                                                                         ACCEPTED
                                                                     14-13-00824-CV
                                                     FOURTEENTH COURT OF APPEALS
                                                                  HOUSTON, TEXAS
                                                               11/23/2015 4:29:17 PM
                                                               CHRISTOPHER PRINE
                                                                              CLERK

            No. 14-13-00824-CV

                                                 FILED IN
               IN THE           14th COURT OF APPEALS
     FOURTEENTH COURT OF APPEALS HOUSTON, TEXAS
           HOUSTON, TEXAS       11/23/2015 4:29:17 PM
                                            CHRISTOPHER A. PRINE
                                                   Clerk
    TAMIMI GLOBAL COMPANY, LTD.

                         Appellant/Cross Appellee,
                    v.

KELLOGG BROWN & ROOT, L.L.C., KELLOGG
BROWN & ROOT INTERNATIONAL, INC., AND
 KELLOGG BROWN & ROOT SERVICES, INC.,

                         Appellees/Cross-
                         Appellants.

        MOTION FOR REHEARING

                   Lauren B. Harris
                   Texas Bar No. 02009470
                   lharris@porterhedges.com
                   Nicholas A. Simms
                   Kerry M. McMahon
                   David W. Salton
                   Porter Hedges LLP
                   1000 Main Street, 36th Floor
                   Houston, Texas 77002
                   Telephone: (713) 226-6624
                   Facsimile: (713) 226-6224
                   Attorneys for Appellees and Cross-
                   Appellants Kellogg Brown & Root,
                   L.L.C., Kellogg Brown & Root
                   International, Inc., and Kellogg Brown &
                   Root Services, Inc.
TO THE HONORABLE FOURTEENTH COURT OF APPEALS:

      Pursuant to the Texas Rules of Appellate Procedure, Appellees and Cross-

Appellants Kellogg Brown & Root, L.L.C., Kellogg Brown & Root International,

Inc., and Kellogg Brown & Root Services, Inc. (collectively “KBR”) file this

Motion for Rehearing, and would respectfully show the Court as follows:

                                     Argument

      KBR files this motion for rehearing to address a single issue: whether this

Court properly affirmed the district court’s denial of KBR’s breach of contract

counterclaim seeking recovery of $930,000 in attorneys’ fees and costs it incurred

in third-party litigation arising from Tamimi’s payment of illegal kickbacks. This

Court affirmed the trial court’s findings that the collateral litigation against KBR

was not caused by Tamimi’s breach of the contract by offering kickbacks, but the

acceptance of those kickbacks by two KBR employees (Terry Hall and Luther

Holmes). Op. at 43-47. KBR respectfully urges this Court to reconsider its

decision because the Court’s analysis is contrary to controlling standards of

causation the Texas Supreme Court has carefully established.

I.    Tamimi’s Offers of Kickbacks and Their Acceptance By Hall and
      Holmes Were Concurring Causes of KBR’s Damages.
      The Court’s causation analysis demonstrates that it failed to properly adhere

to controlling standards for evaluating causation, and in particular, for applying the

“substantial factor” test. Rather than properly considering Tamimi’s conduct in


                                          1
paying kickbacks, the Court incorrectly determined that causation was not proven

because of Hall and Holmes’ acceptance of the illicit offer. The breakdown in the

Court’s reasoning, however, is that Tamimi not only initiated the entire chain of

events by offering kickbacks, but it paid them over an extended time period and

allegedly benefitted from those payments—the very reason the United States

government deemed its contract “tainted” and KBR was sued. The acceptance of

kickbacks was, at the very least, a concurring cause of KBR’s damages.

      The Court’s analysis further demonstrates that it improperly treated the

acceptance of kickbacks as a superseding cause that absolved Tamimi from any

liability. That theory, however, has no application under these facts where the

acceptance of kickbacks was within the scope of the risk created by Tamimi’s

conduct and foreseeable. The Court then compounded its error by erroneously

concluding that the federal counterclaim attributed any misconduct only to the

acceptance of kickbacks, when that interpretation is refuted by its plain language.

Tamimi’s breach of the contractual anti-kickback provision was a “substantial

factor” in causing the government’s federal counterclaim as a matter of law.

      A.    The “Substantial Factor” Standard Does Not Require Tamimi’s
            Conduct To Be The Sole Cause of Harm.
      The trial court misconstrued the “substantial factor” test to require that

Tamimi’s conduct be the only cause of KBR’s damages. The trial court criticized

KBR for failing to offer proof that the United States would have “filed its


                                         2
counterclaim had there been an offer of kickback from Mr. Khan but no acceptance

by KBR employees.” CR2592-93¶12. In other words, the trial court incorrectly

construed the “substantial factor” standard to essentially require KBR to eliminate

Hall and Holmes’ conduct as a basis for the counterclaim—disregarding that, at the

very least, Tamimi’s conduct was a concurrent cause of KBR’s damages.

      The “substantial factor” test permits a finding of causation-in-fact

notwithstanding    concurrent    causation    by   other   intervening   events.   See

Transcontinental Ins. Co. v. Crump, 330 S.W.3d 211, 222-23 (Tex. 2010). The

proximate cause standard has been defined to include the substantial factor

requirement (cause-in-fact) as well as a foreseeability component:

      “Proximate cause” means a cause that was a substantial factor in
      bringing about an event, and without which cause such an event
      would not have occurred. In order to be a proximate cause, the act or
      omission complained of must be such that a person using the degree
      of care required of him would have foreseen that the event, or some
      similar event, might reasonably result therefrom. There may be more
      than one proximate cause of an event.

See State Bar of Tex., Texas Pattern Jury Charges: Business, Consumer, Insurance

& Employment PJC §100.14 (2012 ed.); Crump, 330 S.W.3d at 223. The trial

court’s analysis fails to recognize that there can be more than one cause of an

event, and that a concurrent act that cooperates with the original act will not cut off

the liability of the original wrongdoer. See Travis v. City of Mesquite, 830 S.W.2d

94, 98 (Tex. 1992); Bell v. Campbell, 434 S.W.2d 117, 122 (Tex. 1968); 2RR41.



                                          3
The foreseeable conduct of another does not break the chain of causation.1 See

Mewhinney v. London Wineman, Inc., 339 S.W.3d 177, 182 (Tex. App.—Dallas

2011, pet. denied).

