DOJ Sues KBR, Two Kuwait Firms For Alleged Iraq Contract Kickbacks

The Dept. of Justice has filed a lawsuit against Kellogg, Brown & Root Services and two Kuwait-based companies, charging that they filed false claims and engaged in kickbacks related to a U.S. Army contract in Iraq a decade ago.

DOJ announced on Jan. 23 that it filed the complaint in U.S. District Court in Rock Island, Ill. The government alleged that in 2003 and 2004, Kellogg, Brown & Root (KBR) workers took kickbacks related to subcontracts that company had awarded to the two Kuwaiti firms—La Nouvelle General Trading & Contracting Co. and First Kuwaiti Trading Co.

Under the Army’s Logistics Civil Augmentation Program III contract, awarded to KBR in December 2001, the company—then a part of Halliburton Co.—provided such services as transportation, maintenance, shelter and facilities management to the military in Iraq.

The Justice Dept. also charged that KBR claimed reimbursements from the Army for allegedly inflated costs related to the subcontracts.

John A. Elolf, KBR Inc. supervisor of corporate communications, said in an emailed statement, “As this case was just filed, we are unable to comment on the U.S. government’s specific claims at this time.”

Jim Lewis, U.S. Attorney for the Central District of Illinois, said in a statement, “We were able to obtain criminal convictions against several subcontract 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.”

Lewis’s office has obtained convictions against 10 companies and individuals for actions related to contracts in Iraq. They include three KBR subcontract managers, who pleaded guilty in 2005, 2006 and 2007 to taking kickbacks or making a false statement related to subcontracts with La Nouvelle or First Kuwaiti.

KBR was part of Halliburton until 2007, when it was split off as a separate company, KBR Inc.

Halliburton had acquired Brown and Root in 1962. In 1998, Halliburton added the former M.W. Kellogg Co. when it acquired Kellogg’s parent, Dresser Industries Inc. Halliburton later combined the two engineering-construction operations into Kellogg Brown & Root.

Tom Ichniowski has been writing about the federal government as ENR’s Washington Bureau Chief since the George H.W. Bush administration, and he has covered at least five major highway bills. A recognized expert on government policy on infrastructure and regulation, Tom is also a Baltimore native and Orioles fan who grew up rooting for Brooks and Frank Robinson. He is a graduate of Columbia College and Columbia’s graduate school of journalism, where he once used “unrelentless” in a headline.

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