Two whistleblowers have announced that a 12-year litigation with KBR Services has been settled for $108.75 million, the largest cash settlement ever obtained in connection with alleged Iraq War fraud. Filed under the “qui tam” provisions of the False Claims Act, the lawsuit by former KBR employees Geoffrey Howard and Zella Hemphill Anderson alleged KBR defrauded the United States Army in connection with KBR’s contract to supply troops in the War with property and materials. Despite widespread reports of billions of dollars in waste, fraud and abuse over the course of the War, no other case has successfully recovered such a substantial sum for alleged fraud.
The lawsuit alleges that KBR defrauded the Army under the multi-billion dollar LOGCAP III contract when it routinely ordered new materials when excess quantities of the same items were sitting in KBR warehouses in Iraq. The case cites extensive evidence that KBR routinely lied to the Army, certifying that it had checked for excess material before ordering anew. According to the whistleblowers, KBR was indifferent to this massive waste because the Army reimbursed KBR for all these unnecessary costs, plus profit. The fraud was related to “cross-leveling,” a LOGCAP requirement that before buying new material, KBR had to check within the theater to see if excess of that same material was in-country.
The whistleblowers’ evidence as laid out in their lawsuit showed that KBR fraudulently manipulated its inventory management system such that vast amounts of material in inventory were “invisible” to anyone trying to cross-level. For example, KBR was allegedly ordering new electrical wire when it had up to 65 years’ worth of inventory of such wire on hand. There was enough stock of four other items to last 32.9 years, 15.6 years, 13.0 years, and 12.7 years. This practice resulted in massive amounts of excess material paid for by U.S. taxpayers, much of which was turned over to the Government of Iraq or abandoned at the end of the War. The whistleblowers’ internal complaints to the company were routinely ignored, according to the complaint.
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