[SeMissourian.com] Overcast ~ 44°F  
Wind Advisory
Monday, Nov. 24, 2014

Kuwaiti builder of U.S. embassy in Baghdad accused of paying kickbacks

Friday, September 21, 2007

WASHINGTON -- The Kuwaiti company building the U.S. embassy in Baghdad has been accused of agreeing to pay $200,000 in kickbacks in return for two unrelated Army contracts in Iraq.

The scheme, outlined in a now-sealed court document obtained by The Associated Press, allegedly involved First Kuwaiti General Trading & Contracting and a manager for Kellogg Brown & Root Inc. or KBR, a firm hired to handle logistics for the military in Iraq and Afghanistan.

The document summarizes grand jury testimony from former KBR manager Anthony J. Martin, who pleaded guilty in July to taking kickbacks in 2003.

Although the government has tried to keep First Kuwaiti's name out of public records related to Martin's case, details from his testimony were found by a defense lawyer, J. Scott Arthur of Orland Park, Ill., who included a summary in a six-page document filed last Friday in an unrelated federal court case in Rock Island, Ill. The AP downloaded a copy of the document from the court's Web site shortly before a judge ordered the document sealed and removed from public record.

Questions about the company come amid growing concerns about contractors in Iraq and Afghanistan, and claims that the State Department's inspector general has been reluctant to help investigations into alleged fraud.

The document filed by defense attorney Arthur of Orland Park, Ill., seeks more information from the government about the alleged conspiracy between Martin and First Kuwaiti. Arthur contends the government is improperly withholding evidence about Martin and his allegedly criminal relationship with the company through Al Absi.

According to the court document, Martin testified to a federal grand jury that he engaged in the kickback scheme with Lebanese businessman Wadih Al Absi, who controls First Kuwaiti General Trading & Contracting. The company is building the $592 million Baghdad embassy, the largest in the world with working space for about 1,000 people.

In a statement, First Kuwaiti said Martin's allegations are "without merit."

Questions about the company come amid growing concerns about contractors in Iraq and Afghanistan, and claims that the State Department's inspector general has been reluctant to help investigations into alleged fraud.

First Kuwaiti has done other work for the government, including jobs for the Army Corps of Engineers and the U.S. Marine Corps, according to the company's Web site. The company already is under scrutiny by Congress for its labor practices, and a State Department e-mail disclosed this week says the Justice Department is investigating First Kuwaiti for alleged contract fraud on the embassy project.

The document filed by defense attorney Arthur of Orland Park, Ill., seeks more information from the government about the alleged conspiracy between Martin and First Kuwaiti. Arthur contends the government is improperly withholding evidence about Martin and his allegedly criminal relationship with the company through Al Absi.

In the court filing, Arthur says that while preparing for his client's upcoming trial, he discovered the allegations about First Kuwaiti and Al Absi agreeing to pay kickbacks to Martin. Arthur said federal prosecutors accidentally disclosed Al Absi's name in heavily edited grand jury transcripts. Arthur now is demanding that prosecutors turn over all information about the company and Al Absi.

"Tony Martin's plea agreement, together with the inadvertent identification of Wadih and First Kuwaiti as coconspirators in an ongoing scheme to defraud the United States government entitles the defendant to know the exact scope of said conspiracy," Arthur's court filing stated.

Martin said in court documents that he agreed to receive kickbacks before awarding a $4.6 million contract to First Kuwaiti to supply 50 semi-tractors and 50 refrigeration trailers for six months. A month later, Martin awarded First Kuwaiti an additional $8.8 million subcontract to supply 150 semi-tractors for six months.

For his effort, Martin said, the company agreed to pay him $200,000. After he received an initial $10,000, he took a trip back to the United States. When he returned, he says he told the company he would not take any additional money.

The court filing says Martin's "criminal benefactor appears to have completely escaped responsibility for his misconduct and instead continues to profit from a cozy relationship with the government."

Martin was allowed to plead guilty to a single felony charge in exchange for his cooperation with prosecutors. The government plans to have him testify as a prosecution witness in a military contracting case against Arthur's client, a former KBR procurement manager, Jeff Alex Mazon.

First Kuwaiti strongly defended its work on the Baghdad embassy, saying it is particularly proud of completing the job within budget and on time "while constructing high-quality buildings -- an achievement competitors didn't think possible."

First Kuwaiti said all its contracts with the U.S. government have been awarded appropriately, that it has consistently provided more value than requested in support of the U.S. war effort in Iraq and elsewhere under extraordinarily difficult conditions.

Last January, the Justice Department asked the State Department inspector general to help look into allegations of misconduct by First Kuwaiti on the Baghdad embassy, according to a letter this week by Rep. Henry Waxman, D-Calif., chairman of the House Oversight and Government Reform Committee.

In July, contractors told Waxman's committee that First Kuwaiti used forced labor to build the embassy, which is to be completed this month. First Kuwaiti this week pointed to an investigation by Philippines officials, who have concluded that none of their citizens on the embassy project was forced to work.

Waxman's committee is investigating State Department Inspector General Howard Krongard for allegedly preventing his investigators from cooperating with the Justice Department probe. Krongard says he has tried to help other government agencies, noting that he made one of his best investigators available to federal prosecutors in North Carolina in a probe of alleged weapons smuggling into Iraq by a contractor.

An internal State Department e-mail disclosed by Waxman says the allegations regarding First Kuwaiti "are basically contract fraud and public corruption."

Halliburton, where Vice President Dick Cheney was CEO until 2000, has been selling off its interest in KBR for more than a year and completed the process five months ago. Four former KBR procurement employees have been charged or pleaded guilty in contracting fraud cases involving Army contracts. The Army awarded the multibillion-dollar logistical support to KBR after the Sept. 11 attacks.

KBR spokeswoman Heather Browne said the company brought two of the matters to the attention of federal investigators and the company "in no way condones or tolerates unethical behavior. We have fully cooperated with the Department of Justice."

The Justice Department says 29 people have been charged or convicted in procurement fraud cases involving Iraq, Afghanistan or Kuwait.


On the Net:

First Kuwaiti General Trading & Contracting: http://www.firstkuwaiti.com/

KBR: http://www.kbr.com/


Fact Check
See inaccurate information in this story?


Respond to this story

Posting a comment requires free registration. If you already have an account on seMissourian.com or semoball.com, enter your username and password below. Otherwise, click here to register.

Username:

Password:  (Forgot your password?)

Your comments:
Please be respectful of others and try to stay on topic.