Private contractors steal billions from Uncle Sam

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Barbara Ferguson | Arab News

Published — Wednesday 30 July 2008

Last Update 30 July 2008 3:00 am

WASHINGTON: The federal government paid a US contractor up to $900 million to carry out reconstruction in Iraq, and now says the company did not fulfill its contract but simply walked away with millions of taxpayers’ dollars.

California-based Parsons had projects awarded by the US Army Corps of Engineers in the “security and justice sector,” including much-needed prisons, a series of border posts, courthouses and fire stations.

The company was paid $333 million as of May 21, the audit said, including more than $142 million on projects that were either terminated or canceled, and the government paid an additional $34 million to settle claims made by Parsons and its subcontractors.

According to the special inspector general for Iraq reconstruction, millions of taxpayers’ dollars were squandered in “incomplete, terminated and abandoned” projects in Iraq.

The report notes that the US government, in a final careless act of waste, left behind $1.2 million worth of unguarded construction supplies, most of which are now missing. Three more contractors were paid another $9 million to finish the job, but they failed to do so. The money was wasted, and there is no chance it will ever be recovered.

Inspectors found that Parsons was paid for 53 contracts, but only 18 were completed. Of the $333 million Parsons was paid before the company left Iraq, $142 million was for projects that were never finished.

The US Justice Department is burdened with some 900 cases of whistleblowers accusing government contractors of fraud. It will take years to work through the backlog. In the larger scheme of waste, fraud, negligence and incompetence by government contractors in Iraq, Parsons is a small player. The amount of money lost, wasted and stolen is massive — billions and billions of dollars.

The Defense Contract Audit Agency said it has found $10 billion in questionable contracts for services and equipment in Iraq.

The US government is currently spending $12 billion a month in Iraq, much of it with little accountability or oversight. Projects are plagued by cost overruns, poor record keeping, high turnover and criminally shoddy work. Inferior electrical work resulted in the deaths of 13 service members and, in just one six-month period, 283 electrical fires.

Stuart Bowen, the special inspector general for Iraq reconstruction, told reporters that his agency’s 120 audits on Iraqi reconstruction projects “tell an episodic story of waste.”

A recent report found that of the $21 billion earmarked for reconstruction funds, about $4 billion was wasted in one way or another. One company in particular, Houston-based KBR Inc., has been accused of overbilling the government and using poor accounting practices.

A civilian official working with the US Army said that when he refused to sign off on $1 billion in questionable charges from KBR he was replaced and KBR’s charges were approved by higherups.

KBR was formerly owned by Halliburton, a Texas company whose chief executive was Vice President Dick Cheney.

But there have been success stories on the ground. This reporter met a contactor last year who said he always completed his contracts for the US government. When asked his secret, he said, anonymously: “It’s easy. When I win the contract to build, say, a school in a town in Iraq, the first thing I do is ask to meet the town’s council of elders. I then ask them if they would like a new school in their town. They always say they would. I then ask them where they would like the school to be built, and then ask them if they can supply the work force.

“That way I empower the local authorities, and rather than bring in ‘TCNs’ (third country nationals), I pump money into the local economy, which keeps us pretty safe. It is simple,” he told Arab News. “But you’d be amazed at the number of US contractors who haven’t figured this out.”

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