Justice Department Announces Halliburton Indictments, Congressman Lynch Calls For Further Investigation Of Kickback Allegations

Mar 21, 2005

Today, the Justice Department announced an indictment against a Halliburton official and subcontractor for "major fraud against the United States” under Halliburton’s LOGCAP contract to provide support for the U.S. Army in Kuwait and Iraq.

 

The indictment alleges that Jeff Mazon, a former manager at Halliburton subsidiary Kellogg, Brown, and Root, and Ali Hijazi, the managing partner of Halliburton subcontractor LaNouvelle General Trading and Contracting Company, billed U.S. taxpayers more than $5.5 million for work that should have cost only $680,000 - a markup of more than 800%.

 

"Action to stop to overcharging by Halliburton is long overdue,” said Rep. Waxman.  "Overcharging the taxpayer is reprehensible, yet it appears that it was widespread.”

 

Earlier this week, Rep. Waxman released an audit by Defense Department auditors concluding that Halliburton overcharged by more than $100 million under the company’s contract to operate Iraq’s oil infrastructure.

 

Today’s announcement by the Justice Department follows a series of reports by the Defense Contract Audit Agency, the Coalition Provisional Authority Inspector General’s office, and the Government Accountability Office detailing rampant overcharging by Halliburton.

 

Rep. Stephen F. Lynch, a member of the Committee that has been investigating the kickback allegations, stated:  "I think it’s a disgrace that it has taken over a year since I first asked for the names of these individuals.  However, in light of these revelations, the Pentagon has to examine all the contracts and subcontracts overseen by this individual, all the business conducted by this subcontractor, and all of Halliburton’s billings related to both.”

 

Both companies involved with the kickback allegations, Halliburton and LaNouvelle, have been implicated in other overcharging schemes.  For example, previous testimony before the Committee revealed that LaNouvelle was charging $45 per case of soda and $100 per bag of laundry.  Documents obtained by Committee staff show that LaNouvelle’s laundry subcontract was approved and personally signed by Jeff Mazon.

 

The new information in the indictment also raises issues about the testimony of Halliburton officials before Congress.  At a July 22, 2004, hearing held by the Government Reform Committee, Alfred Neffgren, a chief operations officer at KBR, was questioned about the authority and positions of the Halliburton employees being investigated.

 

Rep. C.A. "Dutch” Ruppersberger, the Member of Congress who questioned Halliburton officials about the kickbacks and a former Maryland prosecutor, stated:  "We have asked Halliburton officials repeatedly whether these employees played a managerial role, and they told us they did not.”

 

When asked whether these Halliburton employees were managers, Mr. Neffgren testified, "No, they weren’t”; they were "administrative people.”  Upon further questioning, he testified that they were "senior subcontract administrators.”  According to the federal grand jury indictment, however, Jeff Mazon held the managerial position of Procurement, Materials and Property Manager.

 

Mr. Neffgren also downplayed Mr. Mazon’s role in overseeing subcontracts, stating that there were "300 to 350” senior subcontract administrators in Iraq at the time.  Other former Halliburton employees have informed Committee staff that there were far fewer managers with Mazon’s position in Iraq and Kuwait.  

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