The case of an alleged $2 billion government contract fraud/abuse in Iraq/Afghanistan

A company providing services to our troops in Iraq and Afghanistan has allegedly committed $2 billion in fraud and abuse. Until recently, it was part of Halliburton (spun off after a stock swap)?

Donna Borak, of the AP (courtesy of SignOn San Diego) reports:

U.S. lawmakers on Thursday railed against defense contractor KBR Inc. for a string of fraud and contract abuses on a multibillion-dollar contract that provides food and shelter to U.S. troops in Iraq.

“I think profiteering during wartime is inexcusable,” said Sen. Byron Dorgan, D-N.D., during a Senate Armed Services Committee hearing. “We've got a very serious problem. This is the most significant waste, fraud and abuse we have ever seen in this country.”

Here are more specifics as to what occurred, quoting Senator Levin, chairman of the Senate Armed Services Committee:

Sen. Carl Levin, D-Mich., chairman of the committee, cited several examples of contract abuse, including KBR billing the federal government for millions of meals that were never delivered, overstating labor costs by 51 percent, or $30 million and wasting between $40 million and $113 million by purchasing unnecessary vehicles.

Full story from the AP, here.

The thought of a company being made independent (via a stock swap) and charges of wrongdoing being brought forth, shortly afterwards, bothered me. I decided to look a little further to see what I could find about how this occurred.

I found a site called Halliburton Watch, which did an article entitled, Halliburton bails out of Iraq, KBR and now America. The article (which alleges a lot of other wrongdoing by Halliburton) links to the press release from Halliburton about the KBR spin-off, here.

The stock swap was announced in February. Since it would be hard to skim $2 billion from a $20 billion contract (granted over 5 years) in two months, I decided to see what else I could find.

Going to Senator Levin's site, I found a press release, clearly indicating that the alleged fraudulent activity occurred well before February.

After stating that KBR (formerly Halliburton) should be considered innocent until proven guilty, there seems to be a lot of substance to these charges, researched by government auditors. It will be interesting to see how this plays out, and fraud in time of war (if proven), should be dealt with severely!