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KBR sued for kickbacks, false claims in Iraq subcontracts

The Department of Justice sued Kellogg, Brown & Root (KBR) Services Inc. Thursday for taking kickbacks from two subcontractors and filing false reimbursement claims with the government.

Houston-based KBR had a contract to provide logistical support to the U.S. Army in Iraq, including transportation, food and shelter.

The DOJ alleges in its civil complaint that in 2003 and 2004, KBR employees took kickbacks from two Kuwaiti subcontractors, La Nouvelle and First Kuwaiti. The subcontractors are are also charged in the suit.

KBR allegedly claimed reimbursement for services under the subconstracts that were 'grossly deficient or not provided,' the DOJ said.

The complaint alleges KBR inflated the value of fuel tankers provided by La Nouvelle, and a KBR employee took a kickback of a $1 million from the subcontractor. KBR also allegedly made monthly lease payments to First Kuwaiti for trucks that KBR had already returned to the subcontractor.

The DOJ complaint charges KBR with using refrigerated trailers to transport ice for consumption by the troops that had been used previously as temporary morgues without sanitizing them first.

The government is suing KBR, La Nouvelle and First Kuwaiti under the False Claims Act and the Anti-Kickback Act. The U.S. Attorney's Office in Rock Island, Ill., previously convicted 10 companies and individuals in connection with wartime contracts in Iraq, including three KBR employees.

In February 2009, KBR and its former parent Halliburton paid $579 million to resolve FCPA-related charges for bribery in Nigeria as part of the TSKJ consortium. That enforcement action is the second biggest FCPA case of all time.

Some of the government's allegations in the current case are based on a False Claims Act lawsuit filed in federal court by a whistleblower named Bud Conyers. Under U.S. law, he'll be entitled to share in any recovery the government makes in the case.

A copy of the DOJ's January 23, 2014 release is here.


Julie DiMauro is the executive editor of FCPA Blog and can be reached here.