Incoming Judiciary Chairman Leahy
Targets Corruption
In First Bills Of 110th Congress
Leahy Introduces Bills To Combat War
Profiteering, Public Corruption
WASHINGTON (Thursday, January 4) – Signaling a
renewed emphasis on combating corruption at home and abroad, incoming
Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.), introduced a
package of bills Thursday targeting corrupt officials and private
companies seeking to defraud American taxpayers and troops.
“Americans want the culture of corruption to end.
From war profiteers and corrupt officials in Iraq, to convicted
Administration officials, to influence-peddling lobbyists and,
regrettably, even members of Congress, too many supposed public servants
have been serving their own interests, rather than the public interest,”
said Leahy.
Many Democratic Senators joined Leahy in
reintroducing a bill creating criminal penalties for war profiteers and
cheats who would exploit taxpayer-funded efforts in Iraq and elsewhere
around the world. The War Profiteering Prevention Act of 2007 builds
on earlier efforts by Leahy, who is also a senior member of the
Appropriations Committee, to crack down on this type of rampant fraud
and abuse. It is similar to legislation Leahy introduced in 2003, that
was subsequently passed by the Senate as part of an appropriations bill
but later torpedoed by the White House and the House Republican
leadership, which stripped out the Leahy provision.
Also on Thursday, Leahy joined with Senator Mark
Pryor (D-Ark.), on another anti-corruption measure aimed at
strengthening the tools available to federal prosecutors in combating
public corruption. This bill gives investigators and prosecutors the
statutory tools and the resources that they need to ensure that serious
and insidious public corruption is detected and punished, including
extending the statute of limitations on some of the worst crimes.
“The American people staged an intervention during
the November elections and made it clear that they would not stand for
it any longer. They expect the Congress to take action, and these bills
are a good first step toward meeting that call,” Leahy said. “We need
to restore the people’s trust by acting to clean up the people’s
government.”
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Below are Senator Leahy’s statements on the
War Profiteering Prevention Act of 2007 and the
Effective Corruption Prosecutions Act of 2007
and, as well as summaries of the two bills and background information
detailing a few examples of the fraud and war profiteering that have
already occurred in Iraq and elsewhere.
Statement of Senator
Patrick Leahy
On Introduction of the War Profiteering Prevention Act of 2007
January 4, 2007
Mr. LEAHY: Mr. President, today I am reintroducing
a bill that creates criminal penalties for war profiteers and cheats who
would exploit taxpayer-funded efforts in Iraq and elsewhere around the
world. Last year, despite the mounting evidence of widespread
contractor fraud and abuse in Iraq, the Republican–controlled Senate
would not act on it. Instead, the Congress took a terrible misstep in
seeking to end the work of the Special Inspector General for Iraq
Reconstruction. I have been proposing versions of this bill since 2003,
when it did pass the Senate. Unfortunately, this crucial provision was
stripped out of the final version of a bill by a Republican-controlled
conference committee.
There is growing evidence of widespread contractor
fraud in Iraq, yet prosecuting criminal cases against these war
profiteers is difficult under current law. We must crack down on this
rampant fraud and abuse that squanders American taxpayers’ dollars and
jeopardizes the safety of our troops abroad. That is why I renew my
efforts for accountability and action with the introduction of the War
Profiteering Prevention Act of 2007. I am pleased to join with
Senators Bingaman, Kerry, Harkin, Rockefeller, Dorgan, Wyden, Schumer,
Cantwell, Bill Nelson, Clinton, Lautenberg and Menendez to introduce
this legislation.
Widespread Fraud and War Profiteering in Iraq
Congress has sent billions upon billions of dollars
to Iraq with too little accountability and too few financial controls.
More than $50 billion of this money has gone to private contractors
hired to guard bases, drive trucks, feed and shelter the troops and
rebuild the country. This is more than the annual budget of the
Department of Homeland Security.
