Bill put forward to fight public corruption and war profiteering,

http://leahy.senate.gov/press/200701/010407b.html

Incoming Judiciary Chairman Leahy Targets Corruption
In First Bills Of 110th Congress

Leahy Introduces Bills To Combat War Profiteering, Public Corruption

WASHINGTON - Signaling a renewed emphasis on combating corruption at home and abroad, incoming Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.), introduced a package of bills Thursday targeting corrupt officials and private companies seeking to defraud American taxpayers and troops.

“Americans want the culture of corruption to end. From war profiteers and corrupt officials in Iraq, to convicted Administration officials, to influence-peddling lobbyists and, regrettably, even members of Congress, too many supposed public servants have been serving their own interests, rather than the public interest,” said Leahy.

Many Democratic Senators joined Leahy in reintroducing a bill creating criminal penalties for war profiteers and cheats who would exploit taxpayer-funded efforts in Iraq and elsewhere around the world. The War Profiteering Prevention Act of 2007 builds on earlier efforts by Leahy, who is also a senior member of the Appropriations Committee, to crack down on this type of rampant fraud and abuse. It is similar to legislation Leahy introduced in 2003, that was subsequently passed by the Senate as part of an appropriations bill but later torpedoed by the White House and the House Republican leadership, which stripped out the Leahy provision.

Also on Thursday, Leahy joined with Senator Mark Pryor (D-Ark.), on another anti-corruption measure aimed at strengthening the tools available to federal prosecutors in combating public corruption. This bill gives investigators and prosecutors the statutory tools and the resources that they need to ensure that serious and insidious public corruption is detected and punished, including extending the statute of limitations on some of the worst crimes.

“The American people staged an intervention during the November elections and made it clear that they would not stand for it any longer. They expect the Congress to take action, and these bills are a good first step toward meeting that call,” Leahy said. “We need to restore the people's trust by acting to clean up the people's government.”

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Below are Senator Leahy's statements on the War Profiteering Prevention Act of 2007 and the Effective Corruption Prosecutions Act of 2007 and, as well as summaries of the two bills and background information detailing a few examples of the fraud and war profiteering that have already occurred in Iraq and elsewhere.

Statement of Senator Patrick Leahy
On Introduction of the War Profiteering Prevention Act of 2007
January 4, 2007

Mr. LEAHY: Mr. President, today I am reintroducing a bill that creates criminal penalties for war profiteers and cheats who would exploit taxpayer-funded efforts in Iraq and elsewhere around the world. Last year, despite the mounting evidence of widespread contractor fraud and abuse in Iraq, the Republican–controlled Senate would not act on it. Instead, the Congress took a terrible misstep in seeking to end the work of the Special Inspector General for Iraq Reconstruction. I have been proposing versions of this bill since 2003, when it did pass the Senate. Unfortunately, this crucial provision was stripped out of the final version of a bill by a Republican-controlled conference committee.

There is growing evidence of widespread contractor fraud in Iraq, yet prosecuting criminal cases against these war profiteers is difficult under current law. We must crack down on this rampant fraud and abuse that squanders American taxpayers' dollars and jeopardizes the safety of our troops abroad. That is why I renew my efforts for accountability and action with the introduction of the War Profiteering Prevention Act of 2007. I am pleased to join with Senators Bingaman, Kerry, Harkin, Rockefeller, Dorgan, Wyden, Schumer, Cantwell, Bill Nelson, Clinton, Lautenberg and Menendez to introduce this legislation.

Widespread Fraud and War Profiteering in Iraq

Congress has sent billions upon billions of dollars to Iraq with too little accountability and too few financial controls. More than $50 billion of this money has gone to private contractors hired to guard bases, drive trucks, feed and shelter the troops and rebuild the country. This is more than the annual budget of the Department of Homeland Security.

Instead of results from these companies, we are seeing penalties levied for allegations of fraud and abuse. At least 10 companies with billions of dollars in U.S. contracts for Iraq reconstruction have paid more than $300 million in penalties since 2000, to resolve allegations of bid rigging, fraud, delivery of faulty military parts and environmental damage. Seven other companies with Iraq reconstruction contracts have agreed to pay financial penalties without admitting wrongdoing.

In 2005, Halliburton took in approximately $3.6 billion from contracts to serve U.S. troops and rebuild the oil industry in Iraq. Halliburton executives say that the company received about $1 billion a month for Iraq work in 2006. In addition, last month, we learned of new plans to spend hundreds of millions more to create jobs in Iraq.

Last year, the Special Inspector General for Iraq Reconstruction found that millions of U.S. taxpayer funds appropriated for Iraq reconstruction have been lost and diverted. Yet we continue to send more taxpayer funds to Iraq, without accountability.