      The trial court mistakenly believed that the “substantial factor” standard

imposed a higher burden on KBR that its plain language implies. CR2592¶11. In

Crump, the Texas Supreme Court rejected the view that the “substantial factor”

requirement imposes a higher threshold, stating:

      The word “substantial” is used to denote the fact that the defendant’s
      conduct has such an effect in producing the harm as to lead reasonable
      men to regard it as a cause, using that word in the popular sense, in
      which there always lurks the idea of responsibility, rather than in the
      so-called “philosophic sense,” which includes every one of the great
      number of events without which any happening would not have
      occurred. Each of these events is a cause in the so-called “philosophic
      sense,” yet the effect of many of them is so insignificant that no
      ordinary mind would think of them as causes.

Crump, 330 S.W.3d at 224 (citing Lear Siegler, Inc. v. Perez, 819 S.W.2d 470, 472

& n.1 (Tex. 1991)). Despite the supreme court’s guidance, the trial court declined

to find that Tamimi could be “responsible for whatever happens next.”

CR2592¶14.




      1
         These Texas cases discuss the proximate cause standard in the context of tort
claims, such as general negligence. However, to the extent the trial court and court of
appeals applied the proximate cause standard here, these cases are applicable.



                                          4
        The trial court and Court of Appeals erroneously failed to recognize that

Tamimi initiated the chain of events causing the ultimate harm, i.e. paying the

kickbacks that “ensured that Tamimi would obtain lucrative dining facility

(“DFAC”) subcontracts from KBR,” and that the government alleged resulted in

inflated claims. KBR Ex. 23, ¶108; App. Tab A. This is not a situation (as the

Court here appears to have accepted) where a mere offer and attenuated acceptance

occurred. The scheme between Tamimi, Hall and Holmes took place over an

extended period, as Tamimi continued to pay them over the course of more than a

year.   Id. at ¶115. Throughout this period, Hall and Holmes were allegedly

involved in making decisions that continued to benefit Tamimi as it received

lucrative contracts from KBR. Id. at ¶116. Tamimi’s conduct was a substantial

factor in sparking the government’s counterclaim as a matter of law, and, at least, a

concurring cause of KBR’s damages. The trial court’s contrary decision is also

against the great weight and preponderance of the evidence.

        The trial court never properly focused on the conduct of Tamimi and its

contractual breaches, or considered the foreseeability component of the proximate

cause test. The possibility that a lower level KBR employee might accept

kickbacks was certainly foreseeable to Tamimi. See, e.g. County of El Paso, Tex.

v. Jones, No. EP-09-CV-000119-KC, 2009 WL 4730303 *11 (W.D. Tex. 2009)

(not designated for publication) (“Because it is also foreseeable that Defendants’



                                         5
conduct in offering bribes to Flores would lead to acceptance of the offer, the

County has established proximate cause.”). In fact, the prohibition on kickbacks

was expressly stated in the parties’ subcontracts.        These subcontracts were

reviewed by Shabbir Kahn (“Kahn”), who ran Tamimi as its chief of operations.

2RR75, 3RR26, 31. And it was Khan who was responsible for initiating the

kickbacks. 3RR23, 27-28, 32, 39. Also see El Chico Corp. v. Poole, 732 S.W.2d

306, 314 (Tex. 1987) (recognizing that it is foreseeable that the sale of alcohol to a

minor will result in the minor driving while intoxicated and causing injury to

himself or others).

      Mark Lowes, in-house counsel for KBR, was the only expert witness to

testify as to KBR’s attorneys’ fees and the reason why they were incurred:

      Q:    (Mr. Simms): And how did the offer of bribes to Terry Hall
      cause damages to KBR?

      A:    (Mr. Lowes): Well, but for that, we would haven’t had the
      counterclaim and we wouldn’t have had to defend. We would have
      only had the contract action.

3RR24.

      Q:     (Mr. Klasing): ….isn’t it true that the trigger for every single
      one of these causes of action,….is the fact that KBR employees
      actually took kickbacks from someone?

      A:    (Mr. Lowes): You and I have and I have had this semantic
      discussion before and I respectfully disagree. Our contract says
      you’re not going to make the offer, but for the offer, it’s impossible
      for anyone to accept it….



                                          6
3RR80-81. Tamimi did not offer any witness to contradict this testimony. Also

see 3RR53 (“…but for the bribe, which the government claimed tainted the

contract, I wouldn’t have had to defend these actions.”).        Because the court

misinterpreted the “substantial factor” test to require KBR to disprove that Hall

and Holmes’ conduct was also a reason for the government’s counterclaim, the

judgment should be reversed.

      B.     Hall and Holmes’ Acceptance of Kickbacks Was Not An
             Intervening Cause That Vitiated Tamimi’s Liability.
      Without expressly using the term “new and independent” (or superseding)

cause, this Court and the trial court effectively decided that Hall and Holmes’

acceptance of the kickbacks absolved Tamimi of liability for the consequences of

its breach. However, this inferential rebuttal theory has no applicability where the

intervening forces are foreseeable and within the scope of the risk created by the

defendant’s conduct.

      A “new and independent cause” is one that intervenes between the original

wrong and the final injury such that the injury is attributed to the new cause rather

than the first and more remote cause. See Dew v. Crown Derrick Erectors, Inc.,

208 S.W.3d 448, 450 (Tex. 2006).              An intervening cause supersedes the

defendant’s conduct and destroys the causal connection between that conduct and

the plaintiff’s injury.   Id.   However, this Court and the trial court failed to

recognize that if the intervening force was foreseeable, it is “considered to be a


                                          7
concurring cause of the plaintiffs’ injuries and the defendant remains liable.” Id. at

451.

       As the Texas Supreme Court noted in Dew, intervening forces are within the

scope of the original risk created by the defendant’s misconduct:

       Obviously the defendant cannot be relieved from liability by the fact
       that the risk, or a substantial and important part of the risk, to which
       the defendant has subjected the plaintiff has indeed come to pass.
       Foreseeable and intervening forces are within the scope of the original
       risk, and hence of the defendant’s negligence. The courts are quite
       generally agreed that intervening causes which fall fairly in this
       category will not supersede the defendant’s responsibility.

Id. at 453. “Where the intervening act’s risk is the very same risk that renders the

original actor negligent, the intervening act cannot serve as a superseding cause.”

Id.