Instead of results from these companies, we are
seeing penalties levied for allegations of fraud and abuse. At least 10
companies with billions of dollars in U.S. contracts for Iraq
reconstruction have paid more than $300 million in penalties since 2000,
to resolve allegations of bid rigging, fraud, delivery of faulty
military parts and environmental damage. Seven other companies with
Iraq reconstruction contracts have agreed to pay financial penalties
without admitting wrongdoing.
In 2005, Halliburton took in approximately $3.6
billion from contracts to serve U.S. troops and rebuild the oil industry
in Iraq. Halliburton executives say that the company received about $1
billion a month for Iraq work in 2006. In addition, last month, we
learned of new plans to spend hundreds of millions more to create jobs
in Iraq.
Last year, the Special Inspector General for Iraq
Reconstruction found that millions of U.S. taxpayer funds appropriated
for Iraq reconstruction have been lost and diverted. Yet we continue to
send more taxpayer funds to Iraq, without accountability.
Too much of this money is unaccounted for, and many
of the facilities and services that these funds were supposed to pay for
are still nonexistent. We in Congress must ask – where did all the
money go? We need to press for more accountability over the use and
abuse of billions of taxpayers’ dollars sent as development aid to Iraq,
not less.
Accountability is Long Overdue
A new law to combat war profiteering in Iraq and
elsewhere is sorely needed and long overdue. Although there are
anti-fraud laws to protect against the waste of U.S. tax dollars at
home, no law expressly prohibits war profiteering or expressly confers
jurisdiction on U.S. federal courts to hear fraud cases involving war
profiteering committed overseas.
The bill I introduced today would criminalize Awar
profiteering@ – overcharging taxpayers in order to defraud and to profit
excessively from a war, military action, or reconstruction efforts. It
would also prohibit any fraud against the United States involving a
contract for the provision of goods or services in connection with a
war, military action, or for relief or reconstruction activities. This
new crime would be a felony, subject to criminal penalties of up to 20
years in prison and fines of up to $1 million, or twice the illegal
gross profits of the crime.
The bill also prohibits false statements connected
with the provision of goods or services in connection with a war or
reconstruction effort. This crime would also be a felony, subject to
criminal penalties of up to 10 years in prison and fines of up to $1
million, or twice the illegal gross profits of the crime.
The measure also addresses weakness in the existing
laws used to combat war profiteering, by providing clear authority for
the Government to seek criminal penalties and to recover excessive
profits for war profiteering overseas. These are strong and focused
sanctions that are narrowly tailored to punish and deter fraud or
excessive profiteering in contracts, both at home and abroad.
The message sent by this bill is clear -- any act
to exploit the crisis situation in Iraq or elsewhere overseas for
exorbitant gain is unacceptable, reprehensible, and criminal. Such
deceit demeans and exploits the sacrifices that our military personnel
are making in Iraq and Afghanistan, and around the world. This bill
also builds on a strong legacy of historical efforts to stem war
profiteering. Congress implemented excessive-profits taxes and contract
renegotiation laws after both World Wars, and again after the Korean
War. Advocating exactly such an approach, President Roosevelt once
declared it our duty to ensure that “a few do not gain from the
sacrifices of the many.”
A
Fresh Start
Our Government cannot in good faith ask its people
to sacrifice for reconstruction efforts that allow some to profit
unfairly. When U.S. taxpayers have been called upon to bear the burden
of reconstruction contracts – where contracts are awarded in a system
that offers little competition and even less accountability – concerns
about wartime profiteering are a grave matter.
Combating war profiteering is not a Democratic
issue, or a Republican issue. Rather, it is a cause that all Americans
can support. When I first introduced this bill in 2003, it came to be
cosponsored by 21 Senators. The Senate Appropriations Committee also
unanimously accepted these provisions during a Senate Appropriations
Committee markup of the $87 billion appropriations bill for Iraq and
Afghanistan for Fiscal Year 2004, and this provision passed the Senate.
Passing bipartisan war profiteering prevention legislation was the right
thing to do then, and it is the right thing to do now.
