Bribery Network to Bloat War Costs Is Alleged
Federal investigators have uncovered what they describe as a sweeping network of kickbacks, bribes and fraud involving at least eight employees and subcontractors of KBR, the former Halliburton subsidiary, in a scheme to inflate charges for flying freight into Iraq in support of the war, according to court papers unsealed yesterday.
The latest conviction in the cases related to the scheme came yesterday, when a former Houston-based executive for an air-freight carrier hired by KBR pleaded guilty in federal district court to dispensing bribes and then lying to federal investigators. The executive, Kevin Andre Smoot, 43, of The Woodlands, Tex., served as a managing director for Eagle Global Logistics Incorporated, a carrier that received a subcontract from KBR to ship the freight. 
The guilty plea by Mr. Smoot is the second by an Eagle executive in the case. But the papers describing his plea indicate that investigators believe at least one more Eagle employee and five KBR employees, all so far unnamed, were also involved. Mr. Smoot alone admitted to delivering bribes, called gratuities in the legalistic language of the court papers, to the employees of KBR on some 90 occasions between 2002 and 2005.
At the core of the case is a contract that KBR, previously known as Kellogg, Brown & Root, won before the war to supply the American military with food, fuel, housing and other necessities. The value of the contract soared with the Iraq invasion, and has so far paid KBR some $20 billion.
The company hired Eagle in a subcontract to fulfill part of that mission, carrying military goods from Dubai, United Arab Emirates, to Baghdad. But the scheme by the Eagle executives began in November 2003 when a plane operated by a rival carrier, DHL, was struck by a missile and landed in Baghdad with its left wing in flames. The Eagle executives used that incident to charge a fraudulent “war-risk surcharge” of 50 cents for every kilogram (2.2 pounds) of freight on its own flights, the papers say.
Between November 2003 and July 2004, Eagle made 379 flights as part of the subcontract, charging some $13.3 million - an amount that included $1.1 million in overcharges. It is not clear whether KBR knew of the overcharging scheme, but the papers say that Mr. Smoot and an Eagle subordinate delivered nearly $34,000 in gratuities to KBR employees “to obtain or reward favorable treatment” in connection with the contract.
According to the papers, the gratuities included “meals, drinks, golf outings, tickets to rodeo events, baseball and football games and other entertainment items.”
A spokeswoman for KBR, Heather L. Browne, said in a statement yesterday that the company “in no way condones this behavior.”
“We are fully cooperating with the government’s investigation of this matter and will continue to do so,” Ms. Browne said.
The guilty plea by Mr. Smoot was announced yesterday by Rodger A. Heaton, the United States attorney for the Central District of Illinois, where the Army Field Support Command, which administers the logistics contract, is based in Rock Island.
Copyright 2007 The New York Times Company
Every time I turn around, Haliburton, Bechtel, KBR, or some of their subsidiaries are at the heart of a disgusting scandal. I would have liked the media to pick up on this a looooonnnnnnngggggg time ago. I live in the Boston Area, where the Big Dig was fatally mismanaged by some of these people and I have heard their names associated with incompetence, no-bid contracts where money goes missing, etc. etc. all over the country and the world, especially in Iraq. Has anyone seen any articles that make this connection, and if so, please let me know where they read it.
It is beyond enfuriating.
I am shocked, shocked, shocked. As usual, NYT is making a big noise about multimillion fraud only to deflect our attention from multitude of multitrillion frauds (hedge funds, security market manipulations, outright fraud of issuing counterfeit money a.k.a market capitalizations, Red and now Al Qaeda scares to justify $1 Trillion military year in and year out for 60 years in a row!
And I bet my life that even on this Common Sense site there will be indignation about these latest antics of our current poster boy, Halliburton. As if it is not part and parcel of so called American Way of life, which is non-negotiable according to its Promoter-in-Chief.
Where are $1 men of WW2 fame? Where are idealists who came to serve the most forgotten President, FDR?
