Contractor Fraud in Iraq Called Crime of the Century

The People vs. the Profiteers

Americans working in Iraq for Halliburton spin-off KBR have been outraged by the massive fraud they saw there. Dozens are suing the giant military contractor, on the taxpayers' behalf. Whose side is the Justice Department on?

by David Rose November 2007

On first meeting him, one might not suspect Alan Grayson of being a crusader against government-contractor fraud. Six feet four in his socks, he likes to dress flamboyantly, on the theory that items such as pink cowboy boots help retain a jury's attention. He and his Filipino wife, Lolita, chose their palm-fringed mansion in Orlando, Florida, partly because the climate alleviates his chronic asthma, and partly because they wanted their five children to have unlimited access to the area's many theme parks.

So help them, God: Anti-fraud crusader Alan Grayson.

Photograph by Gasper Tringale.

Grayson likes theme parks, too. Toward the end of two long days of interviews, he insists we break to visit Universal Studios, because it wouldn't be right for me to leave his adopted city without having sampled the rides. Later he sends me an e-mail earnestly inquiring which one I liked best.

He can be forgiven a little frivolity. In his functional home-office in Orlando, and at the Beltway headquarters of his law firm, Grayson & Kubli, Grayson spends most of his days and many of his evenings on a lonely legal campaign to redress colossal frauds against American taxpayers by private contractors operating in Iraq. He calls it "the crime of the century."

His obvious adversaries are the contracting corporations themselves—especially Halliburton, the giant oil-services conglomerate where Vice President Dick Cheney spent the latter half of the 1990s as C.E.O., and its former subsidiary Kellogg, Brown & Root, now known simply as KBR. But he says his efforts to take on those organizations have earned him another enemy: the United States Department of Justice.

Over the past 16 years, Grayson has litigated dozens of cases of contractor fraud. In many of these, he has found the Justice Department to be an ally in exposing wrongdoing. But in cases that involve the Iraq war, the D.O.J. has taken extraordinary steps to stand in his way. Behind its machinations, he believes, is a scandal of epic proportions—one that may come to haunt the legacy of the Bush administration long after it is gone.

Consider the case of Grayson's client Bud Conyers, a big, bearded 43-year-old who lives with his ex-wife and her nine children, four of them his, in Enid, Oklahoma. Conyers worked in Iraq as a driver for Kellogg, Brown & Root. Spun off by Halliburton as an independent concern in April, KBR is the world's fifth-largest construction company. Before the war started, the Pentagon awarded it two huge contracts: one, now terminated, to restore the Iraqi oil industry, and another, still in effect, to provide a wide array of logistical-support services to the U.S. military.

In the midday heat of June 16, 2003, Conyers was summoned to fix a broken refrigerated truck—a "reefer," in contractor parlance—at Log Base Seitz, on the edge of Baghdad's airport. He and his colleagues had barely begun to inspect the sealed trailer when they found themselves reeling from a nauseating stench. The freezer was powered by the engine, and only after they got it running again, several hours later, did they dare open the doors.

The trailer, unit number R-89, had been lying idle for two weeks, Conyers says, in temperatures that daily reached 120 degrees. "Inside, there were 15 human bodies," he recalls. "A lot of liquid stuff had just seeped out. There were body parts on the floor: eyes, fingers. The goo started seeping toward us. Boom! We shut the doors again." The corpses were Iraqis, who had been placed in the truck by a U.S. Army mortuary unit that was operating in the area. That evening, Conyers's colleague Wallace R. Wynia filed an official report: "On account of the heat the bodies were decomposing rapidly.… The inside of the trailer was awful."

It is not unheard of for trucks in a war zone to perform hearse duty. But both civilian and U.S.-military regulations state that once a trailer has been used to store corpses it can never again be loaded with food or drink intended for human consumption. According to the U.S. Army's Center for Health Promotion and Preventive Medicine, "Contact with whole or part human remains carries potential risks associated with pathogenic microbiological organisms that may be present in human blood and tissue." The diseases that may be communicated include aids,hepatitis, tuberculosis, septicemia, meningitis, and Creutzfeldt-Jakob disease, the human variant of mad cow.

But when Bud Conyers next caught sight of trailer R-89, about a month later, it was packed not with human casualties but with bags of ice—ice that was going into drinks served to American troops. He took photographs, showing the ice bags, the trailer number, and the wooden decking, which appeared to be stained red. Another former KBR employee, James Logsdon, who now works as a police officer near Enid, says he first saw R-89 about a week after Conyers's grisly discovery. "You could still see a little bit of matter from the bodies, stuff that looked kind of pearly, and blood from the stomachs. It hadn't even been hosed down. Afterwards, I saw that truck in the P.W.C.—the public warehouse center—several times. There's nothing there except food and ice. It was backed up to a dock, being loaded."

Former KBR driver Bud Conyers's photo of a truck carrying beverage ice less than a month after it hauled rotting corpses.

As late as August 31, 11 weeks after trailer R-89 was emptied of the putrefying bodies, a KBR convoy commander named Jeff Allen filed a mission log stating that it had carried 5,000 pounds of ice that day. This ice, Allen wrote, was "bio-contaminated." But to his horror, on that day alone, "approx 1,800 pounds [were] used."

Conyers and Logsdon say that R-89 was not the only truck that was loaded with ice after being used as a mortuary. They attribute this state of affairs to a chronic shortage of trucks brought about by systemic failures in KBR's operation. The firm had purchased some 200 reefers in Iraq, but only a quarter of them worked. "We had crap-assed trucks they'd bought from local dealers," Logsdon says. "Often you'd be driving one they'd pieced together from several just to get it on the road." He and other former KBR workers say that even new vehicles, some of which cost hundreds of thousands of dollars, often broke down because of an absence of affordable spare parts. Instead of paying to repair them, the company often burned disabled trucks in pits or by the side of the road. Conyers tried repeatedly to draw his superiors' attention to these and other alleged abuses, but to no avail. (In an e-mailed statement, KBR denied that it "did or does" order defective vehicles, adding that it disposes of equipment only with "the approval of designated Army personnel.")

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