Houston company pays US$4 million to settle Iraq fraud allegations

Canoe | August 2, 2006

A company hired by Halliburton Co. to ship military cargo to Iraq has paid the government $4 million US to settle allegations it inflated invoices by adding a "war risk surcharge," the U.S. Justice Department said Wednesday.

The invoices from Houston-based EGL Inc., operating as Eagle Global Logistics, were for shipments of military goods sent from Dubai, United Arab Emirates, to Iraq between November 2003 and July 2004.

A former Dubai-based vice-president, Christopher Joseph Cahill, pleaded guilty in February to inflating the invoices by $1.14 million to cover the fraudulent surcharges.

The company won a war contract from Halliburton subsidiary Kellogg, Brown & Root in 2002 to fly freight into Baghdad from Dubai. The deal was part of a logistics contract between KBR and the government that has paid out more than $11 billion, according to the Army Field Support Command.

Cahill's fraud scheme began in November 2003 after a plane operated by a rival carrier was struck by a surface-to-air missile and landed at the Baghdad airport with its left wing in flames, according to court papers.

Cahill learned that carrier was seeking a new form of war-risk insurance and added a similar surcharge of 50 cents for every kilogram of freight on Eagle flights, prosecutors said.

KBR has said it has cooperated in the investigation and all government reviews of its business.

Halliburton, a Houston-based oilfield services company, has been criticized since the beginning of the war in Iraq for multibillion-dollar government contracts. U.S. Vice-President Dick Cheney was its chief executive from 1995 to 2000.

Last modified August 9, 2006