Privilege Denied in Suit Over Halliburton Billing

WASHINGTON (CN) - Attorney-client privilege will not let Halliburton withhold documents as it denies inflating construction costs of laundry rooms for at least three U.S. military bases in Iraq, a federal judge ruled.

Henry Barko sued the oil company and its former subsidiary, KBR, previously known as Kellogg Brown & Root, in 2005 on behalf of the government.

As his False Claims Act case continued in 2010, U.S. District Judge Emmet Sullivan agreed to a protective order that lets Halliburton withhold 89 requested documents to avoid disclosing trade secrets.

U.S. District Court Judge James Gwin vacated that order this past July, however, and on Monday refused to grant an interim appeal, a stay or a seal in light of Halliburton's concerns about attorney-client privilege.

Though "KBR's fear of producing the documents is understandable," such documents are not protected because "in none of the documents is legal advice requested or offered," according to the ruling.

"The only privacy interests at issue appear to be an interest in secrecy for secrecy's sake or KBR's embarrassment that its internal investigation raised major suggestions of bribery, raised major questions whether KBR employees were steering contracts to favored contractors, raised major questions whether KBR improperly approved change orders that sometimes doubled the cost of agreed contracts, and raised major questions why additional contracts were given to contractors who had miserably failed to complete earlier work," he wrote.

Barko claims that a contract structure gave KBR incentives to increase the costs of operations by 3 percent. KBR also allegedly manipulated the process to ensure that KBR's subcontractors, Daoud & Partners, "was either the only bidder or the lowest bidder on numerous projects."

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