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Tuesday
Nov172009

PWC says whistleblower filed 40 ‘unsuccessful’ actions in Kuwaiti Courts

Events surrounding the indictment of Kuwaiti-based Public Warehousing Company for conspiracy to defraud the United States and other allegations raise questions about a key whistleblower in the case. In announcing PWC’s indictment on Monday, the Dept. of Justice said, “All of the charges concern multi-billion dollar contracts issued by the Department of Defense for feeding American troops in Iraq, Kuwait and Jordan.” PWC is scheduled for an initial appearance and arraignment in Atlanta on Nov. 20. A related civil action has also been filed against PWC.

But most major media have overlooked a strongly worded statement issued by PWC about the charges. That statement paints a complex picture of international intrigue and politics.

 PWC said in a Nov. 16 statement:
“The court documents filed in the United States reveal that the investigation leading to the indictment and the False Claims Act lawsuit was instigated by Kamal Mustafa Sultan, owner of Kamal Mustafa Sultan Company, who has a long history of strong animosity towards PWC, its officers and its employees. A July 19, 2009 San Antonio (Texas) Express-News story [Firm tied to Iraq scandal profited] raises major questions about the [al-Sultan’s] company: In the PWC matter, Kamal Mustafa Sultan brought a ‘qui tam’ case under the False Claims Act in November 2005, which means that he has a financial interest in the outcome of the case. In Kuwait, Kamal Mustafa Sultan has filed more than 40 court actions against PWC, its executives and its employees, and all of the court actions have been unsuccessful.”

The San Antonio  Express appears to confirm PWC’s account, with additional disclosures about Al-Sultan on Tuesday: “Public Warehousing Co., now known as Agility, was indicted by a federal grand jury in Atlanta based partly on allegations in the suit filed by a whistleblower, Kamal Mustafa Al-Sultan, whose own company appears to have offered a $40,000 bribe to now-former Army Maj. John L. Cockerham of San Antonio…Cockerham, who admitted taking $9.6 million in bribes from various companies and expected another $5.4 million, was scheduled for sentencing today in San Antonio, but it has been postponed until Dec. 2.”

The paper also said, “Officials have referred to Cockerham's case as the largest American bribery investigation the Iraq reconstruction produced.” Adding even more intrigue to the case, the paper noted, “The case spun from intertwined probes that resulted in the bizarre deaths of at least two military contracting officers, among them Army Lt. Col. Marshall Gutierrez, who died from ingesting antifreeze after questioning Public Warehousing's charges.”

The PWC corporate announcement about the Justice indictments also claimed prices had been “negotiated with, agreed to, and continually approved as by the U.S. government” since 2003.

PWC said attacks on convoys had destroyed more than 300 trucks and damaged another 700. “More than 30 employees have been killed and 200 injured carrying out their work in a war zone.”

The Justice Dept. said of the PWC indictment, “This indictment is the result of a multi-year probe into abuses in vendor contracts in the Middle East involving the illegal inflation of prices in contracts to feed our troops. The indictment alleges PWC submitted false information and manipulated prices to overcharge for food. Others who have engaged in similar conduct should beware. This indictment is only the first step. Our investigation of entities and persons who have defrauded the United States and our military is ongoing.”

The San Antonio Express disclosed additional information about the alleged whistle blower: “Ironically, Al-Sultan's company, KMSCO, was accused by the Army in 2004 of stealing fuel it was supposed to provide for troops, but settled the matter by paying a $500,000 penalty…The company also appears on a ledger outlining bribes Cockerham had received or aimed to collect for steering bottled-water contracts to handpicked firms. KMSCO, however, continues to receive multi-million dollar contracts, U.S. military records show.”

The PWC statement said of the Justice Dept. indictment, “[O]nce these allegations are examined in court, they will be found to be without merit. These allegations should have no impact on any current contracts with the U.S. government.”

The Dept. of Justice statement about PWC cautioned that the government has “intervened in a related civil action filed under the qui tam provisions of the False claims Act. The United States will be filing its own complaint in that civil action at a later date.” The government also asked anyone with information to come forward.

Issues with both PWC and KMSCO contracts suggest the challenges of moving vast quantities of product on an international scale and monitoring billions of dollars in federal contracts. And information disclosed by the government also appears to raise questions about the whistleblower who allegedly had serious problems in dealing with government contracts.


 

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    The charges came after federal officials joined a 2005 whistle-blower suit by Kamal Mustafa al-Sultan, the owner of a Kuwaiti company that had partnered with Public Warehousing to submit a proposal on the food supply contracts, the Justice Department said. The case remained under seal to let federal officials investigate the allegations and determine whether the U.S. government would join the lawsuit.

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