U.S. Contractor Accused Of Fraud Still Winning Big Projects In Afghanistan

WASHINGTON | On July 31, 2006, an employee of The Louis Berger Group, a contractor handling some of the most important U.S. rebuilding projects in Afghanistan, handed federal investigators explosive evidence that the company was intentionally and systematically overbilling American taxpayers.

Neither the whistle-blower’s computer disk full of incriminating documents nor a trail of allegations of waste, fraud and shoddy construction, however, prevented Louis Berger from continuing to reap hundreds of millions of dollars in federal contracts.

In fact, two months after the government learned of the employee’s allegations, the U.S. Agency for International Development tapped Louis Berger — which has an office in Kansas City — to oversee $1.4 billion in reconstruction contracts in Afghanistan.

The decision to brush aside the allegations and the evidence and keep doing business with Louis Berger, underscores a persistent dilemma for the Obama administration in Afghanistan and elsewhere.

Cutting ties with suspect war-zone contractors in Afghanistan would threaten the administration’s effort to rebuild the country and begin withdrawing some of the nearly 100,000 U.S. troops there next July. However, as the recession, unemployment and budget deficits prompt belt-tightening at home, the billions the administration is spending to try to rebuild Afghanistan and Iraq are receiving increasing scrutiny from Congress and the public.

Louis Berger’s alleged overbilling, a practice that dates at to least the mid-1990s, swelled to tens of millions in lost tax dollars, according to a person familiar with the inquiry who spoke to McClatchy Newspapers on the condition of anonymity because the allegations are the subject of a sealed court case.

Court documents, however, reveal that the Justice Department is negotiating a deal that would “aid in preserving the company’s continuing eligibility to participate” in federal contracting in Afghanistan and elsewhere.

Founded in 1953, The Louis Berger Group does engineering and construction-related work domestically and in about 80 countries worldwide, according to the company’s website. It has more than 5,000 employees and is based in Morristown, N.J.

Holly Fisher, a Louis Berger spokeswoman, said the investigation into the company’s pricing shouldn’t taint its work for the government.

“While its work in Afghanistan was covered by that methodology, it is the methodology that is in question, not the work in Afghanistan,” she said.

Fisher declined to answer additional questions about the investigation or to make any corporate officers available for interviews.

USAID officials acknowledged last year in an internal report that they’d lost confidence in Louis Berger to oversee projects under the latest, $1.4 billion Afghanistan contract, which is jointly held with Black & Veatch of Overland Park.

USAID, however, didn’t respond for three weeks to repeated requests for interviews about why it continued to award contracts to Louis Berger or about the ongoing criminal investigation or on contracting in Iraq and Afghanistan.

Instead, the agency issued a statement pointing to its internal report about the joint venture.

“The assessment found vulnerabilities, and we immediately worked to address the identified issues,” USAID said.

The agency said it began to hold weekly meetings with company officials, assigned monitors to every site and changed personnel involved in the contract.

“USAID continues to take necessary actions to protect U.S. taxpayer funds in this matter,” the statement said. “We are engaged in ongoing dialogue with the Louis Berger Group, Inc. to ensure that the corporation is in full compliance with our contracts.”

However, Ashley Jackson, the head of policy in Afghanistan for the international aid organization Oxfam, said little has changed despite the Obama administration’s pledge to revamp the agency.

USAID hasn’t been an aggressive watchdog in Afghanistan, partly because it’s under political pressure to pump billions into the country without regard to the quality of the work, Jackson said.

“A system has emerged where USAID is basically like a pass-through for these contractors,” she said.

Source: Kansas City Star

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