       Similarly, it is no defense to Tamimi’s liability that the acceptance of the

kickbacks was a criminal act.         Intentional criminal conduct is also not a

superseding cause of injury where the criminal conduct is foreseeable. See Phan

Son Van v. Peňa, 990 S.W.2d 751, 753 (Tex. 1999). As stated in the Restatement

of Torts,

       [t]he act of a third person in committing an intentional tort or crime is
       a superseding cause of harm to another resulting therefrom, although
       the actor’s negligent conduct created a situation which afforded an
       opportunity to the third person to commit such a tort or crime, unless
       the actor at the time of his negligent conduct realized or should have
       realized the likelihood that such a situation might be created, and that
       a third person might avail himself of the opportunity to commit such a
       tort or crime.


                                          8
Id. at 753, citing RESTATEMENT (SECOND) OF TORTS §448 (1965). Here, Tamimi’s

conduct went well beyond being merely negligent—Tamimi intentionally

committed a crime by offering a kickback and created a situation where that offer

was accepted.

      The Court effectively (but incorrectly) decided that Hall and Holmes’

acceptance of kickbacks relieved Tamimi of any responsibility for its breach,

allowing Tamimi to breach its contracts with impunity. Although the trial court

acknowledged the federal court of claims’ finding that knowledge of the kickbacks

had not been imputed to KBR in the federal court proceeding (CR2591¶6, KBR

Ex. 25; 3RR58), the court improperly decided that it was KBR’s acceptance of the

kickbacks that caused the collateral litigation against KBR.      The trial court,

however, never made any finding that KBR was responsible for the illegal actions

of Hall and Holmes, or that their conduct was authorized. See J & C Drilling Co.

v. Salaiz, 866 S.W.2d 632, 636 (Tex. App.—San Antonio 1993, no pet.) (finding

that claim of respondeat superior was waived where no evidence of course and

scope of employment was presented). The trial court’s determination that KBR’s

conduct, and not Tamimi’s, was the cause of KBR’s damages is in error.

      C.    The Court Improperly Construed The Federal Pleadings To State
            That The Counterclaim Was A Result of KBR’s Conduct Alone.

      The Court’s affirmance of the trial court’s judgment is also in error because

the lower court solely relied on the federal court counterclaim to decide that the

                                        9
lawsuit was caused by “KBR’s acceptance of the offer which triggered the

litigation.”   CR2592.      However, the trial court disregarded the allegations

throughout the petition that Tamimi’s repeated illicit payments to Hall and Holmes

also served as a basis for the counterclaim.

       The allegations in the counterclaim describe a course of payments Tamimi

made over several years, after Hall initially declined the offer “but reported it to

nobody.” See KBR Ex. 23, ¶114-116; App. Tab A. The pleadings further describe

decisions for the “benefit of Tamimi as a KBR subcontractor” during the time the

payments were made.         Id. at ¶116.     The government also alleged that these

kickbacks resulted in “inflated contract prices from Tamimi for which KBR sought

reimbursement.”      Id. at ¶118.     Any conclusion that the government filed its

counterclaim purely based on Hall and Holmes’ acceptance of the kickbacks,

belies the plain language of the pleadings.2

       If the focus of the counterclaim was on KBR, it was because Tamimi, as a

subcontractor, was not a party to that litigation. It is undisputed that Tamimi and



       2
         At the hearing on the motion for entry of judgment, the trial court stated that the
basis for his judgment was that “the only actual evidence I had was the federal
government saying that it was the acceptance of the offer and not the making of the offer
that caused their lawsuit.” 1RR7. To the contrary, the pleadings state that the
“counterclaims generally arise from the receipt of kickbacks by KBR employees from
Tamimi Global Company.” KBR Ex. 23, ¶108 (emphasis added); 3RR 23. Nowhere do
the pleadings state that Tamimi’s payments played no role in the litigation.



                                            10
Khan were, in fact, separately prosecuted for their roles in the scheme. Tamimi

was charged with conspiracy to pay kickbacks and conspiracy to pay gratuities.

4BRR at DX 11, ¶1. Tamimi entered into a Deferred Prosecution Agreement with

the government (4BRR at DX 11) (App. Tab B), and Khan went to prison (4B RR

at DX 16). As part of the Deferred Agreement, Tamimi expressly admitted that it

was responsible for the “past crimes” and “unlawful conduct” of Khan in paying

kickbacks to Hall and Holmes (described therein as “Person A”). 4BRR at DX 11,

¶4, 22, Attachment A, ¶1, 41-43; 3RR31, 35.         Tamimi also agreed to pay a

monetary penalty of $5.6 million.      4BRR at DX 11, ¶8.         According to the

agreement, Khan made the payments to Hall and Holmes “in order to ensure that

[Tamimi] kept the DFAC subcontracts that it had, and to ensure that [Tamimi]

would continue to get additional subcontracts as they became available.” Id. at

¶43.

       The government’s counterclaim against KBR, as well as Tamimi’s plea

agreement, unequivocally describe Tamimi’s pervasive role in paying illegal

kickbacks to obtain subcontracts at inflated prices. The trial court and court of

appeals’ decisions that the federal court litigation was only attributable to conduct

of KBR is simply wrong.




                                         11
II.    Texas Law Allows for The Recovery of Attorneys’ Fees Incurred In
       Defending Foreseeable Litigation Caused By A Breach of Contract.
       Although the trial court and this Court applied the “proximate cause”

standard in this case, that test is not typically applied in a breach of contract

dispute. See Abraxas Pet. Corp. v. Hornburg, 20 S.W.3d 741, 758 n.12 (Tex.

App.—El Paso 2000, no pet.); Winograd v. Clear Lake City Water Auth., 811

S.W.2d 147, 156 (Tex. App.—Houston [1st Dist.] 1991, writ denied) (“While

proximate cause must be proven in a tort action, it is not the causal standard

applied in a suit for damages for breach of contract.”); see Michol O’Connor,

O’CONNOR’S TEXAS CAUSES          OF   ACTION, ch. 5-B, §2.1 (2015 ed.). The Texas

Supreme Court has indicated that the proper test for breach of contract is whether

the damages “result from” the alleged breach.           See McKnight v. Hill & Hill

Exterminators, Inc., 689 S.W.2d 206, 209 (Tex. 1985).               Even if this higher

standard is applied,3 however, KBR was still entitled to recover its attorneys’ fees

as a matter of law.




       3
         The requirement of foreseeability is a more severe limitation of liability than is
the requirement of substantial or “proximate” cause in the case of an action in tort or for
breach of warranty. See RESTATEMENT (SECOND) OF CONTRACTS §351 cmt. a (1981).
Even so, KBR should also prevail under the foreseeability test.



