U.S. Embassy in Baghdad—and KBR are currently fighting another LOGCAP III False Claims Act lawsuit. That lawsuit, filed by the government in 2012, concerns an alleged overbilling of $48 million for troop housing units. The most damning claim in the 2012 lawsuit is that KBR long knew that First Kuwaiti’s billing practices were, in the words of internal KBR emails, “absolute highway robbery.”

By: Neil Gordon
Investigator, POGO

Neil Gordon, Investigator Neil Gordon is an investigator for the Project On Government Oversight. Neil investigates and maintains POGO's Federal Contractor Misconduct Database.

Topics: Contract Oversight

Related Content: Contractor Accountability, Federal Contractor Misconduct, False Claims Act

Authors: Neil Gordon

Submitted by cynicann at: February 5, 2014
We have no money for schools, food stamps, social services, the elderly, yada, yada. Reminds me of the old song "That's where my money goes, to buy my "baby" clothes, I buy her everything to keep her in style. She wears silk underwear, I wear my last year's pair, that's where my money go-o-o-oes.... Where's the outrage, the persistence, the insistence that through investigations bring some restitution, some jail time.
Submitted by SamHunter at: February 4, 2014
I spent a lot of time in the CENTCOM sandbox as a Federal Civil Service Engineer and then for almost all of 2013 as a contractor in Iraq. At none of that time did I work for DLA, LOGCAP or USACE who all oversea most of contractors in the AOR. I was there because between the three of them they screwed the pooch routinely and I was directed to come up with a get-well-plan. Which they usually managed to subvert or screwup in some fashion. The LOGCAP series of contracts were created by a bunch of idiots who never leave the USA and believe that every country out there operates exactly the same as us. How arrogant and stupid. I have personally witnessed LOGCAP and USACE personnel order KBR (previously Halliburton and their subsidiary KBR) to perform work that was substandard and wasteful. I have seen the directives to KBR ordering them to subcontract work to foreign national companies that were owned by the son of the local Emir or potentate. A lot of that kick-back and payola was directed by the US State Dept. personnel who I have utter contempt for. Whatever KBR is accused of doing, dig a little deeper and I will guarantee you that KBR does NOTHING under that contract without being ordered to do so by a Federal employee or uniformed military. I have sat in meetings where KBR personnel afterwards were about to explode with frustration and anger, over the dishonest, fraudulent and wasteful action orders from Federal employee nincompoops. I have nothing but sympathy for them. I have utter disgust with CENTCOM military personnel and the legions of minimal to low knowledge, skill and ability personnel recruited (that's what they wanted) to run these contracts. My hat is off to KBR and CH2M and all of the other companies who have been servicing the AOR but who have to follow the orders of the moron bureaucrats who issue orders to them.
Submitted by terry8589 at: February 2, 2014
I wonder how much we have been robbed by KBR & HALLIBURTON?
Submitted by Laurie S at: February 1, 2014
This is treason! We should have never been in Iraq. To over charge the Military for needed items and put the troops at risk is unconscionable. Our idiot President put us there and his ganster VP, Cheney's subsidiary company KBR along with Haliburton, empted the US Treasury.

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