Too much of this money is unaccounted for, and many of the facilities and services that these funds were supposed to pay for are still nonexistent. We in Congress must ask – where did all the money go? We need to press for more accountability over the use and abuse of billions of taxpayers' dollars sent as development aid to Iraq, not less.

Accountability is Long Overdue

A new law to combat war profiteering in Iraq and elsewhere is sorely needed and long overdue. Although there are anti-fraud laws to protect against the waste of U.S. tax dollars at home, no law expressly prohibits war profiteering or expressly confers jurisdiction on U.S. federal courts to hear fraud cases involving war profiteering committed overseas.

The bill I introduced today would criminalize Awar profiteering@ – overcharging taxpayers in order to defraud and to profit excessively from a war, military action, or reconstruction efforts. It would also prohibit any fraud against the United States involving a contract for the provision of goods or services in connection with a war, military action, or for relief or reconstruction activities. This new crime would be a felony, subject to criminal penalties of up to 20 years in prison and fines of up to $1 million, or twice the illegal gross profits of the crime.

The bill also prohibits false statements connected with the provision of goods or services in connection with a war or reconstruction effort. This crime would also be a felony, subject to criminal penalties of up to 10 years in prison and fines of up to $1 million, or twice the illegal gross profits of the crime.

The measure also addresses weakness in the existing laws used to combat war profiteering, by providing clear authority for the Government to seek criminal penalties and to recover excessive profits for war profiteering overseas. These are strong and focused sanctions that are narrowly tailored to punish and deter fraud or excessive profiteering in contracts, both at home and abroad.

The message sent by this bill is clear -- any act to exploit the crisis situation in Iraq or elsewhere overseas for exorbitant gain is unacceptable, reprehensible, and criminal. Such deceit demeans and exploits the sacrifices that our military personnel are making in Iraq and Afghanistan, and around the world. This bill also builds on a strong legacy of historical efforts to stem war profiteering. Congress implemented excessive-profits taxes and contract renegotiation laws after both World Wars, and again after the Korean War. Advocating exactly such an approach, President Roosevelt once declared it our duty to ensure that “a few do not gain from the sacrifices of the many.”

A Fresh Start

Our Government cannot in good faith ask its people to sacrifice for reconstruction efforts that allow some to profit unfairly. When U.S. taxpayers have been called upon to bear the burden of reconstruction contracts – where contracts are awarded in a system that offers little competition and even less accountability – concerns about wartime profiteering are a grave matter.

Combating war profiteering is not a Democratic issue, or a Republican issue. Rather, it is a cause that all Americans can support. When I first introduced this bill in 2003, it came to be cosponsored by 21 Senators. The Senate Appropriations Committee also unanimously accepted these provisions during a Senate Appropriations Committee markup of the $87 billion appropriations bill for Iraq and Afghanistan for Fiscal Year 2004, and this provision passed the Senate. Passing bipartisan war profiteering prevention legislation was the right thing to do then, and it is the right thing to do now.

I am hopeful that in a new year, and with a new Congress, we can make a fresh start and forge a bipartisan partnership on this important issue that will result in passage of this bill. I ask unanimous consent that a copy of the bill be printed in the Record.

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War Profiteering Prevention Act of 2007

§ Criminalizes war profiteering, which is defined as materially overvaluing any good or service with the specific intent to excessively profit from the war and relief or reconstruction activities

§ Statute would strengthen the tools available to federal prosecutors to combat war profiteering by providing clear authority for the Government to seek criminal penalties and to recover excessive profits for war profiteering overseas.

§ Prohibits any fraud against the United States, Iraq, or any other foreign country involving a contract for the provision of any goods or services in connection with a war, military action, or relief or reconstruction activities.

§ Subjects violators to up to 20 years imprisonment and a fine not to exceed the greater of $1,000,000 or twice the amount of any illegal gross profits, or both.

§ Prohibits making a false statement in any matter involving a contract for the provision of any goods or services in connection with a war, military action, or relief or reconstruction activities.

§ Subjects violators of this provision to up to 10 years imprisonment and a fine not to exceed the greater of $1,000,000, or twice the amount of any illegal gross profits, or both.

§ Creates extraterritorial jurisdiction over offenses committed overseas, and covers any person in the United States or abroad who violates its provisions.

(Background Information)

Billions Of Taxpayer Dollars Lost
To Fraud And Waste In Iraq And Elsewhere

The United States has spent more than a quarter of a TRILLION dollars during its four years in Iraq.

Over $50 BILLION -- more than the annual budget of the Department of Homeland Security -- has been spent to hire private contractors to guard bases, drive trucks, feed and shelter the troops and rebuild the country.

BILLIONS of taxpayer dollars are unaccounted for, according to a finding by the special inspector general examining the Iraq reconstruction effort.

