US sues contractors over troop trailers in Iraq

Associated Press at The Blaze  November 20, 2012

The U.S. government has filed a civil lawsuit accusing a Houston-based global construction company and its Kuwaiti subcontractor of submitting nearly $50 million in inflated claims to install live-in trailers for troops during the Iraq War.

The lawsuit names KBR Inc. and First Kuwaiti Trading Co., alleging they overcharged for truck, driver and crane costs, and misrepresented delays in providing around 2,250 trailers meant to replace tents used by soldiers earlier in the invasion.

In one instance, the contractors allegedly claimed they paid $23,000 to lease one crane per month when the actual price was about $8,000, according to the lawsuit, which was filed this week in U.S. District Court in Rock Island, Ill., and first appeared in federal court records Tuesday.

KBR, once the engineering and construction arm of Halliburton, has faced lawsuits before related to its work in Iraq. One of the most prominent involved a soldier electrocuted in his barracks shower at an Army base. That case was eventually dismissed.

In the case involving the trailers, Jim Lewis, the U.S. Attorney for the Central District of Illinois, said “KBR and First Kuwaiti did not provide an honest accounting.”

Stuart Delery, a U.S. deputy assistant attorney general, said in a Department of Justice statement regarding the lawsuit that contractors “are not permitted to profit at the expense of the taxpayers at home who are supporting our men and women in uniform.”

Warlords, Inc./How Do You Handle 70,000 Unemployed Afghan PSC? Very Carefully

by David Isenberg at Huffington Post  November 13, 2012

David Isenberg is the author of the book Shadow Force: Private Security Contractors in Iraq and blogs at The PMSC Observer. He is a senior analyst at Wikistrat and a Navy veteran.

While it’s only one among many factors bedeviling Afghanistan, its substantial private-security contracting industry warrants attention. It’s made up of tens of thousands of Afghan employees, mostly armed guards.

Bear in mind that 2014 is the deadline for Afghanistan assuming responsibility for its own security. This is a date the whole world has an interest in because either Afghanistan will be a more or less stable country — or it will lapse back into the chaotic and destabilized state it was after the Soviets left in 1989.

We all recall how that turned out.

The Afghan government and the U.S.-led International Security Assistance Force (ISAF) are transferring private security company (PSC) operations to the Afghan Public Protection Force (APPF), a new Afghan government force.

But substantial uncertainty, to put it politely, and skepticism — to put it more bluntly – persists over APPF’s ability to handle the job. Even more importantly, how it plans to absorb the commanders and former fighters who currently provide the bulk of PSC workforces.

Please read the entire article here

$85 million awarded to 12 Oregon soldiers; KBR guilty of negligence, not fraud

Oregon Live  November 2, 1012

Oregon National Guard soldiers

A Portland jury found defense contractor KBR Inc. was negligent, but did not commit fraud against a dozen Oregon Army National Guard soldiers who sued the company for its conduct in Iraq nine years ago. Magistrate Judge Paul Papak announced the decision about 3:35 p.m. the U.S. Courthouse in Portland. Each soldier was awarded $850,000 in non-economic damages and $6.25 million in punitive damages.

“It’s a little bit of justice,” said Guard veteran Jason Arnold, moments after the verdict was announced Friday afternoon. Arnold was one of four of the soldier-plaintiffs in the courtroom was the verdict was read.

The verdict should send an important message to those who rely on military troops, he said.

“We’re not disposable,” said another soldier, Aaron St. Clair. “People are not going to make money from our blood.”

KBR’s lead attorney, Geoffrey Harrison, said the company will appeal.

“We will appeal the jury’s incorrect verdict,” he said. “We believe the trial court should have dismissed the case before the trial.”

Harrison said the soldiers’ lawyers produced a medical expert, Dr. Arch Carson, who offered “unsupported, untested medical opinions” that each soldier had suffered invisible, cellular-level injuries as a result of their exposure to hexavalent chromium.

The verdict means the jury did not hear clear and convincing evidence that KBR intended to deceive the soldiers in the way it operated at the Qarmat Ali water treatment plant, near Basra, Iraq. But they did find that the company failed to meet its obligations in managing the work at the plant.

