Dec. 3 (Bloomberg) -- KBR Inc., the largest private contractor in Iraq, was sued by ex-members of the Indiana National Guard and accused of knowingly exposing employees and the soldiers protecting them to cancer-causing dust at an Iraqi worksite in 2003.

Sixteen soldiers said today in a federal court complaint in Evansville, Indiana, that Houston-based KBR and related companies are responsible for chromium poisoning at Qarmat Ali, Iraq.

The plaintiffs, from the Tell City, Indiana, Guard unit, were providing security for KBR during repairs of a water- treatment plant, according to the complaint. The site was contaminated for six months by hexavalent chromium, a carcinogen in powdered compounds used to control corrosion, it said.

“The Tell City Guardsmen were repeatedly told that there was no danger on site, even after KBR managers knew that blood testing of American civilians exposed onsite confirmed elevated chromium levels,” the soldiers’ lawyers said in court papers.

A KBR spokeswoman, Heather Browne, said the company hadn’t reviewed the suit and declined to comment on it except to say the action will be defended vigorously.

“We deny the assertion that KBR harmed troops and was responsible for an unsafe condition,” she said by e-mail. “KBR appropriately notified the Army Corps of Engineers upon discovery of the existence of the substance on the site and the Corps of Engineers concluded that KBR’s efforts to remediate the situation were effective. Further the company in no way condones any action that would compromise the safety of those we serve or employ.”

KBR in Iraq

KBR provides logistical services to troops in Iraq and is helping rebuild the country’s oil infrastructure.

Hexavalent chromium on first exposure causes nosebleeds, respiratory ailments and rashes, which the soldiers said KBR officials told them was caused by dry desert air or sand allergies, according to the complaint. Chromium poisoning is irreversible, it said.

In time, medical experts predict, one in five exposed individuals will develop cancer, the soldiers’ attorney Mike Doyle of Doyle Raizner in Houston said in an interview.

“There is no fix,” according to the complaint. “Instead, vigilant health care and early treatment, if possible, is the only protection that medical science can afford exposed individuals from the anticipated future consequences.”

KBR sought to conceal the contamination and, once it was discovered, to limit exposed individuals’ knowledge about the level of poisoning they had suffered, the soldiers claimed.

Need for Testing

Chromium is purged from the body relatively quickly, even though cellular damage remains, so the soldiers and workers claim they should have been immediately tested to gauge their exposure level, they said in the complaint.

The soldiers’ claim that KBR knowingly exposed them to toxic chemicals while downplaying the risks echoes accusations made to a U.S. Senate panel and in a separate arbitration action brought by former employees.

Ed Blacke, who worked as a medic at Qarmat Ali, testified in June to the Senate Democratic Policy Committee that KBR fired him when he discovered the chromium exposure and tried to warn workers.

Blacke and nine former coworkers filed claims against KBR saying they suffered injuries from exposure to chromium dust at the work site. They said KBR officials knew the site was contaminated, chose not to issue protective clothing and equipment and covered up the problem.

Arbitration Trial

Under their employment contracts, the workers must arbitrate disputes with KBR and its former parent, Halliburton Co. An arbitration trial in that case is set for Dec. 8 in Houston, said Doyle, who is also representing those workers.

The soldiers in the Indiana case say they would have acted against KBR sooner had they been able to confirm their exposure to the toxic substance.

Attached to their complaint was a memo from the Army to their lawyers confirming that members of the unit “had a high potential for direct exposure’’ to sodium dichromate, whose primary ingredient is hexavalent chromium, while they were guarding the plant from April to September 2003.

The memo is signed by Colonel Timothy Thomeleson, assistant chief of staff to the Indiana Army National Guard’s 38th Infantry Division.

Also attached to the complaint was a document described as an internal KBR memo in which managers discussed the presence of sodium dichromate at the plant in June 2003.

KBR was unchanged $12.54 at 4:15 p.m. in New York Stock Exchange composite trading.

The court case is McManaway v. KBR, 8:08-CV-0186, U.S. District Court, Southern District of Indiana (Evansville). The arbitration case is Langford v. Halliburton, 70-480-00649-05, American Arbitration Association (Houston).

To contact the reporters on this story: Laurel Brubaker Calkins in Houston at laurel@calkins.us.com; Margaret Cronin Fisk in Southfield, Michigan, at mcfisk@bloomberg.net.

Last Updated: December 3, 2008 16:28 EST