                                            12
      The Restatement (First) of Contracts §334 contemplates that attorneys’ fees

incurred in the defense of collateral litigation caused by a defendant’s breach of

contract are recoverable. The Restatement provides:

      If a breach of contract is the cause of litigation between the plaintiff
      and third parties that the defendant has reason to foresee when the
      contract was made, the plaintiff’s reasonable expenditures in such
      litigation are included in estimating damages.

See RESTATEMENT (FIRST) OF CONTRACTS §334 (1932) (emphasis added). As the

Restatement recognizes, the key inquiry is the foreseeability of third party

litigation expenses resulting from any breach. See Mead v. Johnson Group, Inc.,

615 S.W.2d 685, 687 (Tex. 1981) (“In an action for breach of contract, actual

damages may be recovered when loss is the natural, probable, and foreseeable

consequence of the defendant’s conduct.”). A contracting party is expected to

account for those risks that are foreseeable at the time the contract is made. See

RESTATEMENT (SECOND) OF CONTRACTS §351 cmt. a, c.

      Foreseeability is a fundamental prerequisite to the recovery of consequential

damages for breach of contract.      Basic Capital Management, Inc. v. Dynex

Commercial, Inc., 348 S.W.3d 894, 901 (Tex. 2011). As the Texas Supreme Court

has recognized:

      Consequential damages are those damages that result naturally, but
      not necessarily, from the defendant’s wrongful acts. They are not
      recoverable unless the parties contemplated at the time they made the
      contract that such damages would be a probable result of the breach.



                                        13
      Thus, to be recoverable, consequential damages must be foreseeable
      and directly traceable to the wrongful act and result from it.

Stuart v. Bayless, 964 S.W.2d 920, 921 (Tex. 1998) (per curiam) (internal citations

omitted). Texas jurisprudence regarding the foreseeability requirement has been

derived in part from Hadley v. Baxendale, in which the court recognized that:

      Where two parties have made a contract which one of them has
      broken, the damages which the other party ought to receive in respect
      of such breach of contract should be such as may fairly and
      reasonably be considered either arising naturally, i.e. according to the
      usual course of things, from such breach of contract itself, or such as
      may reasonably be supposed to have been in the contemplation of
      both parties at the time they made the contract as the probable result
      of the breach of it.

Basic Capital, 348 S.W.3d at 901, citing Hadley v. Baxendale, 9 Exch. 341, 156

Eng. Rep. 145, 151 (1854).

      The Texas Supreme Court has specifically acknowledged the applicability of

section 351 of the Restatement (Second) of Contracts in which the parameters for

determining whether a loss is a foreseeable result of any breach is defined. See

Basic Capital, 348 S.W.3d at 901-02. The Restatement provides:

      (1) Damages are not recoverable for loss that the party in breach did
         not have reason to foresee as a probable result of the breach when
         the contract was made.

      (2) Loss may be foreseeable as a probable result of a breach because
         it follows from the breach

            a. in the ordinary course of events, or




                                        14
            b. as a result of special circumstances, beyond the ordinary
               course of events, that the party in breach had reason to
               know.

See RESTATEMENT (SECOND)      OF   CONTRACTS §351. If the contract is silent as to

risks the defendant has assumed, courts will determine what risks were foreseen or

foreseeable when the contract was made by viewing the matter in the light of

common sense, considering the nature and purpose of the contract, the surrounding

circumstances, and what liability the breaching party may reasonably have

assumed. See 24 SAMUEL WILLISTON & RICHARD A. LORD, A TREATISE              ON THE

LAW OF CONTRACTS §64:13 (4th ed.).

      In Basic Capital, the Texas Supreme Court, applying this test, reversed the

court of appeals’ determination that lost profits a borrower claimed as

consequential damages for breach of a commitment to provide financing were not

foreseeable. Basic Capital, 348 S.W.3d at 902-03. The lender agreed to loan the

borrower $37 million to acquire and rehabilitate three commercial buildings, if its

other entities would borrow $160 million over a two year period. After loaning

$37 million to acquire the buildings, however, the lender refused to provide further

financing once interest rates rose. Id. at 897. The borrower claimed damages for

lost profits, which the court of appeals disallowed. The Texas Supreme Court

reversed the court of appeals’ determination that the borrower’s lost profits were

not foreseeable. Id. at 901-02. The Court reasoned that the lender “cannot profess



                                         15
blindness to foreseeability that its breach would also cost [the borrower] business.”

Id. at 903.

      Applying these principles here, there is no question that Tamimi’s breach of

the contract precluding the offer of kickbacks was a cause of collateral litigation

initiated by the government. As in Basic Capital, Tamimi cannot claim that it was

unaware that if it breached the contract by offering kickbacks, those offers might

be accepted (unbeknown to KBR). And it is certainly foreseeable that this illegal

conduct might be discovered, and the perpetrators prosecuted. It is axiomatic that

when a person commits a crime, the actor contemplates the possibility of getting

caught.   Tamimi, through Khan, knew it would breach the subcontracts and

commit a crime by offering kickbacks, yet chose to do so anyway.

      The context and purpose of the contract between Tamimi and KBR must

also be considered in deciding whether KBR’s attorneys’ fees incurred in the

collateral litigation are foreseeable. KBR retained Tamimi as a subcontractor to

provide food services to the American troops during wartime in the Middle East.

3RR10-16. The parties certainly contemplated through the inclusion of the “anti-

kickback” provision in the contract that such offers were a possibility—especially

where the work was to be performed in a country experiencing lawlessness and

political unrest.   The subcontracts specifically prohibit “kickbacks” not only

because they are illegal, but also to avoid the exact course of events that unfolded



                                         16
here—that the government could decline to reimburse KBR for its payments to

Tamimi, and the parties could face criminal prosecution.

      KBR included an anti-kickback notice in each of its subcontracts in

connection with the war effort in Iraq. 3RR17, 20. Certainly, KBR expected its

subcontractors to adhere to this agreement, and expressly contracted for

compliance. 3RR17. KBR maintains an active compliance program that is “part

of its corporate culture.”   3RR35.     KBR has written policies and procedures

prohibiting kickbacks, and each employee participates in annual training to

reinforce them. 3RR35. Similarly, KBR provides hotlines to allow employees to

report potential violations of its corporate policies. 3RR36. The decisions of both

the trial court and this Court render KBR’s compliance program and the parties’

anti-kickback provision—which expressly prohibits Tamimi from offering

kickbacks—meaningless.