Friday’s verdict closes the first phase of a web of litigation between National Guard and British troops against KBR Inc., the defense contractor they accuse of knowingly exposing them in 2003 to a carcinogen at Qarmat Ali. KBR has denied the accusations.

In Oregon another set of Oregon soldiers are waiting in the wings for their day in court. Magistrate Judge Paul Papak and the attorneys agreed earlier to hold an initial trial with the first 12 soldiers, in order to keep the proceedings from becoming too unwieldy. A second trial, featuring all or some of the remaining 21 plaintiffs, could begin in federal court in Portland this winter.

Another lawsuit brought by Indiana soldiers against KBR is on hold in federal court in Texas, while an appeals court considers a jurisdictional issue.

The cases stem from the chaotic aftermath of the U.S.-led invasion of Iraq in March 2003. The Army Corps of Engineers hired KBR Inc. to run a massive program called Restore Iraqi Oil. The program involved dozens of sites throughout Iraq — sites that neither the Army nor KBR had visited before the invasion. The project was intended to quickly restore the flow of Iraq’s oil, partly to fund the war. The Pentagon remembered the way Saddam Hussein had lit the fields on fire during the first Gulf War, and feared a repeat in 2003.

Qarmat Ali was a compound where water was pumped underground to drive oil to the surface elsewhere. For decades, Iraqis had treated the water with sodium dichromate, an anticorrosion agent that contains hexavalent chromium, a known carcinogen. (Sodium dichromate is banned in the United States.)

Iraq’s Southern Oil Co. took delivery of sodium dichromate, an orange-yellow crystalline powder, in bags that were stored on site. Soldiers and others testified that the material was loose and drifting around the site, and had contaminated areas even outside the chemical injection building where it was added to the water.

How contaminated was it? Accounts differ. Even one of the plaintiffs in this case said he didn’t notice any soil discoloration. One of the British soldiers whose testimony was prerecorded said it was everywhere. Another Oregon soldier said it settled heavily on the clothing of the soldiers, who unwittingly carried it back to their camps over the border in Kuwait.

Much of KBR’s defense in the first Oregon trial focused on just how unlikely it was that any soldier — who visited the plant at durations from one day to 21 days — could have been exposed to dangerously high levels of sodium dichromate. But one of the most gripping portions of the testimony was when Oregon veteran Larry Roberta described eating a chicken patty that had been coated with the orange crystals, which he said immediately burned in his esophagus, causing him to vomit.

Roberta now is confined to a wheelchair and takes oxygen from a tank in his backpack. He had a history of gastrointestinal issues, but attributes much of his poor health to his time at Qarmat Ali.

Harrison, KBR’s lawyer, said the company “believes in the judicial process and respects the efforts and time of the jurors,” but believes the process that brought the case to conclusion Friday shouldn’t have been allowed to come so far.

“KBR did safe and exceptional work in Iraq under difficult circumstances,” he said in a brief, prepared statement. “We believe the facts and law ultimately will provide vindication.”

Soldier-plaintiff Arnold said the message of the verdict is unmistakable. He said service members are being exploited “to this day.”

Now, he said, “the voice will be out. There will be a lot more scrutiny.”

As Iraq, Afghan wars end, private security firms adapt

Rueters October 21, 2012

* Iraq, Afghan withdrawal may mean leaner times for contractors

* Shift to guarding private sector’s oil fields and mines

* Some see big shakeout in private security industry

* U.N. member states wary of private security forces

By Peter Apps, Political Risk Correspondent

WASHINGTON, Oct 21 (Reuters) – On a rooftop terrace blocks from the White House, a collection of former soldiers and intelligence officers, executives and contractors drink to the international private security industry.

The past decade – particularly the U.S.-led wars in Iraq and Afghanistan – provided rich pickings for firms providing private armed guards, drivers and other services that would once have been performed by uniformed soldiers.