I am hopeful that in a new year, and with a new
Congress, we can make a fresh start and forge a bipartisan partnership
on this important issue that will result in passage of this bill. I ask
unanimous consent that a copy of the bill be printed in the Record.
# # # # #
War Profiteering Prevention Act of 2007
§ Criminalizes war profiteering, which is
defined as materially overvaluing any good or service with the specific
intent to excessively profit from the war and relief or reconstruction
activities
§ Statute would strengthen the tools
available to federal prosecutors to combat war profiteering by providing
clear authority for the Government to seek criminal penalties and to
recover excessive profits for war profiteering overseas.
§ Prohibits any fraud against the United
States, Iraq, or any other foreign country involving a contract for the
provision of any goods or services in connection with a war, military
action, or relief or reconstruction activities.
§ Subjects violators to up to 20 years
imprisonment and a fine not to exceed the greater of $1,000,000 or twice
the amount of any illegal gross profits, or both.
§ Prohibits making a false statement in any
matter involving a contract for the provision of any goods or services
in connection with a war, military action, or relief or reconstruction
activities.
§ Subjects violators of this provision to
up to 10 years imprisonment and a fine not to exceed the greater of
$1,000,000, or twice the amount of any illegal gross profits, or both.
§ Creates extraterritorial jurisdiction
over offenses committed overseas, and covers any person in the United
States or abroad who violates its provisions.
(Background Information)
Billions Of Taxpayer Dollars Lost
To Fraud And Waste In Iraq And Elsewhere
The United States has spent more than a quarter of
a TRILLION dollars during its four years in Iraq.
Over $50 BILLION -- more than the annual budget of
the Department of Homeland Security -- has been spent to hire private
contractors to guard bases, drive trucks, feed and shelter the troops
and rebuild the country.
BILLIONS of taxpayer dollars are unaccounted for,
according to a finding by the special inspector general examining the
Iraq reconstruction effort.
Since 2000, 10 companies with billions of dollars
in U.S. contracts for Iraq reconstruction have paid more than $300
MILLION IN PENALTIES to resolve allegations of bid rigging, fraud,
delivery of faulty military parts and environmental damage in connection
with other projects.
Examples of Fraud and Waste - Custer Battles, Halliburton and Bechtel
CUSTER BATTLES is accused of bilking the government
out of $50 MILLION
Custer Battles billed the government nearly $10
MILLION when its actual costs were less than $4 MILLION, according to a
government investigation.
Custer Battles over billed electricity costs by
$326,000 - Actual electricity charges of $74,000 were billed at
$400,000.
Custer Battles over billed for trucks that did not
run by $572,000 – Actual purchase price of $228,000 for faulty trucks
were billed to government for $800,000.
The two largest government contractors in Iraq --
Bechtel Corp. and Halliburton Co. -- have been fined several times in
the past four years.
HALLIBURTON CO. averaged about $ 1 BILLION A MONTH
from the government for work in Iraq in 2006, according to executives.
The company took in $3.6 BILLION last year from contracts to serve U.S.
troops and rebuild the oil industry in Iraq.
A pattern of fraud, waste, and corruption by
Halliburton in Iraq emerged through news reports between December 2003
and May 2004. In December, a Pentagon investigation found evidence that
Halliburton's Kellogg, Brown & Root (KBR) had overcharged the U.S.
government some $61 MILLION for fuel deliveries from Kuwait to Iraq. In
January, Halliburton admitted to the Pentagon that two of its employees
took up to $6 million in kickbacks for awarding a Kuwaiti-based company
with work in Iraq. Then in early February it was reported that the
company had agreed to repay the U.S. government some $27 million for
meals that were never served to American troops.
Bills From Five-Star, Beachfront Hotel And Drivers
Paid to Haul Empty Trucks - In May 2006, the Coalition Provisional
Authority's inspector general started raising questions about the bills
that Halliburton had racked up at a five-star beachfront hotel near
Kuwait City. And 12 Halliburton truck drivers claimed they risked their
lives driving empty trucks in Iraq while their employer billed the
government for hauling absolutely nothing.
