Appeals Court Decision Permitting KBR to Keep Secret Documents Containing Evidence of Millions of Dollars in Fraud Against the U.S. Taxpayers Challenged
Washington, D.C. November 25, 2014. A whistleblower who formerly worked for the giant defense contractor, Kellogg Brown and Root (KBR) has filed a petition for a writ of certiorari to the U.S. Supreme Court seeking review of a highly controversial ruling by the U.S. Court of Appeals for the D.C. Circuit permitting corporations to hide documentation of fraud obtained in internal corporate compliance investigations.
The petition, filed yesterday, seeks to overturn an appeals court ruling permitting KBR to keep secret internal investigatory records that contain evidence of millions of dollars in defense contracting fraud committed during the War in Iraq.
In the case KBR initially forced its employees to sign gag orders prohibiting them from releasing any information concerning contracting fraud without the approval of KBR’s attorneys. Employees were informed, in writing, that violating the gag order could result in their being fired. However, the whistleblower in this case, Mr. Harry Barko, challenged the frauds and filed a federal lawsuit under the False Claims Act. The lawsuit, if successful, will require KBR to repay the federal government three-times the amount of all monies fraudulently charged or overpaid.
At issue in the appeal is whether company records, containing evidence of fraud, can be released by order of a trial judge, or whether corporations can immediately appeal and seek suppression of the evidence. In this case the trial judge ordered KBR to release the documents. However, an appeals court in Washington D.C. reversed that decision, permitting KBR to suppress the evidence that fraud was committed. The Supreme Court petition challenges the procedures used to overturn the trial court’s discovery order, the gag orders employees were forced to sign, and the decision of the appeals court to suppress the evidence.
Stephen M. Kohn, Executive Director of the National Whistleblower Center and one of Mr. Barko’s attorneys, issued the following statement:
“At stake in this case is the integrity of internal corporate compliance programs. The issue is simple: a compliance program is not a cover-up program. If companies are permitted to gag employees who try to report fraud and prevent the release of evidence proving fraud and misconduct, taxpayers will lose billions of dollars to greedy and corrupt contractors.”
“The taxpayer is the loser when multibillion dollar government contractors can commit fraud, gag employees and thus hide fraud and misconduct behind a feigned claim of attorney-client privilege,” Kohn added.
KBR has 30 days to file a response to the petition.
- The whistleblower’s Supreme Court petition.
- United States ex rel. Barko v. Halliburton Co. et al., No. 1:05-CV-1276 (D.D.C.), March 6, 2014 order (first order of the district court ordering production of the KBR documents that demonstrate KBR’s fraud against the taxpayer).
- In re: Kellogg Brown & Root, Inc., et al, June 27, 2014 order of the Appeals Court upholding KBR’s claim of attorney client privilege and suppressing the release of the information.