Iraq Embassy Builder Tied to Kickbacks

A portion of the new U.S. embassy under construction is seen from across the Tigris river in Baghdad, in this May 19, 2007 file photo. The Kuwait company building the U.S. embassy in Baghdad has been accused of agreeing to pay $200,000 in kickbacks in exchange for two Army contracts from a subsidiary of Halliburton that was hired to handle logisitics for the military in Iraq and Afghanistan. (AP Photo) (AP)

For his effort, Martin said, the company agreed to pay him $200,000. After he received an initial $10,000, he took a trip back to the United States. When he returned, he says he told the company he would not take any additional money.

The court filing says Martin's "criminal benefactor appears to have completely escaped responsibility for his misconduct and instead continues to profit from a cozy relationship with the government."

Martin was allowed to plead guilty to a single felony charge in exchange for his cooperation with prosecutors. The government plans to have him testify as a prosecution witness in a military contracting case against Arthur's client, a former KBR procurement manager, Jeff Alex Mazon.

First Kuwaiti strongly defended its work on the Baghdad embassy, saying it is particularly proud of completing the job within budget and on time "while constructing high-quality buildings _ an achievement competitors didn't think possible."

First Kuwaiti said all its contracts with the U.S. government have been awarded appropriately, that it has consistently provided more value than requested in support of the U.S. war effort in Iraq and elsewhere under extraordinarily difficult conditions.

Last January, the Justice Department asked the State Department inspector general to help look into allegations of misconduct by First Kuwaiti on the Baghdad embassy, according to a letter this week by Rep. Henry Waxman, D-Calif., chairman of the House Oversight and Government Reform Committee.

In July, contractors told Waxman's committee that First Kuwaiti used forced labor to build the embassy, which is to be completed this month. First Kuwaiti this week pointed to an investigation by Philippines officials, who have concluded that none of their citizens on the embassy project was forced to work.

Waxman's committee is investigating State Department Inspector General Howard Krongard for allegedly preventing his investigators from cooperating with the Justice Department probe. Krongard says he has tried to help other government agencies, noting that he made one of his best investigators available to federal prosecutors in North Carolina in a probe of alleged weapons smuggling into Iraq by a contractor.

An internal State Department e-mail disclosed by Waxman says the allegations regarding First Kuwaiti "are basically contract fraud and public corruption."

Halliburton, where Vice President Dick Cheney was CEO until 2000, has been selling off its interest in KBR for more than a year and completed the process five months ago. Four former KBR procurement employees have been charged or pleaded guilty in contracting fraud cases involving Army contracts. The Army awarded the multibillion-dollar logistical support to KBR after the Sept. 11 attacks.

KBR spokeswoman Heather Browne said the company brought two of the matters to the attention of federal investigators and the company "in no way condones or tolerates unethical behavior. We have fully cooperated with the Department of Justice."

The Justice Department says 29 people have been charged or convicted in procurement fraud cases involving Iraq, Afghanistan or Kuwait.

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On the Net:

First Kuwaiti General Trading & Contracting: http://www.firstkuwaiti.com/

KBR: http://www.kbr.com/