But as the conflicts that helped create the modern industry wind down, firms are having to adapt to survive. They must also, industry insiders say, work to banish the controversial image of mercenary “dogs of war” that bedevil many firms, particularly in Iraq.

“This industry has always gone up and down,” Doug Brooks, president of the International Stability Operations Association (ISOA), told Reuters on the sidelines of its annual conference in Washington. “What we’re seeing now is that it is becoming much more mature – and much more responsible.”

The free-for-all atmosphere that pervaded the industry, particularly in the early years of the war in Iraq, insiders say, appears gone for good. A string of high profile incidents – often involving armed private guards firing on sometimes unarmed Iraqis – trashed the reputation of firms such as Blackwater, a Virginia-based firm since renamed several times, as well as the wider industry.

Members of the ISOA – which include some but not all of the major contracting firms as well as smaller players – subscribe to a code of conduct that they say helps identify responsible firms.

Despite these efforts, industry insiders and other observers say quality remains mixed. Some firms providing armed guards for merchant ships passing through the Somali pirate-infested Indian Ocean, for example, only hire elite personnel who have served in the Marines or special forces. Others, however, have a reputation for being less discriminating and for unreliable staff and weapons.

Please read the entire article here

Goldman Sachs downgrades G4S

StockMarketWire.com  September 27, 2012

Goldman Sachs downgrades G4S from sell to conviction sell, target price cut from 264p to 231p

War Profiteer of the Month-G4S

30 Aug 2012 — javier at War Resistors International

G4S plc (formerly Group 4 Securicor) is a British multinational security services company headquartered in Crawley, United Kingdom. It is the world’s largest security company measured by revenues and has operations in around 125 countries. G4S was founded in 2004 by the merger of the UK-based Securicor plc with the Denmark-based Group 4 Falck.

In 2004 G4S bought private military and security company (PMSC) ArmorGroup and in doing so joined the shadowy world of privatised war. PMSCs have been accused of profiting from war, conflict, and political instability at the expense of security and human rights.

The British government has already played a large role in the growth of this industry by endorsing its widespread use in Iraq and Afghanistan. In the three years 2007-2009 the industry earned £62.8 million in contracts from the UK government. Almost all of the Foreign Office’s contracts have gone to ArmorGroup, now part of G4S. In June this year, defence secretary Philip Hammond, announced 30,000 Army jobs would go amid spending cuts, citing the need to use “more systematically the skills available in the reserve and from our contractors”.

Please read the history of G4S and more here

The Invisible Foreign Subcontractor

David Isenberg at Huffington Post  August 16, 2012

See also Davids blog Institute of Strategic Satire

Last year I wrote a report for the Project on Government Oversight about and subsequently testified to Congress, regarding a Kuwaiti-based KBR subcontractor which had exploited hundreds of third-country nationals (TCN) coming from various South Asian countries.

Some of the subsequent press coverage criticized KBR, but that missed the point. Sure, in several respect KBR could have done much better, but at least it held special inspections documenting atrocious living conditions and threatened to cut off awards to the subcontractor.

But the real story is how little information the U.S. government has over the operations of foreign subcontractors. As I noted in my congressional testimony:

Subcontracting is among the most challenging parts of the U.S. government’s widespread outsourcing of war-related tasks. It works like this: A government agency – most likely the Defense Department, State Department, or U.S. Agency for International Development – will award work to a “prime” contractor. That prime contractor, usually a large American company like Kellogg, Brown and Root (KBR) or DynCorp International, will often subcontract some or even a majority of its work to other companies, including foreign-owned firms. Those subcontractors sometimes then turn around and subcontract part of the work, and so on.…

But in footing the bill for all this work by a network of companies, the U.S. government often doesn’t know who it is ultimately paying. And that can lead to fraud, shoddy work, or even taxpayer funds ending up in the hands of enemy fighters.

