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State Department Hired Corrupt Contractor To Build U.S. Embassy In Iraq

The State Department has come under intense criticism recently for its lavish $592-million embassy in Iraq. The embassy complex will have a staff of 1,000 people and operating costs will total $1.2 billion a year.

At a July hearing, the State Department official overseeing the construction assured Congress that the project was “on schedule and on budget” and bragged about the “extremely high quality of construction.” Yet the cost of the embassy is now expected to be $144 million more than projected and the opening of the embassy, set for September, has been delayed because of severe construction problems.

Today, House Oversight Committee Chairman Henry Waxman (D-CA) wrote to Secretary of State Condoleezza Rice and raised concerns about the “substandard work” done by the prime contractor, First Kuwaiti General Trading & Contracting Company. Waxman’s investigation has uncovered not only poor workmanship — widespread defects in fire detection systems and electrical wiring — but also a past record of corruption that the State Deparment may have purposefully overlooked:

The Kickback Scheme: Wadih El Absi, the managing Partner of First Kuwaiti, “personally engaged” in a $13-million kickback scheme with a major U.S. contractor in Iraq in 2003 “in order to obtain subcontracts.”

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Overcharges: Defense Contract Audit Agency (DCAA) documents show that in 2005, First Kuwaiti may have overcharged the government on a subcontract to “provide living containers to the U.S. military.” DCAA found that First Kuwaiti was charging over 260 percent “the median cost charged by its supplier.”

Waxman’s investigation underscores that the State Department’s inability to regulate Blackwater was not an isolated incident. As Waxman notes in his letter, “Based on the information the Committee has received, I do not understand why the State Department would rely upon First Kuwaiti to build the largest embassy in the world. … Increasingly, it appears that the State Department’s efforts in Iraq are in disarray.”

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