No Comment — November 4, 2007, 6:56 pm

DOJ and Contractor Fraud

Back on June 29, I sat through some hearings before the House Judiciary Committee in which plaintiff’s counsel in a series of qui tam contract fraud suits described their futile efforts to get the Justice Department to investigate cases in which contractors were fleecing the taxpayers of tens of millions of dollars. A senior Justice official then responded with a series of highly improbable excuses for the Department’s inaction which left eyes rolling in the room. A former Justice lawyer seated near me, who now works with whistleblowers, said “Most people following this are going to get the impression that the Justice Department is not interested in rooting out fraud. Rather it’s interested in shielding the fraudsters. And most people are right.”

Today’s San Antonio Express-News carries a story which fit perfectly into the pattern established at that hearing.

Barrington “Barry” Godfrey of Houston tried to get mega-contractor KBR to quit overcharging the government for thousands of troops he said the company never fed.
He alleges he was forced out for raising the issue, and that the Justice Department tried unsuccessfully to keep his allegations secret and then refused to join him in a whistleblower suit. Iowa businesswoman Beth A. Hanken says she sounded the alarm more than a year ago about the military’s principal food distributor in Kuwait, Public Warehousing Co., over allegations it was taking kickbacks from a subcontractor that helped it inflate prices of food for U.S. troops. A Defense Department official, she claims, responded by forwarding her allegations to Public Warehousing, touching off legal threats that she believes were meant to silence her. The Justice Department this year declined to join a whistleblower lawsuit she filed.

The companies deny any wrongdoing, but Godfrey and Hanken are among a growing list of people who contend they were abandoned by the government when they stuck their necks out to protect taxpayers footing the bill for the war in Iraq. Alan M. Grayson, who represents Hanken, Godfrey and a handful of other whistleblowers in lawsuits about contracting fraud in Iraq, says the department is thwarting whistleblowers [not] helping them. He argues that the Bush administration sweeps many cases under the rug, obtains court orders to keep details from the public and that Justice Department lawyers threaten whistleblowers with dismissal of their cases or contempt of court simply for telling people what they know.

In prior conflicts, the Justice Department was a guard dog against contract fraud in war time. Today it’s a guard dog, all right. But the interests it protects certainly aren’t those of the public. Perhaps it sees its mission as protecting the contractors from scrutiny and oversight, at taxpayer expense.

Another well-known voice from the public watchdog community, Charlie Cray at the Center for Corporate Policy, puts it this way: “In the case of these fraud cases, it’s taxpayers’ interests that are on the line. Given how much they’re willing to spend on the war and priorities of the administration in general, I see no evidence that they are willing to protect the interests of taxpayers when it comes to corporate fraud.”

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