For more detail the article “Limitations Of the Contingency Contracting Framework: Finding Effective Ways To Police Foreign Subcontractors In Iraq And Afghanistan” by Carissa N. Tyler in the Winter 2012 issue of the Public Contract Law Journal provides some valuable detail on the scope of this problem. For example, “Subcontractors are responsible for approximately seventy percent of the work of prime contractors; however, the Government has extremely limited visibility into these subcontractors’ operations. U.S. taxpayer dollars are at risk because U.S. agencies cannot directly police foreign subcontractors. ”

Please read the entire article here

State Department in Bed with Blackwater

Blackwater acted under auspices of US government’

ACADEMI / BLACKWATER CHARGED AND ENTERS DEFERRED PROSECUTION AGREEMENT

TUESDAY, AUGUST 7, 2012  FBI Version

_WWW.JUSTICE.GOV/USAO/NCE/ <http://WWW.JUSTICE.GOV/USAO/NCE/>_

*_ACADEMI / BLACKWATER CHARGED AND ENTERS_*

*_DEFERRED PROSECUTION AGREEMENT_*__

RALEIGH, N.C. — U.S. Attorney Thomas G. Walker announced the unsealingof a bill of information and deferred prosecution agreement (DPA) involving Academi LLC, formerly known as Blackwater Worldwide and Xe Services, LLC (Academi / Blackwater). The bill of information and DPA were unsealed today in U.S. District Court in New Bern, N.C., during proceedings before the Honorable Louise W. Flanagan, U.S. District Judge. In the agreement, the company admits certain facts set forth in a bill of information and agrees to a $7.5 million fine. The agreement also acknowledges and references a $42 million settlement between the company and the Department of State as part of a settlement of
violations of the Arms Export Control Act and the International Trafficking in Arms Regulations.

“Today’s proceedings conclude a lengthy and complex investigation into a company which has provided valuable services to the United States Government, but which, at times, and in many ways, failed to comply with important laws and regulations concerning how we as a country interact with our international allies and adversaries,” said U.S. Attorney Walker. “Compliance with these laws is critical to the proper conduct of our defense efforts and to international diplomatic relations. This prosecution is an important step to ensuring that our corporate citizens comply with these rules in every circumstance.”

IRS-Criminal Investigation Special Agent in Charge Jeannine A. Hammett stated, “High-ranking corporate officials hold positions of trust not only in their companies but also in the eyes of the public. That trust is broken when such officials abuse their power and commit crimes to line their own pockets. An international fraud of this magnitude requires a coordinated effort among law enforcement agencies to stop those involved from profiting from their wrongdoing.”

“Compliance with the firearms laws of the United States in both domestic and international commerce is essential to maintaining order and accountability,” stated ATF Special Agent in Charge Wayne L. Dixie. “Whether it is an individual or a corporation, we will enforce the provisions of the federal gun laws equally. If violations are discovered, we will move to hold those responsible for the violations accountable for their actions.”

“Blackwater profited substantially from Department of Defense (DoD) contracts in support of overseas contingency operations over the past decade,” commented Special Agent in Charge John F. Khin, Southeast Field Office, Defense Criminal Investigative Service (DCIS). “This investigation showed that no contractor is above the law, and that all who do business with the DoD will be held accountable. With this agreement, Blackwater acknowledged their wrongdoing, and took steps to remedy and mitigate the damage they caused to the United States and the public trust.”

“For an extended period of time, Academi / Blackwater operated in a manner which demonstrated systemic disregard for U.S. Government laws and regulations. Today’s announcement should serve as a warning to others that allegations of wrongdoing will be aggressively investigated,” said Chris Briese, Special Agent in Charge of the Charlotte Division of the FBI.

“This company clearly violated U.S. laws by exporting sensitive technical data and unauthorized defense services to a host of countries around the world,” said Brock D. Nicholson, Special Agent in Charge of U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) Atlanta. “In doing so, company employees were frequently in possession of illegal firearms and aided other foreign nationals in the acquisition of illegal firearms. HSI is proud to have played a role in assisting the investigation to call this company to account for its actions.” Nicholson oversees HSI activities in Georgia and the Carolinas.

