Hearing of the House Government Reform Committee:Unprecedented Challenges: Contracting and the Rebuilding of Iraq
HEADLINE: HEARING OF THE HOUSE GOVERNMENT REFORM COMMITTEE SUBJECT: UNPRECEDENTED CHALLENGES: CONTRACTING AND THE REBUILDING OF IRAQ
CHAIRED BY: REPRESENTATIVE TOM DAVIS (R-VA)
WITNESSES PANEL II: LAWRENCE LANZILOTTA, PRINCIPLE DEPUTY AND ACTING UNDER SECRETARY OF DEFENSE (COMPTROLLER), DEPARTMENT OF DEFENSE; DEIRDRE LEE, DIRECTOR, DEFENSE PROCUREMENT AND ACQUISITION POLICY, DEPARTMENT OF DEFENSE;
TINA BALLARD, DEPUTY ASSISTANT SECRETARY OF THE ARMY (POLICY AND PROCUREMENT), DEPARTMENT OF DEFENSE; GENERAL PAUL KERN, COMMANDING GENERAL, U.S. ARMY MATERIAL COMMAND; BRIGADIER GENERAL ROBERT CREAR, COMMANDER, SOUTHWESTERN DIVISION, U.S. ARMY CORPS OF ENGINEERS; WILLIAM H. REED, DIRECTOR, DEFENSE CONTRACT AUDIT AGENCY, DEPARTMENT OF DEFENSE
LOCATION: 2154 RAYBURN HOUSE OFFICE BUILDING, WASHINGTON, D.C.
BODY:
REP. STEPHEN F. LYNCH (D-MA): Thank you, Mr. Chairman. Let me just do a follow-up on that, because I'm a little bit confused.
Mr. Lanzilotta, earlier on questions from Mr. Waxman you stated that you got your information from Mr. Dorita and that you didn't speak to Mr. Mobbs.
MR. LANZILOTTA: Pardon me? I did get the --
REP. LYNCH: Is that true or false?
MR. LANZILOTTA: I spoke to Mr. Dorita concerning the Deputies Committee meeting and what was said at the Deputies Committee meeting. I spoke to Mr. Mobbs as to what his contact was with the vice president's office.
REP. LYNCH: Okay. All right. All right, thank you.
General Kern, first of all I want to thank the panel for helping the committee with its work. General Kern, at the committee's last meeting on March 11th we had an opportunity to have a brief conversation on the record, and I asked you about two Halliburton employees who took kickbacks from a Kuwaiti subcontractor in the amount of about $6.3 million in exchange for steering contracts to that Kuwaiti company. And I asked you for their identity and I also asked you for the information on the Kuwaiti company to find out if they're doing similar things in other areas.
And here's what I asked you. I said, we've put a lot of sunlight on this process to find out who these people were, and we need to do more of that. We need to find out how many contractors they oversaw, we need to find out who the Kuwaiti contractors were that were offering these bribes or kickbacks, and we need to find out, are those subcontractors who are providing these bribes doing other work in the country as well. And obviously we need to find out who these employees are. And in response to my question, you stated-this is a quote-"I promise you I'll get back to you." Unfortunately, sir, with all due respect, I have not heard from you. It's been a couple of months now. And while I just want to ask you, why is that?
GEN. KERN: Mr. Lynch, one, I was under the assumption that our offices have gotten back to you and given you the information which I was given, which was an advisory from the Department of Justice, because they have this under investigation, that I could not provide you the information at this time, because it's an active investigation.
REP. LYNCH: An active criminal investigation?
GEN. KERN: An active criminal investigation by the Department of Justice.
REP. LYNCH: It's a little bit inconsistent, and I just want to explain. We've had situations like this before with Mary Robinson. We were investigating the situation where the Kuwaitis were charging us 100 percent over what we should have been paying for gasoline from certain Kuwaiti contractors. This committee, both the majority and the minority leaders, had Ms. Robinson, who was also under a criminal investigation. She came in and testified. I will point out that her testimony was expected to be favorable to the administration, but she was offered to the committee even though it was in the midst of a criminal investigation.
So I'm just curious why these two individuals who-Halliburton's already paid the money back, the $6.3 million that they received in kickbacks. I don't know what the Kuwaitis got on the deal, how much they got. But the kickbacks have been paid back to the government. And I'm just curious why we can't get the identity of these folks. This is not a criminal investigation, this is a congressional investigation. I just want to know the identity to these folks and how widespread this practice of bribing our people-Halliburton's people through these Kuwaiti contractors.
GEN. KERN: Mr. Lynch, one, I have to believe that the lawyers in the Department of Justice are giving me good advice so that I do not prejudice the ongoing investigation so that we all see that this comes out the way we think it should equitably. Secondly, I do know that there is a threshold associated with these investigations where the fraud issues -- (inaudible) -- dollars changes and we have not proved yet that what the amount that has been alleged is being involved is the right amount. And I think that is one of the critical factors in this particular investigation. And if I could, I'd ask-I'll bring one of my counsels over to your office and we can talk about this in more detail. REP. LYNCH: That would be terrific. Okay, General, let me ask you then, we've got other federal departments that are investigating this misconduct.
GEN. KERN: That's correct.
REP. LYNCH: Have you shared that information with them?
GEN. KERN: We have shared all the information with them, yes.
REP. LYNCH: Okay. Let me ask Mr. Reed then.
Mr. Reed, have you gotten information regarding the identity of these two employees that took the $6 million or some such amount from these Kuwaiti contractors? You're doing the audit here for the Department of Defense. Have you got the information?
MR. REED: No, we haven't. But that is not unusual. When a matter of this nature is being investigated, the identities of the parties, both the ones who may have taken the kickbacks as well as the ones who were maybe given the kickbacks is not publicly disclosed or talked to people outside of the investigation, because to do so much compromise an investigative approach to the criminal investigators or whoever else is investigating. So I would not expect to be told that kind of detailed information.
REP. LYNCH: Let me be clear here. This is --
REP. DAVIS: The gentleman's time has expired. The gentleman's time has expired.
Gentleman from Maryland. He can yield to you if you can --
REP. LYNCH: Yeah, please.
REP. VAN HOLLEN: Mr. Chairman, I'd be happy to yield a moment to my colleague.
REP. LYNCH: Okay. So, Mr. Reed, you haven't been given the information.
General, can you tell me, what department are you sharing this information with if it's not with the contract auditing wing of the Department of Defense.
GEN. KERN: The Department of Justice.
REP. LYNCH: All right. In deference of my colleague, my kind colleague, I want to end my questioning. Thank you.
BREAK IN TRANSCRIPT
REP. LYNCH: Just to go back, General Kern and Mr. Reed, we know that there was mishandling here, that there was over $6 million in kickbacks that were paid to Halliburton employees. You won't tell me the names of the individuals. I can't find out the names of the Kuwaiti companies involved. I can't find out if they're doing other work at other places.
I can't understand why someone won't tell me what other contracts these two individuals were overseeing.
Can you at least tell me, either of you, have we severed all contracts with this company, this Kuwaiti company, that's been paying kickbacks to Halliburton employees? Can you at least tell me that?
GEN. KERN: Sir, I cannot tell you that. Part of what you're asking me is to presume that we've already judged that they're guilty, and I can't do that until the investigation takes place to make any judgments against them. And I can't prejudice the investigation while it's ongoing by divulging information which is not under my purview but under the investigator's purview right now.
REP. DAVIS: Thank you. The gentleman's time --
REP. LYNCH: So we haven't-have we suspended the contracts or anything like that, or is that --