US-based contractor in Afghanistan settles claims | world | Hindustan Times
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US-based contractor in Afghanistan settles claims

world Updated: Nov 06, 2010 13:01 IST

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An engineering consulting firm that has been a major player in US-funded reconstruction projects in Iraq and Afghanistan agreed to pay more than $69 million in civil and criminal penalties on Friday in resolving claims that it overbilled the federal government.

Louis Berger Group Inc., based in Morristown, New Jersey, also agreed to implement stricter oversight of its operations and submit to an outside federal monitor. Under the settlement, it can continue to do contract work for the government, and currently has a $1.4 billion infrastructure project with the US Agency for International Development to build roads and power plants in Afghanistan.

The company was accused of submitting invoices over eight years that were inflated by a total of at least $10 million. The invoices were submitted mostly to the USAID, which oversees many of the government's international development projects.

"These contracts are a critical part of our government's efforts to bring stability and peace to some of the most troubled places in the world," said US Attorney Paul Fishman in announcing the settlement at his Newark office. "LBG took advantage of those contracts and that conduct is intolerable."

The settlement also included an agreement by federal officials not to pursue a criminal complaint filed against the company, an agreement of a whistleblower suit that prompted the investigation, and an administrative agreement between the company and USAID. Officials from several agencies worked on the investigation, including the FBI, the Department of Defense, USAID and the US Attorney's Office in Maryland, where the whistleblower lawsuit from a former employee in the company's accounting department prompted the probe.

Officials from those agencies joined the federal prosecutor in announcing the settlement and emphasized that any corruption on the part of US companies doing business in volatile overseas regions sends the wrong message and puts US operations in jeopardy. Also Friday, two former employees of Louis Berger _ Salvatore Pepe, who was chief financial officer, and Precey Pellettieri, who was company controller _ pleaded guilty to conspiracy and fraud-related charges in Newark federal court, in connection with the overbilling case. They each face up to three years in prison after admitting they obtained contract payments from bills submitted at falsely inflated overhead rates.

Officials at Louis Berger Group said Friday they had been investigating their company's accounting practices and began putting a series of changes in place in 2006 before becoming aware that the government was investigating the company.

Company President Larry Walker said the changes included "corrective and remedial actions" and ethics and compliance training for employees.

"The improvements made to our systems, policies and structures over the past four years have paved the way for a sustainable future and for the company's continued leadership in providing the highest quality of services to our clients in an ethical, transparent and compliant manner," Walker said in a written statement.