Since 2000, 10 companies with billions of dollars in U.S. contracts for Iraq reconstruction have paid more than $300 MILLION IN PENALTIES to resolve allegations of bid rigging, fraud, delivery of faulty military parts and environmental damage in connection with other projects.

Examples of Fraud and Waste - Custer Battles, Halliburton and Bechtel

CUSTER BATTLES is accused of bilking the government out of $50 MILLION

Custer Battles billed the government nearly $10 MILLION when its actual costs were less than $4 MILLION, according to a government investigation.

Custer Battles over billed electricity costs by $326,000 - Actual electricity charges of $74,000 were billed at $400,000.

Custer Battles over billed for trucks that did not run by $572,000 – Actual purchase price of $228,000 for faulty trucks were billed to government for $800,000.

The two largest government contractors in Iraq -- Bechtel Corp. and Halliburton Co. -- have been fined several times in the past four years.

HALLIBURTON CO. averaged about $ 1 BILLION A MONTH from the government for work in Iraq in 2006, according to executives. The company took in $3.6 BILLION last year from contracts to serve U.S. troops and rebuild the oil industry in Iraq.

A pattern of fraud, waste, and corruption by Halliburton in Iraq emerged through news reports between December 2003 and May 2004. In December, a Pentagon investigation found evidence that Halliburton's Kellogg, Brown & Root (KBR) had overcharged the U.S. government some $61 MILLION for fuel deliveries from Kuwait to Iraq. In January, Halliburton admitted to the Pentagon that two of its employees took up to $6 million in kickbacks for awarding a Kuwaiti-based company with work in Iraq. Then in early February it was reported that the company had agreed to repay the U.S. government some $27 million for meals that were never served to American troops.

Bills From Five-Star, Beachfront Hotel And Drivers Paid to Haul Empty Trucks - In May 2006, the Coalition Provisional Authority's inspector general started raising questions about the bills that Halliburton had racked up at a five-star beachfront hotel near Kuwait City. And 12 Halliburton truck drivers claimed they risked their lives driving empty trucks in Iraq while their employer billed the government for hauling absolutely nothing.

Investigation of Overcharging And Potential Connection to Nigeria Bribery Scheme - Federal authorities are also investigating whether Halliburton broke the law by using a subsidiary to do business in Iran, whether the company overcharged for work done for the Pentagon in the Balkans and whether it was involved in an alleged $180 million bribery scheme in Nigeria. The company admitted in 2003 that it improperly paid $2.4 million to a Nigerian tax official.

BECHTEL CORP. paid more than $110,000 to the Environmental Protection Agency and the Energy Department in 2000 and 2001 to settle alleged safety and environmental violations. Bechtel has prime construction contracts in Iraq worth more than $2 billion.

Fines Exceeding $86 Million - Bechtel hired three subcontractors in Iraq that have been fined more than $86 million in the past four years, though none had been banned from getting new contracts.

Others Punished For Waste, Fraud and Abuse Of Govt. Contracts

American International Contractors Inc., paid $4.7 million in fines in 2000 after pleading guilty to bid rigging on a U.S.-funded water project in Egypt, according to published reports. AICI has part of a $325 million contract to rebuild Iraq's transportation systems, has a share of a $500 million contract for emergency construction needs in the Pentagon's Central Command region, which includes Iraq and Afghanistan, and is in a partnership that has a $70 million construction contract at Al-Udeid air base in Qatar, used to support troops in Iraq.

Fluor Corp., paid $8.5 million to the Defense Department in 2001 to settle charges it improperly billed the government for work benefiting its commercial clients, according to published reports. Fluor and AMEC created a joint venture that has $1.7 billion in contracts to rebuild Iraq's electricity, water, sewer and trash removal infrastructure.

Great Lakes Dredge & Dock Co., paid a $969,000 fine in 2002 for environmental damage in the Florida Keys National Marine Sanctuary, according to published reports. Bechtel awarded the company a subcontract to clear the Iraqi port of Umm Qasr.

Northrop Grumman Corp., whose Vinnell Corp. subsidiary was awarded a $48 million contract to train the new Iraqi Army last year, according to published reports. Northrop Grumman has been penalized $191.7 million in the past four years, including $750,000 paid to the Pentagon in 2000 in a case involving allegations of providing faulty replacement parts for the JSTARS airborne surveillance system.

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Statement of Senator Patrick Leahy
On Introduction of the Effective Corruption Prosecutions Act of 2007
January 4, 2007

I am pleased to join with Senator Pryor today to introduce the Effective Corruption Prosecutions Act of 2007, a bill to strengthen the tools available to federal prosecutors in combating public corruption. This bill gives investigators and prosecutors the statutory tools and the resources they need to ensure that serious and insidious public corruption is detected and punished.

