US Countersues KBR for Alleged Kickbacks

Bloomberg reports that KBR managers in Iraq and Kuwait are accused by US authorities of taking $45,000 in kickbacks from a dining facility subcontractor from late 2002 through 2003.

Terry Hall, who was KBR’s regional food services manager for the two countries, and his deputy, Luther Holmes, were accused of violating the False Claims Act and the Anti-Kickback Act in U.S. claims court in Washington.

“Kickbacks in military subcontracts open the door to wartime profiteering and corrupt the integrity of our government contracting process,” Assistant Attorney General Tony West said in a statement. “When we learn of such illegal conduct at the expense of taxpayers, we will pursue it.”

The allegation came as a counterclaim to a lawsuit against the government by a unit of Houston-based KBR for an alleged breach of contract.

The original lawsuit from KBR seeks $41 million it had to forfeit after an audit by the Defense Contract Audit Agency that found KBR overpaid Tamimi $41 million for dining facility costs from July 2004 to December 2004 compared to what it was paying other contractors during that time period.

In its counterclaim, the U.S. alleges that kickbacks were made by Mohammad Shabbir Khan, vice president of Tamimi Global Co., which is based in Saudi Arabia. During the time the payments were made, KBR awarded Tamimi contracts worth more than $400 million, the U.S. says, according to the Justice Department.

A spokeswoman for KBR said “The DOJ’s claim that KBR improperly awarded food services subcontracts to Tamimi is not supported by facts or law. We anticipate the DOJ’s gross overreaching in the current counterclaim to likewise be rejected. We are disappointed with the DOJ’s decision to file this suit and its vague allegations more than six years after the events in question.”

He added that when the Army asked KBR to provide food services in support of the military in Kuwait, it already was using Tamimi for food services in Kuwait and Iraq and directed KBR to use Tamimi as a subcontractor in Kuwait.

“Despite knowledge of various alleged improprieties by Tamimi, the Army continues to contract with Tamimi for such services today.”

(Sources: Bloomberg, Wall Street Journal)

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