The War Profiteers - War Crimes, Kidnappings & Torture
November 16th, 2009 - Kuwaiti Contractor Accused of Bilking Army
By Guillermo Contreras
San Antonio Express-News
November 16, 2009
A Kuwaiti company that was the primary provider of food for American troops during the war in Iraq was indicted Monday on charges that it overcharged the U.S. more than $68 million, although a related civil lawsuit says the fraud exceeded $1 billion.
Public Warehousing Co., now known as Agility, was indicted by a federal grand jury in Atlanta based partly on allegations in the suit filed by a whistleblower, Kamal Mustafa Al-Sultan, whose own company appears to have offered a $40,000 bribe to now-former Army Maj. John L. Cockerham of San Antonio.
Cockerham, who admitted taking $9.6 million in bribes from various companies and expected another $5.4 million, was scheduled for sentencing today in San Antonio, but it has been postponed until Dec. 2.
Officials have referred to Cockerham's case as the largest American bribery investigation the Iraq reconstruction produced. The case spun from intertwined probes that resulted in the bizarre deaths of at least two military contracting officers, among them Army Lt. Col. Marshall Gutierrez, who died from ingesting antifreeze after questioning Public Warehousing's charges.
The six-count indictment charges Public Warehousing (also called PWC) and unidentified co-conspirators with conspiracy to defraud the United States, major fraud and wire fraud.
Company executives were not charged, but prosecutors said the case remains under investigation. PWC officials, who have previously said PWC was cooperating with the Justice Department and denied any wrongdoing, could not be reached for comment.
“This indictment is the result of a multiyear probe into abuses in vendor contracts in the Middle East involving the illegal inflation of prices in contracts to feed our troops,” said F. Gentry Shelnutt, acting U.S. attorney in Atlanta, where the civil suit also was filed in 2005.
“Others who have engaged in similar conduct should beware,” he said. “This indictment is only the first step. Our investigation of entities and persons who have defrauded the United States and our military is ongoing.”
The indictment alleges PWC was awarded “prime vendor” contracts to provide food and other items to the U.S. military in Iraq, Kuwait and Jordan between 2003 and 2005 and was paid more than $8.5 billion, but intentionally failed to buy less-expensive food items, used formulas that allowed for overbilling, and manipulated and inflated prices of delivered products.
Al-Sultan stands to gain millions of dollars if he wins the lawsuit that, in part, alerted American authorities to the alleged fraud, though officials said there were other investigative leads that led to the criminal indictment.
Al-Sultan's suit, also known as a qui-tam action, recently was unsealed. Such litigation can stay sealed for years while the government investigates and decides whether to join the case, and if the plaintiffs win, the whistleblower can get about 15 percent of what the government recovers.
The Justice Department joined the suit, but declined in 2007 to join a similar suit filed in 2006 by another contractor, Iowa businesswoman Beth A. Hanken, who accused Public Warehousing of the same type of fraud.
Al-Sultan's lawsuit names as defendants Public Warehousing and some of its subsidiaries, and company officials Tarek Abdul Aziz Sultan Al-Essa, Charles Tobias Switzer and Emad Al Saleh.
Ironically, Al-Sultan's company, KMSCO, was accused by the Army in 2004 of stealing fuel it was supposed to provide for troops, but settled the matter by paying a $500,000 penalty, the Express-News reported.
The company also appears on a ledger outlining bribes Cockerham had received or aimed to collect for steering bottled-water contracts to handpicked firms. KMSCO, however, continues to receive multi-million dollar contracts, U.S. military records show.
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