by Ben Vernia | September 18th, 2011
On September 16, the Department of Justice announced that the Saudi Arabian company Tamimi Global Company has entered an 18-month deferred prosecution agreement and paid $13 million to settle criminal and civil kickback and illegal gratuity charges. According to DOJ’s press release:
Saudi Arabia-based Tamimi Global Company Ltd (TAFGA) has agreed to pay the United States $13 million to resolve criminal and civil allegations that the company paid kickbacks to a Kellogg Brown & Root Inc. (KBR) employee and illegal gratuities to a former U.S. Army sergeant, in connection with contracts in support of the Army’s operations in Iraq and Kuwait. The civil matter was handled by the Justice Department’s Civil Division, and the criminal matter was handled by the U.S. Attorney’s Office for the Central District of Illinois.
The U.S. alleges that employees of TAFGA paid kickbacks to KBR to obtain subcontracts awarded under LOGCAP (Logistics Civil Augmentation Program) III – KBR’s prime contract with the U.S. Army to provide logistical support to the military in conflicts abroad, including Iraq and Afghanistan. LOGCAP III is the third generation of contracts under the program. KBR performs its obligations under the contract largely through subcontractors such as TAFGA.
The U.S. also alleges that employees of TAFGA paid illegal gratuities to Army Sergeant Ray Chase. Chase was responsible for Army food services at camps Doha and Arifjan (Zone 1) in Kuwait in 2002 and 2003. As alleged in the information, Chase received regular payments from TAFGA employees on account of official acts that he took while he served in Kuwait in 2002 and 2003. TAFGA has now admitted that its employees entered into a conspiracy to pay illegal gratuities to Chase.
TAFGA appeared today before Senior Judge Michael M. Mihm in the U.S. District Court for the Central District of Illinois in Peoria, Ill., on consideration of a deferred prosecution agreement (DPA) between TAFGA and the U.S. Attorney’s Office. Under the terms of that agreement, TAFGA will pay the United States $5.6 million as part of a deferred prosecution and institute a strict compliance program to ensure that the company and its employees will abide by the legal and ethical standards required for government contracts. If TAFGA meets its obligations under the agreement without violation for 18 months, the United States will dismiss the criminal charges.
As part of the criminal agreement, TAFGA admitted conspiring to pay kickbacks to former KBR subcontract manager Steven Lowell Seamans in return for favorable treatment in the award and performance of a subcontract to provide dining services at Camp Arifjan in Kuwait. The conspiracy lasted from October 2002 to March 2006. In related proceedings in March 2006, Seamans pleaded guilty to accepting $60,500 in kickbacks from TAFGA’s former director of operations in Kuwait, Mohammad Shabbir Khan, for the award of the Camp Arifjan subcontract. In June 2006, Khan pleaded guilty to paying Seamans $133,000 in kickbacks for the award of this and another subcontract. Both were sentenced to prison and ordered to pay restitution. In the DPA unsealed today, TAFGA also admitted that as part of the conspiracy charged its then employees made false statements to federal investigators about a phantom business deal to cover up wire transfers to Seamans transmitting the kickbacks. As alleged, this transaction also involved another former TAFGA operations director, Zubair Khan. Khan has been indicted in the Central District of Illinois, and that case is still pending.
With respect to the conspiracy involving Chase, TAFGA admitted that it is responsible for the misconduct of its employees who agreed to provide Chase illegal gratuities and in furtherance of that conspiracy provided Chase money and use of an apartment in Kuwait. All of these illegal gratuities were paid to Chase on account of official acts he performed, or was going to perform, at Camps Doha and Arifjan in Kuwait in relation to the war effort. In 2010, Chase pled guilty and was sentenced to prison for accepting approximately $1.4 million in illegal gratuities from various contractors, including TAFGA. Chase was prosecuted in the Central District of Illinois.
In a separate civil settlement agreement, TAFGA agreed to pay the United States an additional $7.4 million to resolve civil allegations that TAFGA paid kickbacks in return for favorable treatment in the award and performance of the Camp Arifjan subcontract, a subcontract for dining facilities at the Baghdad Palace in Iraq, and five smaller subcontracts for dining services and other logistical support in Iraq, including temporary personal services and installation of tent pads and a shower/laundry unit. The United States alleged that TAFGA’s conduct violated the False Claims Act and the Anti-Kickback Act.
The case was apparently initiated by a Department of Defense investigation, and not a whistleblower suit.