U.S. charges two men with fraud of military contract in Kuwait

<p>A former employee of a Halliburton subsidiary and a Kuwaiti businessman were charged with cheating the U.S. military out of $3.5 million for refueling tankers used in the Iraq war.</p><p>Jeff Alex Mazon, 36, who was a procurement officer for Halliburton subsidiary KBR Inc., and Ali Hijazi developed a scheme to defraud the government by inflating bids on the tanker subcontract, an indictment announced Thursday alleges.</p><p>The men face four counts each of major fraud and six counts each of wire fraud. Each faces as much as 10 years in prison on each major fraud charge and a $5 million fine if convicted.</p><p>Conviction on each count of wire fraud could carry a sentence of up to 20 years in prison and a fine of $250,000 on conviction.</p><p>U.S. Attorney Jan Paul Miller refused to say whether KBR or Houston-based Halliburton are being investigated. Neither is named in the indictment.</p><p>Mazon was arrested Wednesday in Norcross, Ga., the Justice Department said. Hijazi is not in custody and Miller refused to say whether authorities know where he is.</p><p>The indictment came from a federal grand jury in Illinois because the Army Field Support Command at the Rock Island Arsenal oversees the military contract that included the tanker deal.</p><p>According to the indictment, Mazon accepted a bid on the tankers from Hijazi's company, LaNouvelle General Trading and Contracting Co., in 2003. He is accused of inflating the bid to $5.5 million on a project the company estimated would cost $680,000. The indictment says Mason then secretly inflated the bid of a competing company to make LaNouvelle's bid appear to be lower.</p><p>Hijazi paid Mazon $1 million for the favorable treatment, the indictment alleges.</p><p>Miller, the U.S. attorney, said KBR brought the matter to the government's attention last year.</p><p>KBR repaid the government for the refueling tanker subcontract when it recognized the potential fraud, and disqualified LaNouvelle from future work, said Halliburton spokeswoman Wendy Hall.</p><p>The bidding for the subcontract was reviewed by a Defense Department audit agency, said Dan Carlson, an Army Field Support Command spokesman. He could not say why auditors did not catch the allegedly inflated price on the tankers.</p><p>Miller said the investigation is continuing but would not elaborate.</p><p>Since 2001, the government has paid KBR $7.6 billion of an $11.6 billion contract for supporting troops in the Iraq war.</p><p>Vice President Dick Cheney headed Halliburton from 1995 to 2000, and Democratic members of Congress have repeatedly questioned whether Halliburton and its subsidiaries received favored treatment because of its connections. Cheney and other administration officials have denied Cheney had any role in Halliburton's government contract work.</p>

http://accesswdun.com/article/2005/3/149124