Unaccountable Contractors

May 4th, 2008at 03:01pm Posted by Eli

Yet another great example of how much the Bush administration cares about our troops:

The Pentagon has provided $30 billion in contracts to KBR during the Iraq War.  Apparently that’s just the Basic Troop Support Package, however, because it’s not enough money to keep the contractor from electrocuting a dozen troops in showers and elsewhere throughout Iraq and Afghanistan.


The accidental deaths and close calls, which are being investigated by Congress and the Defense Department’s inspector general, raise new questions about the oversight of contractors in the war zone, where unjustified killings by security guards, shoddy reconstruction projects and fraud involving military supplies have spurred previous inquiries.American electricians who worked for KBR, the Houston-based defense contractor that is responsible for maintaining American bases in Iraq and Afghanistan, said they repeatedly warned company managers and military officials about unsafe electrical work, which was often performed by poorly trained Iraqis and Afghans paid just a few dollars a day.

One electrician warned his KBR bosses in his 2005 letter of resignation that unsafe electrical work was “a disaster waiting to happen.” Another said he witnessed an American soldier in Afghanistan receiving a potentially lethal shock. A third provided e-mail messages and other documents showing that he had complained to KBR and the government that logs were created to make it appear that nonexistent electrical safety systems were properly functioning.


One former KBR electrician was quite frank about what’s going on:

And Mr. Bliss, who saw a soldier standing next to him in Qalat, Afghanistan, receive a severe shock from an electrical box that was not supposed to be charged, said his KBR bosses mocked him for raising safety issues. They were “not giving the Army what it needed,” he said, “and not giving the soldiers what they deserved.”

I understand that accidents happen in combat zones.  I know that nothing ever runs perfectly under these conditions.  But that’s not what bothers me.  What bothers me is the fact that taxpayers are funding these clowns to the tune of $30 billion and counting.  And they’re not capable of producing work remotely close to what the government could do for itself in terms of quality and speed.

And then there’s this:

In March 2005, one of the Pentagon’s most trusted contractors – Virginia-based MPRI, founded by retired senior military leaders – won a $400 million contract to train police in Iraq and other hotspots. Two months later, MPRI set up a company in Bermuda to which it subcontracted much of the work.

It was not the first time that MPRI executives had used a shell company in an offshore tax haven to perform government-funded work. A year earlier, MPRI headed a joint venture that won a $1.6 billion contract to provide US peacekeeping forces in Kosovo and elsewhere. Three months later, MPRI set up a company in the Cayman Islands to do the work.

Like MPRI’s Bermuda subsidiary, the Cayman Islands company appears to have no phone number, website, or staff of its own there.

Rick Kiernan, an MPRI spokesman, declined to explain why the company created the two offshore entities and stressed that MPRI operates in “total adherence or compliance with the current law.”

But tax lawyers say that MPRI appears to be avoiding the payment of roughly $4 million dollars a year in Social Security and Medicare taxes for the police-training contract alone and is sidestepping scrutiny by hiring workers through offshore entities based outside the jurisdiction of the Internal Revenue Service.

“The employer is trying to take itself out of the audit reach of the IRS,” said California-based tax lawyer James R. Urquhart III.


MPRI’s use of offshore shell companies has received little notice from the agencies that pay for their services. State Department officials say that their contractors have a right to subcontract work, even to their own wholly-owned subsidiaries set up in offshore tax havens.

“A contractor generally has the right to retain and terminate subcontractors as it deems necessary,” a State Department official said in an e-mail response to a Globe inquiry.

The US Army, for its part, also has declined to condemn the practice.

“We know that it is a practice that goes on,” said Jeffrey Parsons, director of contracting for the Army Materiel Command. “I would not say anyone encourages it, but there are no rules or pratices that would prohibit it. I think that is why Congress is weighing in.”

I can’t imagine what it would take for one of these companies to lose a government contract, much less face criminal sanctions.

Stories like these really drive home the relationship between the government and the contractors: The contractors aren’t paid to deliver services, they’re paid for being loyal and connected Republicans, so it doesn’t matter whether they deliver on their contracts (or manage to not kill anyone), or whether they pay their fair share of taxes.  It’s nothing more than cronyism at the corporation level.

(h/t dakine)

Entry Filed under: Bush,Corruption/Cronyism,Iraq,Republicans,Wankers,War

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