U.S. Sues Kellogg, Brown & Root Over Iraq Kickback Claims

The U.S. Justice Department sued defense contractor Kellogg, Brown & Root Services Inc. (KBR) for allegedly submitting false claims and taking kickbacks related to a U.S. Army contract in Iraq.

KBR employees took kickbacks from two Kuwaiti companies, La Nouvelle General Trading & Contracting Co. and First Kuwaiti Trading Co., while providing wartime logistical support for American soldiers in Iraq in 2003 and 2004, according to a Justice Department statement today. The civil claims were filed in federal court in Rock Island, Illinois.

KBR also inflated its bills to the U.S. for work done by the two Kuwaiti companies, the Justice Department said.

“As this case was recently filed, we’re not able to comment on these claims at this time,” said Rick Goins, a KBR spokesman.

The U.S. Attorney’s Office in Rock Island, Illinois, has secured convictions of 10 companies and individuals in connection with wartime contracts in Iraq.

“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,” said Jim Lewis, U.S. Attorney for the Central District of Illinois. 

The government claimed that KBR awarded La Nouvelle a subcontract to supply fuel tankers for more than triple the tankers’ value. La Nouvelle paid $1 million to the KBR employee who awarded the contract, the Justice Department said.

In another instance, KBR made monthly lease payments to First Kuwaiti for trucks that had already been returned to the subcontractor, the Justice Department said.

To contact the reporter on this story: Greg Farrell in New York at gregfarrell@bloomberg.net

To contact the editor responsible for this story: Sara Forden at sforden@bloomberg.net

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