A whistleblower complaint has prompted the U.S. government to sue a Houston, Texas-based Army contractor and two Kuwaiti companies for submitting false claims in connection with the logistical support they were contracted to provide for U.S. Army operations in Iraq.
The case names Kellogg, Brown & Root Services Inc. (KBR), an engineering and construction firm, and two Kuwait-based companies, La Nouvelle General Trading & Contracting Co. (La Nouvelle) and First Kuwaiti Trading Company (First Kuwaiti), which KBR subcontracted to provide transportation, maintenance and other services for its work in Iraq.
The U.S. alleges that KBR knowingly made false claims to the government while under contract with the Army to provide wartime logistical support known as the Logistics Civil Augmentation Program (LOGCAP) III. That support involved managing transportation, maintenance, food, shelter, and other operations for the Army. KBR in turn awarded subcontracts to La Nouvelle, First Kuwaiti and other regional companies.
The government’s lawsuit alleges that KBR employees took kickbacks from La Nouvelle and First Kuwaiti in exchange for subcontract award and oversight those companies received. KBR then sought reimbursement from the U.S. for costs it incurred from the subcontractors, but those claims were allegedly inflated, excessive, or for goods and services that were either “grossly deficient” or not provided at all.
For example, one KBR employee received a $1 million bank draft from La Nouvelle after awarding that company a subcontract to provide fuel tankers at a cost three times their value. KBR also continued to make monthly lease payments to First Kuwaiti for trucks that had already been returned to the subcontractor. KBR then billed the government for the cost of those trucks after they had been returned.
The lawsuit also alleges that KBR knowingly transported ice for Army soldiers’ consumption in trailers that had been used as temporary morgues and had never been sanitized.
“We depend on companies like KBR and its subcontractors to provide valuable services to our military,” said Assistant U.S. Attorney General Stuart 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.”
Many of the allegations contained in the federal government’s complaint were originally contained in a qui tam or whistleblower lawsuit filed by Bud Conyers in federal court in Houston. The case was later transferred to a federal court in Rock Island, Ill., where the Defense Department administers LOGCAPIII. The U.S. government chose to intervene in Mr. Conyers’ lawsuit, but the False Claims Act permits whistleblowers to proceed with the False Claims Act lawsuit whether or not the government becomes directly involved.
Additionally, the U.S. Attorney’s Office in Rock Island has convicted 10 companies and individuals in connection with wartime contracts in Iraq. Those convictions include three KBR subcontract managers who admitted taking kickbacks or making false statements in connection with the allegations made in the government’s complaint.