MANHATTAN (CN) – After a federal jury convicted an Army captain of corruption with military contractors in Iraq, an attorney who has spent years on such cases said that such prosecutions are rare – and much needed. “For several years, we were very worried because we just saw a complete lack of any sort of fraud prosecution against defense contractors,” Susan Burke said.
“Given the dollars being spent on both these wars, it’s imperative for the United States to continue to root out fraud,” Burke added.
Burke, who has specialized in cases involving misconduct by contractors and military personnel, has represented victims of torture, abuse and murder at Abu Ghraib prison and Nisour Square in Iraq.
Last year, her Iraqi clients settled seven civil lawsuits alleging “senseless slaughter” by guards of the company formerly known as Blackwater, now operating under the name Xe.
Burke says she still has three active lawsuits against defense contractors CACI and L-3, on behalf of Iraqis who say they were tortured at detention centers in Iraq.
She also has an active suit against Blackwater founder Erik Prince and his entities, on behalf of a married couple who used to work for him. The husband and wife Burke represents sued under the False Claims Act, which allows whistleblowers to sue contractors on behalf of the federal government for fraud.
Burke spoke to Courthouse News after Army Capt. Bryant Williams was convicted of corruption in December. Williams was on active duty at the time.
Burke said she has been trying for years to get the federal government to pursue cases against defense corruption cases more aggressively – to little avail.
“We’ve been following, essentially, the lack of actions by the Department of Justice with regard to the torture issues,” Burke said, “and we keep an eye on the federal prosecutions against defense contractors on the fraud issue.”
The Uniform Code of Military Justice prevents the military from prosecuting corporate employees, leaving the Department of Justice the exclusive authority to prosecute crimes by military contractors, Burke said.
Richmond, VA–Lawyers for the American Civil Liberties Union will present oral arguments in the Fourth Circuit Court of Appeals tomorrow in a lawsuit challenging the overreaching secrecy provisions of a federal whistleblower law that prevents the public from learning about serious allegations of fraud against the United States government.
Complaints filed under the False Claims Act are automatically placed under seal and those who file them are gagged from speaking, keeping the complaints secret from the public for months and, in some cases, years.
Such complaints include allegations of military contractor fraud during the Iraq War and warnings of ongoing threats to public health and safety.
The ACLU and the ACLU of Virginia filed suit in U.S. District Court in Alexandria in January 2009 on behalf of themselves, the Government Accountability Project (GAP) and OMB Watch. The government filed a motion to dismiss, which was heard in June 2009. In August 2009, the district court granted the government’s motion. The ACLU then appealed to the Fourth Circuit.
The case is ACLU v. Mukasey. Attorneys on the case are Chris Hansen and Ben Wizner of the ACLU and Rebecca Glenberg of the ACLU of Virginia.
The ACLU’s appellate briefs are available at http://acluva.org/wp-content/uploads/2010/09/4th-circuit-opening-brief.pdf and http://acluva.org/wp-content/uploads/2010/09/Reply-Brief-for-Appellants-ACLU-v.-Holder-2010.2.9.pdf. The district court complaint is available at http://www.aclu.org/free-speech/aclu-et-al-v-mukasey-et-al-complaint.
Agility, a Kuwait-based multi-billion-dollar logistics company spawned by the U.S. invasion of Iraq, is scheduled to be arraigned on Feb. 8 on criminal charges of overbilling U.S. taxpayers for food supply contracts in the Iraq war zone that were worth more than $8.5 billion.
If the lawsuit is successful, the company could owe the U.S. government as much as $1 billion.
Originally known as Public Warehousing Corporation (PWC), Agility boasts that it once supplied one million meals a day to U.S. soldiers and contractors in the Middle East. The company’s Mercedes trucks hauled delicacies, from ice cream to lobster tails, to feed soldiers living on military bases scattered throughout Iraq.
Today, it has new contracts to provide food to the U.S. Agency for International Development (USAID) in Djibouti in the Horn of Africa and – until about a month ago – was supposed to ramp up food delivery to the troops newly posted in southern Afghanistan.
In a lawsuit filed on Nov. 18, 2005, Kamal Mustafa al-Sultan accuses Agility of cheating him of a share of profits from the lucrative contract because he refused to go along with alleged corruption. A former business partner of PWC/Agility, Sultan is a cousin of the company founder and CEO, Tarek Abdul Aziz Sultan al-Essa.
After conducting a grand jury investigation, the U.S. Department of Justice (DoJ) joined Kamal Sultan and filed criminal charges against PWC/Agility on Nov. 9, 2009, immediately boosting the original lawsuit’s chances of success.
