U.S. suing KBR: Alleges false claims in Iraq work

Jan. 24, 2014 at 1:44 PM
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WASHINGTON, Jan. 24 (UPI) -- The U.S. government is suing Kellogg, Brown & Root Services Inc. and two Kuwaiti companies over alleged false claims connected to providing logistical services.

The U.S. Justice Department, in announcing the complaint filed in federal court in Rock Island, Ill., identified the Kuwaiti companies as La Nouvelle General Trading & Contracting Co. and First Kuwaiti Trading Co.

The alleged false claims are related to a KBR contract to provide logistical support to the U.S. Army in Iraq.

"We depend on companies like KBR and its sub-contractors to provide valuable services to our military," said Assistant Attorney General for the Justice Department's Civil Division Stuart F. Delery. "We will ensure that contractors do not engage in corrupt practices at the expense of our troops abroad, while profiting at the expense of taxpayers at home."

The Justice Department alleges KBR made claims it knew to be false under a contract with the Army to provide wartime logistical support, known as the Logistics Civil Augmentation Program, or LOGCAP, III. The award enabled KBR -- an engineering, construction and services firm -- to become a critical source for logistical support services in Iraq, which included transportation, maintenance, food, shelter and facilities management.

KBR performed many of these services through sub-contracts awarded to foreign companies, such as La Nouvelle and First Kuwaiti, prosecutors said.

KBR employees took kickbacks in 2003 and 2004 from La Nouvelle and First Kuwaiti in connection with the award and oversight of sub-contracts awarded to these companies, the Justice Department said in its complaint. KBR then claimed reimbursement from the government for costs incurred under the sub-contracts that allegedly were inflated, excessive or for goods and services that were grossly deficient or not provided."

The complaint said KBR awarded La Nouvelle a sub-contract to supply fuel tankers for more than three times the tankers' value. La Nouvelle later rewarded the KBR employee who awarded the sub-contract with a $1 million bank draft. It said KBR continued to make monthly lease payments to First Kuwaiti for trucks KBR had already returned to the sub-contractor.

KBR billed the government for the costs of both sub-contracts.

The lawsuit alleges refrigerated trailers KBR used to transport ice for consumption by troops had previously been used as temporary morgues and had not been sanitized.

"Our office investigated the actions of KBR and related companies, as well as certain KBR employees," said U.S. Attorney for the Central District of Illinois Jim Lewis. "We were able to obtain criminal convictions against several sub-contract managers whose actions were illegal and caused damage to our military, and we are now committed to pursue these civil claims against the companies themselves."

The government is suing KBR, La Nouvelle and First Kuwaiti under the False Claims Act, as well as the Anti-Kickback Act.

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