The NewStandard ceased publishing on April 27, 2007.

KBRâ€TMs Violations Run Deeper, Wider

by Shreema Mehta

Dec. 4, 2006 – With millions of dollars in alleged contract abuse, former Halliburton subsidiary KBR has become a symbol of the rampant corporate fraud driven by the Iraq war. But a settlement announced last week by the US Justice Department reveals that KBR’s malfeasance began long before "shock and awe" hit Baghdad.

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The Department of Justice (DoJ) announced Wednesday that it had reached an $8 million settlement with KBR over allegations that the company overcharged the US Army for support services provided during operations in the Balkans in 1999 and 2000. According to a DoJ statement, KBR continues to provide services to the military in the region.

The Justice Department would not reveal how much KBR, a construction and engineering company, was originally accused of overcharging.

"The Department of Justice remains committed to vigorously pursuing allegations of procurement abuses affecting the military," Peter D. Keisler, an assistant attorney general, said in a statement announcing the settlement.

According to the settlement, in return for paying the government $8 million, KBR will admit no wrongdoing.

"The government is short on resources and – quite frankly – enthusiasm," Patrick Burns, a spokesperson for Taxpayers Against Fraud, told The NewStandard "So why is the government going back to the same people that lie, cheat and steal? Part of it is politics. Part of it is a finite number of contractors."

A Justice Department spokesperson declined to comment on the settlement.

While the government was taking six years to conclude the Bosnia case, KBR and its former parent company Halliburton went on to win lucrative contracts related to the Iraq war, and to again allegedly overcharge taxpayers for services. KBR, formerly Kellogg Brown & Root, announced its separation from Halliburton last month.

The Justice Department is currently investigating Halliburton for wasteful or fraudulent Iraq contracts, and has indicted two company officials for billing the army $5.5 million instead of the $685,000 they should have charged.

Additionally, defense audits have found that KBR proposed an unreasonable charge for importing and distributing fuel products in Iraq in 2004, uncovering more than $109 million in questionable costs. In one instance, an audit found that KBR proposed a charge of more than $27.5 million to transport about $82,000 worth of fuel and that KBR lacks formal billing procedures, which disables the company from controlling incidents of double billing or overcharging. The audits have also found that KBR failed to notify contracting officers of overpayments, and that it charged "unallowable" costs on some contracts.

"The amount of money that’s been Hoovered out of the American people has been jaw dropping," Burns said.

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The NewStandard ceased publishing on April 27, 2007.


Shreema Mehta is a staff journalist.

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