      KBR was entitled to the recovery of attorneys’ fees because it was forced to

defend itself in collateral litigation that arose from Tamimi’s breach of the contract

and illegal conduct. The acceptance of any kickback offer was clearly foreseeable

to Tamimi because it occurred “in the ordinary course of events,” or at the very

least, occurred “as a result of special circumstances, beyond the ordinary course of

events, that [Tamimi] had reason to know.”         See RESTATEMENT (SECOND)        OF

CONTRACTS §351.       The reasonably foreseeable consequences of a breach of



                                         17
contract are compensable, “even if the criminal act of a third person intervened.”

See 24 SAMUEL WILLISTON & RICHARD A. LORD, A TREATISE              ON THE   LAW   OF

CONTRACTS §64:13 at n.44. This Court incorrectly determined that the acceptance

of the kickback offers by KBR employees precluded KBR’s recovery of its

attorneys’ fees. KBR respectfully urges the Court to reconsider that decision.

       WHEREFORE, Appellees and Cross-Appellants Kellogg Brown & Root,

L.L.C., Kellogg Brown & Root International, Inc., and Kellogg Brown & Root

Services, Inc. respectfully requests that the Court grant this Motion for Rehearing,

and for such other and further relief to which they may show themselves to be

justly entitled to receive.

                                      Respectfully submitted,

                                      PORTER HEDGES LLP

                                      By:    /s/ Lauren Beck Harris
                                             Lauren Beck Harris
                                             State Bar No. 02009470
                                             Nicholas A. Simms
                                             Kerry M. McMahon
                                             David W. Salton
                                             1000 Main Street, 36th Floor
                                             Houston, Texas 77002
                                             Telephone: (713) 226-6624
                                             Facsimile: (713) 226-6224

                                          Attorneys for Appellees and Cross-
                                          Appellants Kellogg Brown & Root,
                                          L.L.C., Kellogg Brown & Root
                                          International, Inc., and Kellogg Brown
                                          & Root Services, Inc.


                                        18
                         CERTIFICATE OF SERVICE
       Pursuant to Rules 6.3 and 9.5(b), (d), and (e) of the Texas Rules of Appellate
Procedure, this is to certify that on this 23rd day of November 2015, a true and
correct copy of the foregoing was served on the following counsel of record by
U.S. first class mail and by electronic delivery as follows:

       Murphy S. Klasing
       Weycer, Kaplan, Pulaski & Zuber, P.C.
       11 Greenway Plaza, Suite 1400
       Houston, TX 77046
       Attorneys for Appellant Tamimi Global Company Ltd.

                                          /s/ Lauren B. Harris
                                          Lauren B. Harris




                      CERTIFICATE OF COMPLIANCE
       1.    This brief complies with the type-volume limitation of Texas Rule of

Appellate Procedure 9.4(i)(2)(D) because this brief contains 4,274 words,

excluding the parts of the brief exempted by Texas Rule of Appellate Procedure

9.4(i)(1).

       2.    This brief complies with the typeface requirements of Texas Rule of

Appellate Procedure 9.4(e) and the type style requirements of Texas Rule of

Appellate Procedure 9.4(e) because this brief has been prepared in a proportionally

spaced typeface using Microsoft Word in 14-point Times New Roman font or

larger.

                                          /s/ Lauren B. Harris
                                          Lauren B. Harris


                                         19
APPENDIX A
           Case 1:09-cv-00351-CCM Document 47               Filed 03115)11    Page 1 of 26



                    IN THE UNiTED STATES COURT Of FEDERAL CLAIMS

KELLOGG BROWN & ROOT SERVICES,                        )
INC.,

               ?laintiff,                             )
               v.                                     )   No. 09-351C
                                                      )   (Judge Christine Miller)
THE UNITED STATES,                                    )
                                                      )
               Defendant                              )
              DEFENDANT’S AMENDED ANSWER AND COUNTERCLAIMSt

       For its amended answer to plaintiff’s complaint, defendant admits, denies, and alleges as

follows:

       The allegations contained in the first sentence of the first paragraph of plaintiffs

“Introduction” are plaintiffs characterization, of its case, to which no response is required; to the

extent that they may be deemed allegations of fact, they are denied. Admits the allegations

contained in the second sentence of the first paragraph of plaintiffs “Introduction” to the

extent supported by the referenced contract, which is the best evidence of its contents; otherwise

denies the allegations. Admits the allegations contained in the third sentence of the first

paragraph of plaintiffs “Introduction.”

        Denies the allegations contained in the first sentence of the second paragraph of

plaintiff’s “Introduction” for lack of knowledge or information sufficient to form a belief as to

their tmth. The remainder of the allegations contained in the second paragraph of plaintiffs



           Although we made earlier filings in this case related to the potential affirmative
defenses and fraud counterclaims under seal because of the pendency of Mr. Terry Hall’s
testimony in a criminal case, this filing is not made under seal because Mr. Hall’s testimony in
that case has been completed and there is no longer any need to keep the information contained
herein confidential.




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“Introduction” constitute plaintiff’s characterization of its case and conclusions oflaw, to which

no response is required; to the extent that they may be deemed allegations of fact, they are

denied.

          The allegations contained in the third paragraph of plaintiffs “Introduction” constitute

plaintiffs characterization of its case and conclusions of law, to which no response is required; to

the extent that they may be deemed allegations of fact, they are denied.

          1. Denies the allegations contained in paragraph 1 for lack of knowledge or information

sufficient to form a belief as to their truth.

          2. The allegations contained in paragraph 2 are plaintiff’s characterization of its case, to

which no response is required; to the extent that they may be deemed allegations of fact, they are

denied.

          3. The allegations contained in paragraph 3 are conclusions of law to which no response

is required; to the extent that they may be deemed allegations of fact, they are denied.

          4. Admits the allegations contained in paragraph 4 that, on July 17,2008, plaintiff filed a

claim with Ms. Mendoza to the extent supported by the referenced claim document, which is the

best evidence of its contents; otherwise denies the allegations.

          5. The allegations contained in paragraph 5 are conclusions of law to which no response

is required; to the extent that they may be deemed allegations of fact, they are denied.

          6. Admits the allegations contained in paragraph 6 to the extent supported by the

referenced notification document, which is the best evidence of its contents; otherwise denies the

allegations.




