Corruption stench as company loses Iraq contract
By Marian Wilkinson,
SMH Correspondent in Washington
May 21, 2004
One of Australia's largest postwar contracts in Iraq has collapsed, with the partners embroiled in a multi-million-dollar legal battle and allegations of corruption in the awarding of contracts by a leading Pentagon supplier.
Morris Corporation, a Queensland catering company that has delivered meals to the armed forces in hot-spots from Somalia to Cambodia, was dumped last year by the giant US military contractor Halliburton, losing a $100 million contract to supply meals to US troops in Iraq.
Morris Corporation won the catering contract last June in partnership with a Kuwaiti company, KCPC, soon after the fall of Saddam Hussein.
The deal was praised by the Howard Government as a signal that Australian companies would get fair treatment over postwar contracts in Iraq.
The contract was to feed 18,000 troops at three camp sites in northern Iraq. But the US company quietly cancelled the deal six weeks later, saying that Morris and its Kuwaiti partner had not met their obligations.
Now an insider involved in the deal alleges that the Australian-Kuwaiti joint venture was approached by a Halliburton employee seeking kickbacks worth up to $3 million during the contract negotiations. "We're not talking about a paper bag. This guy was after a percentage of your sales every month."
The allegations surfaced during a messy legal brawl between Halliburton and its former contractors Morris and KCPC, who are seeking a settlement over the termination of the contract.
The head of Morris Corporation, Robert McVicker, was in Washington this week for legal talks over the settlement.
Questioned at his Washington hotel, Mr McVicker told said he could not comment on the allegations surrounding the collapse of the deal because of the legal negotiations.
But he did say: "While we are disheartened about what's happened in Iraq, we stand to be accountable by whoever. At the very least we have our integrity in tact. We still believe there's an opportunity in Iraq. At this time it would be foolhardy to make comments that could prohibit us from gaining more work."
Halliburton terminated the contract after claiming that the facilities needed for the catering service for the US troops had fallen behind schedule.
The construction of kitchens and dining facilities, handled by the Kuwaiti company, was plagued by security problems and hold-ups in supply convoys.
In the legal brawl between Halliburton and the Australian-Kuwaiti partners, the reasons for the termination are in dispute.
The new allegations that a bribe was sought by a Halliburton employee for the contract will raise serious concerns in Congress and the Pentagon, where Halliburton is already under investigation over kickbacks in a contract to supply fuel to the US military.
Pentagon auditors are scrutinising all of Halliburton's meal contracts after they foundmassive overbilling by the company but until now there have been no allegations of corruption in the catering contracts.
The insider who spoke to the Herald said that the Halliburton employee wanted a percentage of the catering contract in exchange for securing the contract for the joint venture. "They wanted kickbacks of 3 per cent to 4 per cent, which pushed up the prices because then the sub-contractors would add the price of the kickbacks to their costs."
The kickbacks were supposed to be paid to a "consultant" who would act as a cut-out between the Halliburton employee and the payments. The proposed arrangement would have cost the joint venture more than $3 million in kickbacks.
There is no evidence that any money was paid over for the kickbacks by either KCPC or Morris Corporation.
Confidential Halliburton documents given to the Herald show that the US Halliburton employee who allegedly approached the joint venture was involved in awarding millions of dollars worth of Halliburton work in Kuwait to supply the US military with services. The Herald was unable to contact the employee.
Halliburton headquarters in Houston refused to discuss the specific allegations, saying "personnel status and individual assignments are private matters".
The company also said it would not answer questions about the termination of the Morris contract.
CONTINUED IN http://expage.com/haliburtoncorruption1