Hello-o-o!
Most believe the war Bush stated in Iraq was because of oil, and that is most likely the major reason. “Cheney’s” Halliburton and it’s subs was the secondary cause. Greed, combined with power, stupidity and revenge are a bad combination. The mix spells___ evil.
Ahhh, Capitalisn: The American way.
The Corporate States of America (CSA): Greed, Dishonor, and Lack of Conscience. The worst of humanity in what is fast becoming the worst of countries.
I heard on the radio yesterday talk (just talk) of a nationwide “stop work” day sometime in October.
It’s got to be pissing off a lot of people here that our hard-earned tax dollars go to these crime syndicates. We lose everything because of this.
Imagine if all workers just said “to hell with this” one day. Just bring commerce to a dead stop for one whole day in the United States.
Would that get anybody’s attention?
I think there is merit to this idea, as well as follow-up actions and protests.
WE ARE THE EMPLOYERS, not THEM. Somehow, our employees (”elected” officials) see us as the worker bees. Not so.
We are paying them dearly to screw us. My God, the likes of Halliburton (with Cheney’s assistance) have stung us beyond comprehension.
The theft has been so enormous, and the punishment so lacking.
no worse, no better, than any other country.
Wasn’t KBR the outfit that charged the gov’t for tens of thousands of meals that were not served to our servicemen in Iraq and Kuwait? Anyone who has ever been in the food business (and I have) knows that the first and most important record to keep is participation: meals or portions served. It is possible to make mistakes, but they tend to cancel each other out; but if the “mistakes” are on purpose they are always in the contractor’s favor as with KBR.
How convenient. KBR signed a contract to supply the troops before the war even started.
And let’s see, hmmm… who is (or supposedly was) on that stock sheet , Bush Sr., Bush Jr. Cheney, Rumsfeild, Rice, Wolfowitz. You know, the folks who designed the war, and then made sure that their company got the supply contract before the war even started so noone would suspect anything.
Even further proof that the Bush administration was already set to go to war, no matter what any one else had to say. Or no matter what lies they had to make up in order to convince the taxpayers to go to war.
Just follow the money. Bush & co. have lined their pockets with billions of dollars at the expense of hundreds of thousands of lives.
Sounds like something Saddam would do.
Had Enough, you mentioned taxes. Good subject.
This story was broadcast on CNN Thursday, I believe, only once.
FEMA gave a no bid contract to a private company, who would furnish bags of ice to people in New Orleans after Katrina. FEMA paid the company $26 million dollars to provide the ice.
The bags of ice were NOT all handed out,___ so for the past two years, FEMA paid the company $12 million to store it. Now it has been determied that the ice may not be safe for use. We no longer have to pay $6 million a year to store it, the ice is going to be melted.___ Good deal?____ Welllll.
FEMA is paying the private contractor___ $3.5 million to melt the unused ice.____ Are any possible graft or under the table envelopes being passed around? For Halliburton, that $41.5 million would be petty cash, or for an office coffee fund.
How much have you paid in government taxes during your lifetime? Well, whatever, you did pay to melt some bags of ice. Maybe one percent of them.
Sadly, our nation is not deserving of any respect from anyone,___ not even us.
This article is the tip of a massive iceburg, or so the term goes.
Another beaut,__ just ONE more example:
Among many other things, Halliburton takes care of our troops laundry. They charge the government, $90.00, for every single laundry bag of clothng they recieve in their laundry facilities.
I believe that is ONE item we should out-source to China.___ The only ONE.
No, Evelyn, to hell with China: You just have them send those laundry bags to me. I will gladly do them for $89.00 each, and I will contract AMERICANS to help me do it. Each of my contractors will make what I make, and they’ll get paid benefits and educations for their children. The more laundry they do, the more we get paid.
I think when Americans start realizing that their own earnings (in the form of taxes) are being pissed away, it’s time to demand accountability.
I just don’t understand what it’s gong to take to kick-start the populace. Things just don’t have to be this way.