                                                     2




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        7. Avers that the referenced letter from the Administrative Contracting Officer was dated

November 25, 2008, but other wise admits the allegations contained in paragraph? to the extent

supported by the referenced letter, which is the best evidence of its contents; otherwise denies the

allegations.

        8. Admits the allegations contained in paragraph 8 to the extent supported by the

referenced notification document, which is the best evidence of its contents; otherwise denies the

allegations.

        9. Admits the allegations contained in paragraph 9 to the extent supported by the

referenced notification document, which is the best evidence of its contents; otherwise denies the

allegations.

        10. The allegations contained in paragraph 10 are conclusions of law to which no

response is required; to the extent that they maybe deemed allegations of fact, they are denied.

        11. Admits the allegations contained in paragraph 11 to the extent supported by the

referenced contract, which is the best evidence of its contents; otherwise denies the allegations.

        12. Admits the allegations contained in paragraph 12 to the extent supported by the

referenced novafion document, which is the best evidence of its contents; otherwise denies the

allegations.

        13. Admits the allegations contained in paragraph 13 to the extent supported by the

referenced contract, which is the best evidence of its contents; otherwise denies the allegations.

        14. Admits the allegations contained in paragraph 14 to the extent supported by the

referenced contract, which is the best evidence of its contents; otherwise denies the allegations.




                                                  3




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        15. Admits the allegations contained in paragraph 15 to the extent supported by the

referenced contract, which is the best evidence of its contents; otherwise denies the allegations.

        16. Admits the allegations contained in paragraph 16 to the extent supported by the

referenced task order, which is the best evidence of its contents; otherwise denies the allegations.

        17. Admits the allegations contained in paragraph 17 to the extent supported by the

referenced task order, which is the best evidence of its contents; otherwise denies the allegations.

        18. Admits,

        19. Admits,

       20. Admits the allegations contained in paragraph 20 that, on occasion during the

performance of Task Order 59, some roads in Iraq were closed due to hostilities and contractors

in Iraq were sometimes the targets of insurgent activities. The allegations in this paragraph

relating to the means of performing the contract are admitted to the extent supported by the

contract task order, which is the best evidence of its contents; otherwise denies the allegations.

Denies all other allegations contained in this paragraph.

       21. The allegations contained in paragraph 21 are plaintiffs characterization of its case,

to which no response is required and are so vague that they are not susceptible to responsive

pleading; to the extent that they may be deemed allegations of fact, they are denIed.

        22. Admits the allegations contained in paragraph 22 to the extent supported by the

referenced task order, which is the best evidence ofits contents; otherwise denies the allegations.

        23. The allegations contained in paragraph 23 are conclusions of law to which no

response is required; to the extent that they may be deemed allegations of fact, they are denied.




                                                  4




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        24. The allegations contained in paragraph 24 are conclusions of law to which no

response is required; to the extent that they may be deemed allegations of fact, they are denied.

        25. Admits the allegations contained in paragraph 25 to the extent supported by the

referenced task order, which is the best evidence of its contents; otherwise denies the allegations.

        26. Admits.

        27. Admits the allegations contained in paragraph 27 to the extent supported by the

referenced task order modification, which is the best evidence of its contents; otherwise denies

the allegations.

        28. Admits the allegations contained in the first sentence of paragraph 28 to the extent

supported by the referenced statement of work, which is the best evidence of its contents;

otherwise denies the allegations. Admits the allegations contained in the second sentence of

paragraph 28.

        29. Admits the allegations contained in paragraph 29 to the extent supported by the

referenced statement of work, which is the best evidence of its contents; otherwise denies the

aliegations.

        30. Admits.

        31. Denies the allegations contained in paragraph 31 for lack of knowledge or

information sufficient to form a belief as to their truth.

        32. The allegations contained in paragraph 32 are ambiguous and plaintiffs

characterization of its case, to which no response is requfred to the extent that they may be

deemed allegations of fact, they are denied.




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        33. Denies the allegations contained in paragraph 33 for lack of knowledge or

information sufficient to foma a belief as to their tiuth.

        34. Admits.

        35. Admits.

        36. Admits the allegations contained in paragraph 36 to the extent supported by the

referenced agreement, which is the best evidence of its contents; otherwise denies the allegations.

        37. Admits the allegations contained in paragraph 37 to the extent supported by the

referenced “work release,” which is the best evidence of its contents; otherwise denies the

allegations.

        38. Admits the allegations contained in paragraph 38 to the extent supported by the

referenced “revised work release,” which is the best evidence of its contents; otherwise denies

the allegations.

        39. The allegations contained in paragraph 39 are conclusions of law to which no

response is required; to the extent that they may be deemed allegations of fact, they are denied.

        40. Admits the allegations contained in paragraph 40 to the extent supported by the

referenced “Tamimi Subcontract” which is the best evidence of its contents; otherwise denies the

allegations.

        41. Admits the allegations contained in paragraph 41 to the extent supported by the

referenced modification to ‘MA3, which is the best evidence of its contents; otherwise denies

the allegations.

        42. AdmitS the allegations contained in paragraph 42 to the extent supported by the

referenced “Tamimi Subcontract” which is the beet evidence of its contents; otherwise denies the


                                                    6




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‘S.



      allegations.

              43. Admits the allegations contained in paragraph 43 that facilities were constructed at

      Camp Anaconda at sites A-I and A4 by Prime Projects International. Denies the remainder of

      the allegations contained in paragraph 43 for lack of knowledge or information sufficient to form

      a belief as to their truth.

              44. The allegations contained in paragraph 44 are ambiguous and plaintiffs

      characterization of its case, to which no response is required; to the extent that they may be

      deemed allegations of fact, they are denied.

              45. Denies the allegations contained in paragraph 45 for lack of knowledge or

      information sufficient to form a belief as to their truth.

              46. Denies the ailegations contained in paragraph 46 for lack of knowledge or

      information sufficient to form a belief as to their truth.

              47. Admits the allegations contained in paragraph 47 to the extent supported by the

      referenced change order which is the best evidence of its contents; otherwise denies the

      allegations.

              48. Denies the allegations contained in paragraph 48 for lack of knowledge or

      information sufficient to form a belief as to their truth.

              49. Admits the allegations contained in the first sentence of paragraph 49 to the extent

      supported by the referenced change order which is the best evidence of its contents; otherwise

      denies the allegations. Denies the allegations contained in the seconds sentence of paragraph 49

      for lack of knowledge or information sufficient to form a belief as to their truth.




