- WASHINGTON (AP) -- Ten companies
with billions of dollars in U.S. contracts for Iraq reconstruction have
paid more than $300 million in penalties since 2000 to resolve allegations
of bid rigging, fraud, delivery of faulty military parts and environmental
damage.
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- The United States is paying more than $780 million to
one British firm that was convicted of fraud on three federal construction
projects and banned from U.S. government work during 2002, according to
an Associated Press review of government documents.
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- A Virginia company convicted of rigging bids for American-funded
projects in Egypt also has been awarded Iraq contracts worth hundreds of
millions. And a third firm found guilty of environmental violations and
bid rigging won U.S. Army approval for a subcontract to clean up an Iraqi
harbor.
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- Seven other companies with Iraq reconstruction contracts
have agreed to pay financial penalties without admitting wrongdoing. Together,
the 10 companies have paid to resolve 30 alleged violations in the past
four years. Six paid penalties more than once. But the companies have been
awarded $7 billion in Iraq reconstruction contracts.
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- ``We have not made firms pay the price when they screw
up,'' said Peter W. Singer, a former Pentagon official who worked on a
task force overseeing military and contract work in the Balkans.
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- ``But it's not the company's fault if it has a dumb client.
I'm not blaming the companies, I'm blaming the government,'' said Singer,
now a fellow at the Brookings Institution, a Washington think tank.
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- The contracts are legal because the Bush administration
repealed regulations put in place by the Clinton administration that would
have allowed officials to bar new government work for companies convicted
or penalized during the previous three years.
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- Spokesmen for the companies defended the contracts, saying
the penalties often were for violations committed years ago or by subsidiaries
unrelated to the ones working in Iraq. Spokeswoman Pamela Blossom said
AMEC, the convicted British firm, wrote new company ethics rules after
its punishment.
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- ``None of the people involved are with the company any
more,'' said Blossom, whose firm paid $1.2 million in fines for contract
fraud on projects in California and Missouri. ``We're a much better company
now.''
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- Federal regulations require government contractors to
have a ``satisfactory record of integrity and business ethics.'' The government
can ban unethical companies from getting new contracts through a process
called debarment.
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- Companies often avoid debarment by agreeing to settle
misconduct cases and pay penalties without admitting guilt. AMEC was the
only one of the 10 punished Iraq contractors ever debarred, and it was
banned for just one year.
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- If a U.S. company is not on the list of banned firms,
it can compete for Iraq work, said Army Maj. Gary Tallman, a spokesman
for the Iraq contract management office.
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- ``If they pay their fine or do what they have to do to
get off a debarment list, they are back in good standing and eligible to
compete,'' Tallman said.
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- The Clinton administration tightened contracting rules
shortly before leaving office in 2001, instructing officials that repeated
violations of federal laws would make a company ineligible for new contracts.
Officials still would have been able to award contracts to punished companies
for overriding reasons such as national security.
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- The Bush administration suspended the new rules during
its first three months in office, and revoked them in December 2001. Business
groups had objected to the Clinton changes, arguing it was unfair to deny
contracts for reasons unrelated to how well a firm could do the work.
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- The two largest government contractors in Iraq, Bechtel
Corp. and Halliburton Co., have paid several penalties in the past three
years.
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- Halliburton paid $2 million in 2002 to settle charges
it inflated costs on a maintenance contract at now-closed Fort Ord in California.
Vice President Dick Cheney's former company did not admit wrongdoing.
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- Halliburton took in $3.6 billion last year from contracts
to serve U.S. troops and rebuild the oil industry in Iraq. Halliburton
executives say the company is getting about $1 billion a month for Iraq
work this year.
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- Federal authorities also are investigating whether Halliburton
broke the law by using a subsidiary to do business in Iran, whether the
company overcharged for work done for the Pentagon in the Balkans and whether
it was involved in an alleged $180 million bribery scheme in Nigeria. The
company admitted in 2003 that it improperly paid $2.4 million to a Nigerian
tax official.
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- Bechtel paid more than $110,000 to the Environmental
Protection Agency and the Energy Department in 2000 and 2001 to settle
alleged safety and environmental violations. Bechtel has prime construction
contracts in Iraq worth more than $2 billion.
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- ``We were chosen on ability and cost,'' Bechtel spokesman
Howard Menaker said.
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- Bechtel also hired three subcontractors in Iraq that
have been fined more than $86 million in the past four years, though none
had been banned from getting new contracts. Bechtel spokesman Francis Canavan
said the company would reject subcontractors that are on the no-contracts
list.
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- Other punished contractors include:
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- -American International Contractors Inc., which paid
$4.7 million in fines in 2000 after pleading guilty to bid rigging on a
U.S.-funded water project in Egypt. AICI has part of a $325 million contract
to rebuild Iraq's transportation systems, has a share of a $500 million
contract for emergency construction needs in the Pentagon's Central Command
region, which includes Iraq and Afghanistan, and is in a partnership that
has a $70 million construction contract at Al-Udeid air base in Qatar,
used to support troops in Iraq. An AICI official who spoke to the AP declined
to comment or give his name.
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- -Fluor Corp., which paid $8.5 million to the Defense
Department in 2001 to settle charges it improperly billed the government
for work benefiting its commercial clients. The company did not admit guilt.
Fluor and AMEC created a joint venture that has $1.7 billion in contracts
to rebuild Iraq's electricity, water, sewer and trash removal infrastructure.
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- -Great Lakes Dredge & Dock Co., which paid a $969,000
fine in 2002 for environmental damage in the Florida Keys National Marine
Sanctuary. Bechtel awarded the company a subcontract to clear the Iraqi
port of Umm Qasr. Great Lakes Dredge & Dock also pleaded guilty to
price fixing on Army Corps of Engineers contracts in 1988. A company spokesman
did not return messages seeking comment. Bechtel's Canavan said Bechtel
told the Corps of Engineers it planned to hire Great Lakes Dredge &
Dock when it applied for the contract.
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- - Northrop Grumman Corp., whose Vinnell Corp. subsidiary
was awarded a $48 million contract to train the new Iraqi Army last year.
Northrop Grumman has been penalized $191.7 million in the past four years,
including $750,000 paid to the Pentagon in 2000 in a case involving allegations
of providing faulty replacement parts for the JSTARS airborne surveillance
system. A Northrop Grumman spokesman referred questions to the U.S. Army
Corps of Engineers, which said it excludes only companies banned by the
federal government.
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- Guardian Unlimited © Guardian Newspapers Limited
2004
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- http://www.guardian.co.uk/uslatest/story/0,1282,-4023450,00.html
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