Houston-based engineering and services firm KBR, which was a subsidiary of Houston oil field services giant Halliburton until 2006, will pay more than $100 million to settle a 2011 lawsuit claiming it defrauded the U.S. Army during the war in Iraq.
Allegations of waste and inefficiency surfaced against U.S. companies contracted by the military to provide equipment and services for troops following the 2003 invasion of Iraq. Then-Vice President Dick Cheney, a major proponent of the war, served as Halliburton CEO from 1995 through 2000. As a subsidiary of Halliburton, Houston-based KBR held one of the largest government contracts to provide services, property and equipment in the early years of the conflict.
Lawyers for two former KBR employees working in the Middle East accused the company of over-ordering $340 million worth of supplies for U.S. troops and sued KBR in 2011. A dozen years later, KBR has agreed to settle for nearly $109 million, the largest to date in connection with fraud and waste allegations during the war.
“For years, we have heard that KBR and other contractors ripped off the Army for billions of dollars during the Iraq War, yet this is one of the only cases to recover any of that money for taxpayers,” Eric Havian, lead counsel for the case from law firm Constantine Cannon, said in a statement. “It is especially notable that these courageous whistleblowers, not the government, held KBR to account for its fraud.”
KBR confirmed the settlement in a statement on its website, saying it “denies any liability or wrongful conduct” as part of the agreement. KBR said it would pay the settlement in July and the charge will be reflected in its second quarter financial results.
“We are pleased to put this decade-old lawsuit behind us as we close out one of our final legacy legal issues,” Stuart Bradie, CEO of KBR, said in a statement. “This settlement is yet another milestone in our commitment to resolve legacy legal matters and it helps reduce uncertainty and liquidity risk.”
The settlement comes a year after KBR agreed to pay almost $14 million to settle claims it received kickbacks for allegedly rigging government contracts awarded to two subcontractors.
The U.S. joined that case, which also started with a whistleblower, with a 2014 lawsuit claiming that KBR workers in 2002 began rigging the bidding process so contracts went to two Kuwait-based subcontractors, La Nouvelle Trading & Contracting and First Kuwaiti Trading & Contracting Co.
The U.S. alleged that KBR employees were rewarded with kickbacks. The government further alleged that the subcontractors were paid inflated prices, and that KBR tried to pass those costs on to the Army, by seeking reimbursement.
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