U.S. Sues KBR Over False Military Contract Claims

    January 23, 2014

The U.S. Department of Justice (USDOJ) today announced that it is suing Kellogg, Brown & Root (KBR) and two Kuwaiti companies for providing false claims as part of a contract to provide logistical support for the U.S. Army in Iraq. The Kuwaiti companies were subcontracted by KBR to fulfill its contract duties in Iraq.

The lawsuit alleges that KBR, La Nouvelle General Trading & Contracting Co., and First Kuwaiti Trading Co. knowingly provided the U.S. government with false claims as part of KBR’s contract to provide transportation, food, shelter, and other amenities to the U.S. Army in Iraq. The claims involved KBR employees taking bribes from La Nouvelle and First Kuwaiti for subcontracting work. These inflated and sometimes unfulfilled contracts were then submitted to the U.S. government for reimbursement. Specific claims by the USDOJ include supply fuel tankers priced at three times their value and truck lease payments for vehicles that were no longer in use.

“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.”

Three KBR subcontract managers have already been convicted of taking kickbacks or making false statements as part of their contracting work. In addition, Soudi company Tamimi Global has paid the U.S. $13 million in civil and criminal claims related to kickbacks it paid to a KBR contract manager.

“Contractors and subcontractors are expected to comply with their statutory obligations and act in good faith when dealing with the United States government,” said Janice Flores, special agent in the Southwest Field Office of the Defense Criminal Investigative Service. “The lawsuit demonstrates the commitment of DCIS and its partner agencies to prevent false billing and corrupt practices involving the military contracting process.”