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KBR Accused of Kickbacks and False Claims in Iraq

ROCK ISLAND, Ill. (CN) - Federal prosecutors accuse Kellogg, Brown & Root Services of filing false claims for work in Iraq.

The United States sued Houston-based KBR, Kuwait-based La Nouvelle General Trading & Contracting Company and First Kuwaiti Trading Co.

Uncle Sam claims KBR made knowingly false claims to the government under a contract with the Army to provide wartime logistical support, known as the Logistics Civil Augmentation Program (LOGCAP) III.

"We depend on companies like KBR and its subcontractors to provide valuable services to our military," said Stuart F. Delery, assistant attorney general for the Justice Department's Civil Division, in a statement. "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."

KBR provided support services in Iraq, including transportation, maintenance, food, shelter and facilities management. KBR routinely used subcontractors, such as La Nouvelle and First Kuwaiti, to do these services.

Prosecutors claim KBR employees took kickbacks from La Nouvelle and First Kuwaiti in 2003 and 2004 for subcontracts awarded to them. KBR then claimed reimbursement from the government for costs it incurred under the subcontracts that were inflated, excessive or for goods and services that were grossly deficient or not provided at all.

"Our office investigated the actions of KBR and related companies, as well as certain KBR employees," said Jim Lewis, U.S. attorney for the Central District of Illinois.

"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."

Ten companies or people have been convicted on fraud charges for wartime contracts in Iraq.

Anthony J. Martin pleaded guilty in 2007 to taking kickbacks for awarding First Kuwaiti subcontracts for trucks and trailers, and admitted including the kickbacks in the price of the subcontracts.

In 2005, Jeff Alex Mazon pleaded guilty to making a false statement in connection with a subcontract for fuel tankers awarded to La Nouvelle in 2003.

Stephen Lowell Seamans admitted taking kickbacks from La Nouvelle in 2006, during a guilty plea to a kickback arrangement with another subcontractor, Saudi Arabia-based Tamimi Global Co. Ltd.

The government entered into criminal and civil agreements with Tamimi under which Tamimi paid the U.S. government $13 million, including $7.4 million for civil claims and $5.6 million in criminal fines, to resolve its liability for the kickbacks.

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