Investigation of Overcharging And Potential
Connection to Nigeria Bribery Scheme - Federal authorities are also
investigating whether Halliburton broke the law by using a subsidiary to
do business in Iran, whether the company overcharged for work done for
the Pentagon in the Balkans and whether it was involved in an alleged
$180 million bribery scheme in Nigeria. The company admitted in 2003
that it improperly paid $2.4 million to a Nigerian tax official.
BECHTEL CORP. paid more than $110,000 to the
Environmental Protection Agency and the Energy Department in 2000 and
2001 to settle alleged safety and environmental violations. Bechtel has
prime construction contracts in Iraq worth more than $2 billion.
Fines Exceeding $86 Million - Bechtel hired three
subcontractors in Iraq that have been fined more than $86 million in the
past four years, though none had been banned from getting new contracts.
Others Punished For Waste, Fraud and Abuse Of Govt.
Contracts
American International Contractors Inc., paid $4.7
million in fines in 2000 after pleading guilty to bid rigging on a
U.S.-funded water project in Egypt, according to published reports.
AICI has part of a $325 million contract to rebuild Iraq's
transportation systems, has a share of a $500 million contract for
emergency construction needs in the Pentagon's Central Command region,
which includes Iraq and Afghanistan, and is in a partnership that has a
$70 million construction contract at Al-Udeid air base in Qatar, used to
support troops in Iraq.
Fluor Corp., paid $8.5 million to the Defense
Department in 2001 to settle charges it improperly billed the government
for work benefiting its commercial clients, according to published
reports. Fluor and AMEC created a joint venture that has $1.7 billion
in contracts to rebuild Iraq's electricity, water, sewer and trash
removal infrastructure.
Great Lakes Dredge & Dock Co., paid a $969,000 fine
in 2002 for environmental damage in the Florida Keys National Marine
Sanctuary, according to published reports. Bechtel awarded the company
a subcontract to clear the Iraqi port of Umm Qasr.
Northrop Grumman Corp., whose Vinnell Corp.
subsidiary was awarded a $48 million contract to train the new Iraqi
Army last year, according to published reports. Northrop Grumman has
been penalized $191.7 million in the past four years, including $750,000
paid to the Pentagon in 2000 in a case involving allegations of
providing faulty replacement parts for the JSTARS airborne surveillance
system.
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Statement of
Senator Patrick Leahy
On Introduction of the Effective Corruption Prosecutions Act of 2007
January 4, 2007
I am pleased to join with Senator Pryor today to
introduce the Effective Corruption Prosecutions Act of 2007, a bill to
strengthen the tools available to federal prosecutors in combating
public corruption. This bill gives investigators and prosecutors the
statutory tools and the resources they need to ensure that serious and
insidious public corruption is detected and punished.
In November, voters sent a strong message that they
were tired of the culture of corruption. From war profiteers and
corrupt officials in Iraq to convicted Administration officials to
influence-peddling lobbyists and, regrettably, even members of Congress,
too many supposed public servants were serving their own interests,
rather than the public interest. The American people staged an
intervention and made it clear that they would not stand for it any
longer. They expect the Congress to take action. We need to restore the
people’s trust by acting to clean up the people’s government.
The Senate’s new leadership is introducing
important lobbying reform and ethics legislation. Similar legislation
passed the Senate last year, but stalled in the House. This is a vital
first step.
But the most serious corruption cannot be prevented
only by changing our own rules. Bribery and extortion are committed by
people bent on getting around the rules and banking that they won’t get
caught. These offenses can be difficult to detect and even harder to
prove. Because they attack the core of our democracy, these offenses
must be found out and punished. Congress must send a signal that it
will not tolerate this corruption by providing better tools for federal
prosecutors to combat it. This bill will do exactly that.
