Washington, D.C. -- The U.S. House today approved the War Profiteering Prevention Act of 2007 by Representative Neil Abercrombie on a vote of 375-3.  The legislation would apply criminal penalties to U.S. contractors convicted of war profiteering in Iraq.  Many U.S. companies have contracts to provide support services to our military forces and assist in Iraq reconstruction, and have not been subject to the laws of either the United States or Iraq.

“The Bush Administration has outsourced the war in Iraq like no other in history, spending more than $50 billion on private contractors to provide food, water, gasoline and other supplies, guard bases, drive trucks and many other activities in support of the military,” said Abercrombie, who chairs the Armed Services Subcommittee on Air and Land Forces. “The problem is that the U.S. occupation of Iraq has been viewed by some as ‘Open Season’ on the American taxpayer.” 

According to the Defense Contract Audit Agency, there have been more than $10 billion in suspect billings in Iraqi contracts.  In February, the head of the Defense Contract Audit Agency testified before Congress that the agency estimated that there have been more than $10 billion in questioned and unsupported costs relating to Iraq reconstruction and troop support contracts since the war began in 2003.

Of the $10 billion in suspect billings, the Defense Contract Audit Agency has identified $2.7 billion from one contractor alone – Halliburton.  The largest private contractor operating in Iraq is Halliburton. Through its KBR subsidiary, Halliburton has held three large contracts in Iraq. The Defense Contract Audit Agency has identified $2.7 billion in suspect billings in these three contracts. Specifically, under Halliburton’s largest Iraq contract, providing support services for the troops, Pentagon auditors have found $2.4 billion in questioned and unsupported costs – including $1.9 billion in questioned costs and $450 million in unsupported costs.

Former Halliburton employees testified that the company charged $45 for cases of soda, billed $100 to clean 15-pound bags of laundry, and insisted on housing its staff at a five-star hotel in Kuwait.  Halliburton procurement officials described the company’s informal motto in Iraq as “Don’t worry about price.  It’s cost-plus.”  Furthermore, a Halliburton manager was indicted for “major fraud against the United States” for allegedly billing more than $5.5 million for work that should have cost only $685,000 in exchange for a $1 million kickback from a Kuwaiti subcontractor.

At least ten companies, with billions of dollars in contracts, have already been forced to pay millions in penalties to resolve allegations of bid rigging, fraud, gross overcharging, delivery of faulty military parts and environmental damage.  Some of these same companies have faced such allegations during past military operations in other countries, but still received new contracts in Iraq. 

“I introduced the War Profiteering Prevention Act because anti-fraud laws that protect against the waste or theft of U.S. tax dollars in the United States do not apply to American companies overseas,” Abercrombie said.

• One contractor was found guilty of 37 counts of fraud, including false billing, and was ordered to pay more than $10-million in damages.  However, the decision was subsequently overturned because U.S. laws did not apply in Iraq.
• Despite millions of dollars in payments to U.S. companies, Iraqi power plants, telephone exchanges, and sewage and sanitation systems have either not been repaired, or have been fixed so poorly that they still don't function.
• $186 million was spent over two years to build 142 health care centers. Yet, only 15 were completed and only eight are open.  According to testimony, the contractor lacked qualified engineers, hired incompetent subcontractors, failed to supervise construction work and failed to enforce quality control.

Abercrombie’s War Profiteering Prevention Act would criminalize “war profiteering,” defined as contract fraud or overcharging for goods and services overseas.  Violations of the law would be a felony, punishable by up to 20 years in prison and a fine of up to $1 million or twice the illegal profits.  Jurisdiction for such cases, no matter where the alleged crimes are committed, would be in United States Federal Courts.

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