Well said “Had Enough.” …..but all this noise over $34,000 in tips!!! Maybe I’m a little partial seein as I live around “The Woodlands” area. Heck down here thats a SMALL tip!!!!
Did I miss the real story? A DHL aircraft hit by a missle?
So DHL is in Iraq too? They recently bought a bunch of small “courier/delivery companies in Texas.(around the US maybe? someone look that up)
And I thought I caught a glimpse of a bankruptcy mention for Eagle Global but you’d better fact check that too.
Clever way to launder money huh?
And would all the “Progressives” out there stop saying incompetence every time you talk about the cabal. They are succeding 100% in their true objectives. Stealin from the commons!!!
And while we at it:
1) Start saying E rack not Eye rack
2) Start saying E ran not Eye ran
3) Say IHran or IHrak if you must, but EYE whatever is allways IHncorrect!!!
4) Support Stephon Marbury, buy his $14.98 shoes(if you can find them)
5) Demand that ALL RECONSTRUCTION work in New Orleans go to LOCAL PEOPLE, allow them to rebuild their area and send all us Texans back and the “illegals” we hire to Texas. We will split the Laundry and ice with y’all.
I made a typo:___ It was $36 million for the first contract for supplying the ice, not $26. Well, what’s a few million.?
These companies stealing from us are sub-contractors of Halliburton. They also hire and supply the thousands of Cheney’s mercenaries.
I’ll work for you Had Enough. You could drop it to five bucks a sack though. With all of the troops we have, you’d probably earn a good million or so a year.
Great commentary and it’s always encouraging when words like ‘kickback’ appear in a major rag.
Sometimes, this is the only competition that the major contractors see. Management at PB Farradyne or some other contractor, were enraged to see their competitor score exclusive big deals, and gladly welcome a newspaper article shrieking fraud.
Things are great at Halliburton, perhaps not as orgasmic as they were when missiles and bombs began to tear apart Baghdad in ‘03. Things were great for KBR in Vietnam too. There just always seems to be this nearby genocide ‘thingy’, people getting shredded by bombs and fire, etc.
I never cease to be amazed that we never cease to be amazed.
I’ve counted: since 1950, the U.S. has invaded or bombed 22 different countries, not counting shadow operations. Pretty warlike, no?
What if the Iraq War is only partly about oil, and mainly about feeding one of America’s major industries, war (euphemized as “defense”)? After all, didn’t the outgoing President Eisenhower warn us about exactly that?
ther you go again, nancy,,,what if we don’t blow everyone up someone else will,,,and there is money in killing,,,don;t ya know the love of money is the root of all evil,,,not Satan or Sadam,,,,but the BushCo family, check out their offshore wealth, looks like Bill Gates a pantywaste compared to these greedy whoremongers, thats wermongers,, wermich Vhermach, yavolt heil Hitler, caan’t contol aaach du libre, mind con-trol, propaganda, if your not for us your against us,,,,hail to the chief, mission accomplished, nice nuts,,,monkey boy Chimpeach!!1
“no worse, no better, than any other country.”
mf,
Maybe true (though, only partially), but this is my country and I have a right and a duty to call it on the shit it’s doing. If we all tended to our own backyards properly, we’d make better neighbors.
Sadly__ we are now the worst. Name another who can equal our evil deeds in the past six years.
I wonder if a national strike would be that critical disruption that Bush is planning for so he can do his martial law thing and no longer have to worry about elections.
I wonder if a national strike would be that critical disruption that Cheney/Bush is planning for so he can do his martial law thing and no longer have to worry about elections, Congress, or impeachment.
I’m sure there are one or more black ops waiting in the wings in case nobody else gives him an excuse.
I’m sure there are one or more black ops waiting in the wings in case nobody else gives him an excuse.
NO DOUBT.
Not to worry. No doubt Little ‘Berto Gonzales is on top of the situation and will bring the evil-doers to justice.