Lawmakers dig into allegations of fraud cover-up by large federal contractor

Two members of a powerful congressional committee on Tuesday asked one of the nation’s largest government contractors to produce internal corporate files, signaling a widening investigation into claims that the company covered up reports of fraud.

Rep. Elijah Cummings (D-Md.) - (Photo by Chip Somodevilla/Getty Images).
Rep. Elijah Cummings (D-Md.) – (Photo by Chip Somodevilla/Getty Images).

The lawmakers, from the House Oversight and Government Reform Committee, sent a letter KBR chairman William P. Utt saying they had launched an inquiry into allegations that the company required employees seeking to report fraud to sign confidentiality agreements.

Those agreements barred employees from speaking to anyone about their allegations, including government investigators and prosecutors, according to court records and lawyers involved in the case. Those who violated the agreement faced dismissal and legal action.

Attorneys for a whistleblower who is suing KBR and its former parent company, Halliburton Co., say the confidentiality agreements violate the False Claims Act and other laws crafted to protect whistleblowers. The request for documents by Congress comes after the Securities and Exchange Commission (SEC) last month launched its own investigation into the agreements.

“The use of these confidentiality agreements could raise significant concerns if employees of federal contractors are being prohibited from disclosing allegations of waste, fraud, or abuse to government agencies, Congress, or Inspectors General,” Rep. Elijah E. Cummings, (D-Md.) and Rep. John F. Tierney, (D-Mass.), wrote to the chairman of KBR.

The companies have denied the allegations and filed motions to dismiss the case, calling the whistleblower’s claims groundless. Halliburton has declined to comment on the case, saying that KBR is now a separate company.

“KBR does not prevent its employees from reporting perceived misconduct. KBR actively encourages legal and ethical compliance through a vigorous code of business conduct,” KBR spokesman Richard Goins said. “With KBR’s active cooperation, law enforcement has interviewed hundreds of current and former employees without difficulty. KBR cooperates fully with government investigations. We self-report instances of misconduct, and assist in reaching an appropriate resolution.”

The congressmen asked KBR to turn over copies of complaints submitted to KBR between 2002 and the present, including copies of confidentiality agreements and internal polices relating to the use of the agreements. They also asked for descriptions of complaints filed with KBR, steps taken to investigate the complaints and the disposition of the complaints.

The whistleblower case was brought by Harry Barko, a former KBR employee who claimed that Halliburton and KBR inflated the costs of services provided to military bases under a multi-billion dollar logistics contract in Iraq. The suit was filed in 2005, when Halliburton was the parent of the company, then known as Kellogg Brown & Root

Between 2002 and 2011, KBR was the largest U.S. contractor operating in Iraq and Afghanistan, winning nearly $40 billion worth of work.

Scott Higham is a member of the investigations unit of The Washington Post.
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