In November, voters sent a strong message that they were tired of the culture of corruption. From war profiteers and corrupt officials in Iraq to convicted Administration officials to influence-peddling lobbyists and, regrettably, even members of Congress, too many supposed public servants were serving their own interests, rather than the public interest. The American people staged an intervention and made it clear that they would not stand for it any longer. They expect the Congress to take action. We need to restore the people's trust by acting to clean up the people's government.

The Senate's new leadership is introducing important lobbying reform and ethics legislation. Similar legislation passed the Senate last year, but stalled in the House. This is a vital first step.

But the most serious corruption cannot be prevented only by changing our own rules. Bribery and extortion are committed by people bent on getting around the rules and banking that they won't get caught. These offenses can be difficult to detect and even harder to prove. Because they attack the core of our democracy, these offenses must be found out and punished. Congress must send a signal that it will not tolerate this corruption by providing better tools for federal prosecutors to combat it. This bill will do exactly that.

First, the bill extends the statute of limitations for the most serious public corruption offenses. Specifically, it extends the statute of limitations from five years to eight years for bribery, deprivation of honest services, and extortion by a public official. This is an important step because public corruption cases are among the most difficult and time-consuming cases to investigate and prosecute. They often require use of informants and electronic monitoring, as well as review of extensive financial and electronic records, techniques which take time to develop and implement.

Bank fraud, arson, and passport fraud, among other offenses, all have 10-year statutes of limitations. Since public corruption offenses are so important to our democracy and these cases are so difficult to investigate and prove, a more modest extended statute of limitations for these offenses is a reasonable step to help our corruption investigators and prosecutors do their jobs. Corrupt officials should not be able to get away with their ill-gotten gains just by winning the waiting game.

This bill also facilitates the investigation and prosecution of an important offense known as federal program bribery. (Title 18, United States Code, section 666). Federal program bribery is the key federal statute for prosecuting bribery involving state and local officials, as well as officials of the many organizations that receive substantial federal money. This bill would allow agents and prosecutors investigating this important offense to request authority to conduct wiretaps and to use federal program bribery as a basis for a racketeering charge.

Wiretaps, when appropriately requested and authorized, are an important method for agents and prosecutors to gain evidence of corrupt activities, which can otherwise be next to impossible to prove without an informant. The Racketeer Influenced and Corrupt Organizations (RICO) statute is also an important tool which helps prosecutors target organized crime and corruption.

Agents and prosecutors may currently request authority to conduct wiretaps to investigate many serious offenses, including bribery of federal officials and even sports bribery, and may predicate RICO charges on these offenses, as well. It is only reasonable that these important tools also be available for investigating the similar and equally important offense of federal program bribery.

Lastly, this bill authorizes $25 million in additional federal funds over each of the next four years to give federal investigators and prosecutors needed resources to go after public corruption. Last month, FBI Director Mueller in written testimony to the Judiciary Committee called public corruption the FBI's top criminal investigative priority. However, a September 2005 Report by Department of Justice Inspector General Fine found that, from 2000 to 2004, there was an overall reduction in public corruption matters handled by the FBI. The report also found declines in resources dedicated to investigating public corruption, in corruption cases initiated, and in cases forwarded to US Attorney's Offices.

I am heartened by Director Mueller's assertion that there has recently been an increase in the number of agents investigating public corruption cases and the number of cases investigated, but I remain concerned by the Inspector General's findings. I am concerned because the FBI in recent years has diverted resources away from criminal law priorities, including corruption, into counterterrorism. The FBI may need to divert further resources to cover the growing costs of Sentinel, their data management system. The Department of Justice has similarly diverted resources, particularly from United States Attorney's Offices.

Additional funding is important to compensate for this diversion of resources and to ensure that corruption offenses are aggressively pursued. My bill will give the FBI, the United States Attorney's Offices, and the Public Integrity Section of the Department of Justice new resources to hire additional public corruption investigators and prosecutors. They can finally have the manpower they need to track down and make these difficult cases, and root out the corruption.

If we are serious about addressing the egregious misconduct that we have recently witnessed, Congress must enact meaningful legislation to give investigators and prosecutors the resources they need to enforce our public corruption laws. I strongly urge Congress to do more to restore the public's trust in their government.

I ask that a copy of the bill be printed in the Record.

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Effective Corruption Prosecutions Act of 2007

Provides federal investigators and prosecutors the statutory tools and the resources needed to ensure that serious and insidious public corruption is detected and punished.

Extends the statute of limitations for the most serious public corruption offenses, including bribery, deprivation of honest services, and extortion by a public official, from five years to eight years.

Facilitates the investigation and prosecution of a key federal statute used for prosecuting bribery involving state and local officials, as well as officials of the many organizations that receive substantial federal money

Authorizes $25 million over each of the next four years to give federal investigators and prosecutors needed resources to go after public corruption.