See BILL OF INFORMATION

Blackwater admits to facts behind 17 federal charges

By JOSH GERSTEIN  Politico  August 7, 2012

The government security contractor formerly known as Blackwater Worldwide has admitted to the key facts behind 17 federal criminal charges, including illegal exports and unauthorized possession of automatic weapons, as part of an effort to end a long-running investigation into the firm’s conduct.

Blackwater, now known as Academi LLC, agreed to pay a $7.5 million fine on top of a $42 million settlement it reached earlier regarding civil arms export violations.

“Today’s proceedings conclude a lengthy and complex investigation into a company which has provided valuable services to the United States Government, but which, at times, and in many ways, failed to comply with important laws and regulations concerning how we as a country interact with our international allies and adversaries,” U.S. Attorney Thomas Walker said in a statement. “Compliance with these laws is critical to the proper conduct of our defense efforts and to international diplomatic relations. This prosecution is an important step to ensuring that our corporate citizens comply with these rules in every circumstance.”

Some of the charges relate to Blackwater’s possession of machine guns at a training compound in North Carolina.

“ACADEMI is pleased to reach this important agreement on this legacy matter. It is yet another step in our commitment to fairly resolve past issues and become the industry leader in governance, compliance, and regulatory matters,” Academi spokesman John Procter said in a statement. “The agreement, which does not involve any guilty plea or admit to any violations, reflects the significant and tangible efforts that ACADEMI’s new ownership and leadership team have made in achieving that goal. The company is fully committed to this agreement and looks forward to successfully fulfilling its obligations on this legacy matter.”

More on the company’s deferred prosecution agreement here from the Associated Press.

Please see the original and read more here

The Department of Labor and Supreme Group, A Cover Up?

In the second quarter of 2010 The Department of Labor reports that the Supreme Group had 192 employee death claims filed

http://www.dol.gov/owcp/dlhwc/dbaallemployer6-30-10.htm

The Supreme Group shows no prior death claims filed dating back to September of 2001.

While no single insurer shows death claims filed amounting to this number for this time period

CNA shows 46 death claims filed

Zurich shows 105 death claims filed

And the DoL lists 103 death claims to an uninsured employer (there were previously none listed)

http://www.dol.gov/owcp/dlhwc/dbaallcarrier6-30-10.htm

See Also Failure to Secure DBA Coverage, Failure to Report Claims

.

We filed FOIA’s on February 22, 2012 and again on March 8, 2012

Which included the following:

    1.    Any and all complaints, statements, or reports to U.S. Dept. of Labor (DoL) concerning the activities of Supreme Group, Supreme Food Service, and their subcontractors

    2.    Any and all letters, reports, e mail, memoranda or other record showing communications with people regarding the activities of and/or the filing of DBA claims by Supreme Group, Supreme Food Service, and their subcontractors

             3.        Any and all report(s) of investigation or other memoranda or record concerning results of investigation conducted by DoL or any person working for DoL concerning the activities of  and/or the filing of DBA claims by Supreme Group, Supreme Food Services, and their subcontractors

.

We understand that when filing FOIA requests they must be worded properly

But are we to believe that there were 192 Death Claims filed in one quarter by one company and that during this same quarter over 100 Death Claims were filed to an uninsured employer,

AND NO ONE HAD ANYTHING TO SAY ABOUT IT AT THE DEPARTMENT OF LABOR?

Army bars Leonie Industries co-owner from contracts

USA Today  June 20, 2012

WASHINGTON – The Army has suspended the co-owner of the military’s top propaganda firm in Afghanistan from receiving federal contracts after revelations about the owners’ tax debts and the admission by one owner that he launched an online campaign against journalists, according to government documents.

Rep. Hank Johnson, D-Ga., who is on the Armed Services Committee, asked Defense Secretary Leon Panetta on Tuesday to expand the Pentagon investigations into Leonie Industries. In a letter, Johnson cited allegations that the company may have misrepresented its finances while bidding for federal contracts and had started an online smear campaign directed against two USA TODAY journalists.

Please see the original and read more here

Pentagon probes contractor’s taxes, treatment of Afghan workers

USA Today June 11, 2012

WASHINGTON – Pentagon criminal investigators have launched a full probe into the military’s top propaganda contractor in Afghanistan regarding taxes paid by its owners and treatment of its Afghan employees, according to a letter obtained by USA TODAY.