First, the bill extends the statute of limitations
for the most serious public corruption offenses. Specifically, it
extends the statute of limitations from five years to eight years for
bribery, deprivation of honest services, and extortion by a public
official. This is an important step because public corruption cases are
among the most difficult and time-consuming cases to investigate and
prosecute. They often require use of informants and electronic
monitoring, as well as review of extensive financial and electronic
records, techniques which take time to develop and implement.
Bank fraud, arson, and passport fraud, among other
offenses, all have 10-year statutes of limitations. Since public
corruption offenses are so important to our democracy and these cases
are so difficult to investigate and prove, a more modest extended
statute of limitations for these offenses is a reasonable step to help
our corruption investigators and prosecutors do their jobs. Corrupt
officials should not be able to get away with their ill-gotten gains
just by winning the waiting game.
This bill also facilitates the investigation and
prosecution of an important offense known as federal program bribery.
(Title 18, United States Code, section 666). Federal program bribery is
the key federal statute for prosecuting bribery involving state and
local officials, as well as officials of the many organizations that
receive substantial federal money. This bill would allow agents and
prosecutors investigating this important offense to request authority to
conduct wiretaps and to use federal program bribery as a basis for a
racketeering charge.
Wiretaps, when appropriately requested and
authorized, are an important method for agents and prosecutors to gain
evidence of corrupt activities, which can otherwise be next to
impossible to prove without an informant. The Racketeer Influenced and
Corrupt Organizations (RICO) statute is also an important tool which
helps prosecutors target organized crime and corruption.
Agents and prosecutors may currently request
authority to conduct wiretaps to investigate many serious offenses,
including bribery of federal officials and even sports bribery, and may
predicate RICO charges on these offenses, as well. It is only
reasonable that these important tools also be available for
investigating the similar and equally important offense of federal
program bribery.
Lastly, this bill authorizes $25 million in
additional federal funds over each of the next four years to give
federal investigators and prosecutors needed resources to go after
public corruption. Last month, FBI Director Mueller in written testimony
to the Judiciary Committee called public corruption the FBI’s top
criminal investigative priority. However, a September 2005 Report by
Department of Justice Inspector General Fine found that, from 2000 to
2004, there was an overall reduction in public corruption matters
handled by the FBI. The report also found declines in resources
dedicated to investigating public corruption, in corruption cases
initiated, and in cases forwarded to US Attorney’s Offices.
I am heartened by Director Mueller’s assertion that
there has recently been an increase in the number of agents
investigating public corruption cases and the number of cases
investigated, but I remain concerned by the Inspector General’s
findings. I am concerned because the FBI in recent years has diverted
resources away from criminal law priorities, including corruption, into
counterterrorism. The FBI may need to divert further resources to cover
the growing costs of Sentinel, their data management system. The
Department of Justice has similarly diverted resources, particularly
from United States Attorney’s Offices.
Additional funding is important to compensate for
this diversion of resources and to ensure that corruption offenses are
aggressively pursued. My bill will give the FBI, the United States
Attorney’s Offices, and the Public Integrity Section of the Department
of Justice new resources to hire additional public corruption
investigators and prosecutors. They can finally have the manpower they
need to track down and make these difficult cases, and root out the
corruption.
If we are serious about addressing the egregious
misconduct that we have recently witnessed, Congress must enact
meaningful legislation to give investigators and prosecutors the
resources they need to enforce our public corruption laws. I strongly
urge Congress to do more to restore the public's trust in their
government.
I ask that a copy of the bill be printed in the
Record.
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Effective Corruption Prosecutions Act of 2007
Provides federal investigators and prosecutors the
statutory tools and the resources needed to ensure that serious and
insidious public corruption is detected and punished.
Extends the statute of limitations for the most
serious public corruption offenses, including bribery, deprivation of
honest services, and extortion by a public official, from five years to
eight years.
Facilitates the investigation and prosecution of a
key federal statute used for prosecuting bribery involving state and
local officials, as well as officials of the many organizations that
receive substantial federal money
Authorizes $25 million over each of the next four
years to give federal investigators and prosecutors needed resources to
go after public corruption.
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