                                                         7




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         Case 1:09-cv-00351-CCM  Document47
                                          47 Filed
                                             Filed 03/15/11
                                                   03115/11 Page        26
                                                                     of 26
                                                             Page 8$ of



        50.
        50. Denies.

        51.        the allegations
        51. Admits the                                    51, regarding the contents of plaintiff’s
                       allegations contained in paragraph 51,                           plaintiff's

"RFP"      theextent
       to the
“RPP” to              supportedby
               extentsupported    the referenced
                               bythe  referenced document,
                                                 document, which is the best evidence of its
                                                                             evidence of

contents; otherwise         the allegations.
                    denies the
          otherwise denies      allegations. Denies the remainder of                 contained in
                                                                  of the allegations contained

paragraph 51
paragraph          lack of
              for lack
          51 for           knowledge or
                        ofknowledge  or information
                                        information sufficient to forra
                                                                  form a belief    to their truth.
                                                                         belief as to

       52. Admits the
       52.            aUegation contained
                  the allegation                                                   responded
                                 contained in paragraph 52, that Tamimi and others responded

to the "RFP."  Deniesthe
       “RFP.” Denies      remainderof
                      theremainder  ofthe
                                       the allegation
                                            allegation contained
                                                       contained in paragraph 52.

       53.
       53. Admits the  allegations contained
                   the allegations           in the first sentence of
                                   containedin                                        the extent
                                                                   of paragraph 53 to the

supported by the
supported by  the referenced  change order
                   referenced change order which is the best evidence of               otherwise
                                                                      of its contents; otherwise

denies the allegations.

       54. Admits the
       54.        the allegations contained in paragraph 54 to the extent supported by the
                      allegations contained

referenced change
           change order which is
                  order which is the best evidence of
                                                   of its contents; otherwise denies the

allegations.
allegations.

        55. Admits the
        55.            allegations contained
                   the allegations                                         supported by the
                                   contained in paragraph 55 to the extent supported

referenced
referenced change
           change order
                  order which
                        which is the
                                 the best
                                     best evidence
                                          evidence of                         denies the
                                                   of its contents; otherwise denies

allegations.

        56, Admits the
        56.         the allegations contained in
                        allegations contained in paragraph 56 to the extent supported by the

referenced
referenced change
           change order
                  order which is the best evidence
                        which is                   of its contents; otherwise denies the
                                          evidence of

allegations.

        57. Admits the
        57.            allegations contained
                   the allegations contained in                            supported by the
                                             in paragraph 57 to the extent supported

referenced change
           change order
                  order which is
                              is the best evidence of                                the
                                                   of its contents; otherwise denies the

allegations.


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               58. Denies the allegations contained in paragraph 58 for lack of knowledge or

       information sufficient to form a belief as to their truth.

               59. Admits the allegations contained in paragraph 59 that plaintiff solicited and received

       proposals from vendors for the recruitment and transportation of laborers to Camp Anaconda.

       Denies the remainder of the allegations contained in paragraph 59 for lack of knowledge or

       information sufficient to form a belief as to their truth.

               60. Admits the allegation contained in paragraph 60 that plaintiff awarded a subcontract

       to “ESS” in August 2004 to provide labor. Denies the remainder of the allegations contained in

       paragraph 60 for lack of knowledge or information sufficient to form a belief as to their truth.

               61. Denies the allegations contained in paragraph 61 for lack of knowledge or

       information sufficient to form a belief as to their truth.

               62. Admits the allegations contained in paragraph 62 to the extent supported by the

       referenced change order which is the best evidence of its contents; otherwise denies the

       allegations.

               63. Denies the allegations contained in paragraph 63 for lack of knowledge or

       information sufficient to form a belief as to their truth.

               64. Admits the allegation contained in paragraph 64 that plaintiff terminated its

       subcontract with ESS. Denies the remainder of the allegations contained in paragraph 64 for lack

       of knowledge or information sufficient to form a belief as to their truth.

               65. Denies the allegations contained in paragraph 65 for lack of knowledge or

       information sufficient to form a belief as to their truth.




                                                           9




.Vc.




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        66. Denies the allegations contained In paragraph 66 for lack of knowledge or

information sufficient to form a belief as to their truth.

        67. Denies the allegations contained in paragraph 67 for lack of knowledge or

information sufficient to form a belief as to their truth.

        68. Admits the allegations contained in the second sentence of paragraph 68 that Tamimi

continued to perform its contract with plainti during negotiations. Denies the allegations

contained in paragraph 68 for lack of knowledge or information sufficient to form a belief as to

their truth.

        69. Denies the allegations contained in paragraph 69 for lack of knowledge or

information sufficient to form a belief as to their truth.

        70. Admits the allegations contained in paragraph 70 to the extent supported by the

referenced contract modification which is the best evidence of its contents; otherwise denies the

allegations for lack ofknowledge or information sufficient to form a belief as to their truth.

        71. Admits the allegations contained in paragraph 71 to the extent supported by the

referenced change orders which are the best evidence of their contents; otherwise denies the

allegations.

        72. Denies the allegations contained in paragraph 72 because the phrase, “substantially

based upon” is ambiguous and for lack of knowledge or information sufficient to form a belief as

to their truth.

        73. Admits the allegations contained in paragraph 73 to the extent supported by the

referenced change order which is the best evidence of its contents; otherwise denies the

allegations.


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        74. Denies.

       75. The allegations contained in paragraph 75 are plaintiffs characterization of its case,

to which no response is required; to the extent that they may be deemed allegations ofct, they

are denied.

       76. The allegations contained in paragraph 76 are ambiguous and plaintiffs

characterization of its case, to which no response is required; to the extent that they may be

deemed allegations of fact, they are denied.

       77. The allegations contained in paragraph 77 are ambiguous and plaintiff’s

characterization of its case, to which no response is required to the extent that they may be

4eemed allegations of fact, they are denied.

       78. The allegations contained in paragraph 78 are ambiguous and plaintiffs

characterization of its case, to which no response is required to the extent that they may be

deemed allegations of fact, they arc denied.

       79. Denies the allegations contained in paragraph 79-for lack of knowledge or

information sufficient to form a belief as to their truth.

        20. Admits the allegations, contained in paragraph 80, that plaintiff provided vouchers to

the Government, that included statements of amounts paid to Tamimi pursuant to Task Order 59.