The paper revealed in February that the owners of Leonie Industries had owed more than $4 million in back taxes to the federal government. That debt was settled in March, federal records show. The company has received at least $120 million in Pentagon contracts since 2009.

Rep. John Tierney, a Massachusetts Democrat and a senior member of the oversight committee, requested the Pentagon Inspector General investigation of Leonie in March. He praised the Defense Criminal Investigative Service‘s decision to move beyond its initial inquiry and launched a more formal investigation.

Please see the original and read the entire story here

The Price of Sacrifice

The government decided that contractors are eligible for public honor as civilians, through awards such as the Defense of Freedom Medal. This is described as the “civilian equivalent” of a Purple Heart, as both require the recipient to have been injured or killed. But the contractor is honored as victim; not hero.

While this Medal is available the majority of injured contractors will not receive it

Defense of Freedom Medal Held Hostage by the Defense Base Act

David Isenberg at Huffington Post  May 24, 2012

Please see David’s blog  The Isenberg Institute of Strategic Satire

How should one recognize an act on the battlefield that gets you wounded? If you are a soldier, marine, sailor or airman the answer is easy; you get a Purple Heart. That medal, originally created by General George Washington, is awarded to U.S. soldiers wounded by the enemy in combat. It was ordered by the Continental Congress to stop giving commissions or promotions, since the Congress could not afford the extra pay these entailed, so Washington drew up orders for a Badge of Military Merit made of purple cloth. In 1782 he directed that “whenever any singularly meritorious action is performed, the author of it shall be permitted to wear on his facings, over his left breast, the figure of a heart in purple cloth or silk edged with narrow lace or binding.”

In short, Washington gave cloth because he could not give money. But if you are a private contractor and you get wounded you don’t get a Purple Heart. You, hopefully, will get medical care and benefits which your employer is required, at least theoretically, to provide under the Defense Base Act.

To Mateo Taussig-Rubbo, a professor at the State University of New York, Buffalo Law School this raises the question as to whether they are forms of value which can be substituted one for the other.

In an essay he wrote, “Value of Valor: Money, Medals and Military Labor,” published earlier this year he explores the divide between money and medals. This raises interesting questions about motivation.

Please read the entire post here

Judge Denies Blackwaters Motion for Arbitration

Law Offices of Scott J Bloch  May 23, 2012

WASHINGTON, DC (May 23, 2012) – Blackwater Industries, which changed its name to Xe Services, and now has changed it yet again to Academi LLC, lost its initial bid to have the $240 million suit for employee misclassification sent to arbitration and dismissed from federal court in Washington, D.C.

Scott Bloch filed an amended complaint (see link above) in the class action lawsuit on behalf of four former security specialists, who were injured while working for Blackwater, in order to recover their payment of social security, unemployment insurance, and unpaid benefits and state and local withholding and unemployment insurance, and other unspecified damages. The action seeks $240,000,000 in damages for lost benefits, overtime, treble damages and punitive damages, as well as additional amounts as proved for the class of specialists.

The court has rejected that motion filed by Blackwater and required it to file another motion to determine if the same Plaintiffs agreed to have an arbitrator determine if the agreements were unconscionable, procured by duress, fraud and undue influence.

“Blackwater acted illegally and unconscionably toward these brave individuals,” said Bloch. ”Through their fraud as pointed out in the Amended Complaint, they avoided overtime for security workers who worked sometimes 12-16 hours a day 6 days a week. They were forced to sign agreements they never read and were not given time to read and not given copies, which took away valuable rights and were unlawful in their terms. Now the court has rejected their initial motion and required Blackwater to seek the same relief if they can prove that the Plaintiffs who never were allowed to read the original agreements agreed to have an arbitrator determine whether they properly agreed to anything. We continue to assert the illegality of the agreements and the actions of Blackwater.”

Read Xe’s Arbitration Bid Denied in Misclassification Suit here.