US says firm bribed its way to contracts

WASHINGTON - An American-owned company operating from Kuwait paid hundreds of thousands of dollars in bribes to American contracting officers in efforts to win more than $11 million in contracts, the government contends in court documents.

The Army last month suspended the company, Lee Dynamics International, from doing business with the government, and the case now appears to be at the center of a widening procurement scandal that prompted Defense Secretary Robert M. Gates to dispatch the Pentagon inspector-general to Iraq to investigate.

Court documents filed in the case say the Army took action against the company because it was suspected of paying hundreds of thousands of dollars in bribes to US Army officers to secure contracts to build, operate, and maintain warehouses in Iraq that held weapons, uniforms, vehicles, and other materiel for Iraqi security forces in 2004 and 2005.

One of those officers, Major Gloria D. Davis, who was then a contracting official working in Kuwait, shot and killed herself in Baghdad in December 2006.

Government officials say the suicide occurred a day after Davis admitted to an Army investigator that she had accepted at least $225,000 in bribes from the company. The government is trying to seize Davis's assets, a move her heirs are contesting.

The company has been known at various times as American Logistics Services as well as Lee Dynamics International.

Details of the case have come to light because the company contested the Army's decision, on July 9, to bar it from obtaining US government contracts. That forced the government to disclose elements of its case against the company in the court papers, including a statement by an Army investigator.

A lawyer for the company, Howell Roger Riggs, yesterday denied the government's accusations and said the company was appealing to the Army to lift the suspension. Riggs acknowledged the company was under a Justice Department investigation but said no charges had been filed against it or its officials.

"This is based solely on a declaration that is unsubstantiated and uncorroborated," Riggs said in a telephone interview. "If they want to come forward with hard evidence and accusations, we'll deal with it at that time."

The case is now part of a broader investigation in which the Army has sent a high-level team to review 18,000 contracts valued at more than $3 billion that the Army contracting office in Kuwait has awarded over the past four years.

The Army has suspended 22 companies and individuals, at least temporarily, from pursuing government work because of contract-fraud investigations conducted in Iraq, Kuwait, and Afghanistan, an Army spokesman said yesterday. A total of 18 companies and individuals have received a stiffer penalty and are barred for a definite period of time from seeking government work.

The court papers make clear that investigators have concluded that Lee Dynamics paid large bribes to numerous US officials then working in Iraq and Kuwait.