“We will not tolerate fraudulent practices from those tasked with providing the highest quality support to the men and women who serve in our armed forces,” said Tony West, assistant attorney general for the District Court for the Northern District of Georgia, in a press release.
“As this case illustrates, the Department of Justice will investigate and pursue allegations of fraud against contractors and subcontractors, whether they are foreign or domestic,” he said.
Joint Venture Leads to Falling Out
PWC was part of the Sultan family’s business empire that is grounded in high-end supermarkets and mega-stores across the Middle East. Starting in the late 1990s, Tarek Sultan teamed up with ex-U.S. soldiers to bid on lucrative U.S. government projects.
PWC’s first major contract, initially advertised in May 2002, was for a U.S. Defense Supply Center called Prime Vendor Subsistence to supply food eaten on U.S. military bases in the Middle East in anticipation of the invasion of Iraq. (Halliburton/KBR cooks and serves the food, but it does not supply it.)
At the time, Tarek Sultan had no experience in food supply, nor did he have a personal track record with the U.S. military – a requirement for bidding on the contract. However, KMSCO – run by his cousin, Kamal Sultan – had multi-million-dollar U.S. military contracts dating back to 1996 for “life support, food supplements, and ice.”
In a January 2007 interview with IPS, Kamal Sultan says he agreed to create a joint venture with Tarek in June 2002 to provide PWC with the qualifications to bid.
A year later in May 2003, PWC won the initial Prime Vendor contract. Soon after that, Kamal Sultan alleges, PWC officials asked him to take part in a scheme to defraud the military. When Kamal refused, Tarek Sultan dropped KMSCO from the contract, thus depriving Kamal Sultan of his expected 30 percent profit share.
Over the next four years, the two men waged a series of legal battles in Kuwaiti courts, with each side alternately gaining the legal upper hand.
Supporters and Critics
The company has powerful supporters in the U.S. military. Its brochures quote Gen. David Petraeus, now the head of U.S. Central Command: “Agility has performed a miracle across Iraq.”
Some see less a miracle and more profiteering. Rory Mayberry, a Halliburton/KBR food production manager for a dining facility at Camp Anaconda, testified before Congress in June 2005: “For example, tomatoes cost about $5 a box locally, but the PWC price was $13 to $15 per box. The local price for a 15-pound box of bacon was $12, compared to PWC’s price of $80 per box.”
“PWC charged a lot for transportation because they brought the food from Philadelphia,” he said.
“They get options, privileges, that no one else can get, because they used to be part of the [Kuwaiti] government,” says Saad Salem al-Qattan, a Kuwaiti businessman who owns al-Rakeb Company Petroleum Electricity & Construction Services (RAPICO), which is involved in a land dispute with PWC/Agility.
Asked about the U.S. military contracts, he shrugs: “They [PWC/Agility] are greedy, and the [U.S.] military doesn’t know where to go.”
Several lawsuits have been filed against the company. Beth Hanken, an Iowa businesswoman, sued PWC/Agility when she lost contracts to supply pork to the military. The case was dismissed. The only lawsuit that has stuck so far is Kamal Sultan’s 2005 charge against PWC and its top officials.
After the court unsealed the records in November 2009 when the DoJ joined Kamal Sultan’s lawsuit, PWC/Agility posted a statement on its Web site: “Kamal Mustafa Sultan, owner of Kamal Mustafa Sultan Company … has a long history of strong animosity toward PWC, its officers, and its employees.”
PWC/Agility added that Kamal has filed more than 40 court actions against PWC, its executives, and its employees in Kuwaiti courts, but that “all of the court actions have been unsuccessful.”
But whether or not Agility wins in court, it is already losing at the cash register. Immediately after the DoJ joined the case, the Pentagon barred PWC/Agility and its subsidiaries from federal contracts by placing it on the “Excluded Parties List System.”
DynCorp, a business partner, followed suit in late December by dropping PWC/Agility from a major U.S. military logistics contract in southern Afghanistan.
In November, PWC/Agility said it “is confident that once these allegations are examined in court, they will be found to be without merit.”
Since then PWC/Agility has attempted to reach a settlement with the DoJ by offering to pay a $600 million fine, according to reports in the Kuwaiti press. “No agreement has been reached so far and there is no guarantee these negotiations will lead to a solution,” the company stated at the end of December.
A criminal arraignment of PWC/Agility scheduled for early January has been postponed five times so far, the latest delay coming at the eleventh hour on Jan. 29. U.S. Magistrate Christopher Hagy agreed to a new date of Feb. 8, although he expressed exasperation.
“There’s a point at which this stops,” Hagy said.
Unless these settlement discussions bear fruit, the arraignment could lead to a trial in which spectators can expect a fascinating view into the extent of corruption engendered by the U.S. occupations of Afghanistan and Iraq.