Denies the remainder of the allegations contained in paragraph 80 for lack of knowledge or

information sufficient to form a belief as to their truth.

        81. Admits.                                                             -




        82. Admits.

        83. Admits the allegations contained in paragraph 83 to the extent supported by the


                                                   11




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referenced audit report which is the best evidence of its contents; otherwise denies the

allegations.

        84. Admits.

        85. Admits the allegations contained in paragraph 85 to the extent supported by the

referenced DCAA form lwhich is the best evidence of its contents; otherwise denies the

allegations.

        86, Admits the allegations contained in paragraph 86 to the extent supported by the

referenced DCAA form lwhich is the best evidence of its contents; otherwise denies the

allegations.

        87. The allegations contained in paragraph $7 are plaintiffs characterization of its case,

to which no response is required; to the extent that they may be deemed allegations of fact, they

are denied.

        88. Admits the allegations contained in paragraph 88 to the extent supported by the

referenced DCAA Form lwhich is the best evIdence of its contents; otherwise denies the

allegations.

        89. Admits the allegation contained in paragraph 89, that the “PCO” has withheld

$41,070,624 from plaintifl The remainder of the allegations contained in paragraph 89 are

plaintiff’s characterization of its case, to which no response is required; to the extent that they

may be deemed allegations of fact, they are denied.

        90. Defendant incorporates by reference its responses to the allegations of paragraphs 1

through 89 of the complaint.




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        91. The allegations contained in paragraph 91 are conclusions oflaw and plaintiffs

characterization of its case, to which no response is required; to the extent that they may be

deemed allegations of fact, they are denied.

       92. The allegations contained in paragraph 92 are conclusions of law and plaintiffs

characterization of its case, to which no response is required; to the extent that they may be

deemed allegations of fact, they are denied.

       93. Admits the allegations contained in paragraph 93 to the extent supported by the

referenced regulation, which is the best evidence of its contents; otherwise denies the allegations.

       94. The allegations contained in paragraph 94 are conclusions of law and plaintiff’s

characterization of its case, to which no response is required; to the extent that they may be

deemed allegations of fact, they are denied,

       95. The al]egations contained in paragraph 95 are conclusions of law and plaintiff’s

characterization of its case, to which no response is required; to the extent that they may be

deemed allegations of fact, they are denied.

       96. Denies.

       97. The allegations contained in paragraph 97 are conclusions of law and plaintiffs

characterization of its case, to which no response is required; to the extent that they may be

deemed allegations of fact, they are denied.

       98. The allegations contained in paragraph 98 are conclusions of law and plaintiffs

characterization of its case, to which no response is required; to the extent that they may be

deemed allegations of fact, they are denied.




                                                 ‘3




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                            contabed in paragraph 99
        99. The allegations contained
        99.                                       99 are conclusions of law and plaintiff’s
                                                                                plaintiff's

characterization
characterization of its case,
                 of its case, to which no response is required; to the extent
                              to which                                        that they may be
                                                                       extent that

deemed allegations
deemed allegations of fact, they
                   offact,        are denied.
                             they are

        100. The
        100.     allegations contained
             The allegations                        10 are conclusions of law and plaintiff’s
                             contained in paragraph 10                            plaintiff's

characterization of
characterization    its case,
                 of its        to which
                        case, to        no response
                                  which no response isis required; to  the extent
                                                                   to the         that they
                                                                           extent that      may be
                                                                                       they may

deemed allegations of
deemed allegations offact,   they are
                      fact, they  are denied.
                                      denied.

       101. Denies
       101.         that plaintiff
            Denies that  plaintiffis
                                   is entitled
                                      entitled to the relief set forth in the prayer for relief
                                                      relief set                         relief

 immediately following
immediately            paragraph 100,
             following paragraph 100, or        reliefwhatsoever.
                                            any relief
                                      or to any        whatsoever.

                         and every
                    each and
        102. Denies each
        102.                                      previously admitted or otherwise qualified.
                             every allegation not previously




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                      DEFENDANT’S FIRST AYFIRiv1JJIVE DEFENSE

        103. Plaintiff’s claim is unenforceable because of the taint of”ldckbacks,”

                              DEFENDANT’S COUNTERCLAIMS

        104. These counterclaims arise pursuant to the Special Plea in fraud, 28 U.S.C.       § 2514,
the Anti-Kickback Act, 41 U.S.C.   § 53, 55, the False Claims Act, 31 U.S.C. S 3729, and under
common law fraud.

       105. The Court possesses jurisdiction pursuant to 28 U.S.C.       §   1503 and 2508.

       106. Defendant and counterclaim plaintiff is the United $tate.

       107. Plaintiff and counterclaim defendant is Kellogg Brown & Root Services, Inc.

(“KBR”).                              V




       108. These counterclaims generally arise from the receipt of kickbacks by KBR

employees from Tamimi Global Company (“Tamimi”). The two KBR employees most directly

implicated in this case are Mr. Terry Hall, who was KBR’s head of food services for Kuwait and

fracj from late 2002 through early 2004, and Mr. Luther Holmes, his deputy. Mr. Hall and Mr.

Holmes were both receiving kickbacks from a high-level Tamimi employee at the same time that

they were making decisions and recommendations that ensured that Tarnimi would obtain

lucrative dining facility (9)FAC”) subcontracts from KBR pursuant t the LOGCAP Ut contact

for which KBR would be reimbursed by United States taxpayer dollars along with a fee

determined by the subcontract costs. These actions resulted in, among other things, the

submission of falsely inflated and fraudulent claims to the contracting officer for payment from

the United States Treasury.



                                                                     V



                                                15




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       109.    October 2002, Mr. Hail
       109. In October           Hall was
                                      was assiied
                                          assigned to
                                                    to Kuwait
                                                       Kuwaitby
                                                              byKBR.
                                                                KBR. Mr.
                                                                     Mr. Hall’s
                                                                         Hall's

respcnsibiities included
responsibilities          being the
                 included being  the Regional      Services Manager
                                     Regional Food Services Manager for
                                                                    for Kuwait
                                                                        Kuwait (and
                                                                               (and Iraq,

subsequent to its
subsequent     its invasion
                    invasion by
                             by Coalition forces) under the LOGCAP m
                                Coalition forces)                  III contract.
                                                                       contract. The
                                                                                 The Regional

Food Services Manager
food Services             his staff
                      and his
              Manager and     staff were responsible for, among other things, ensuring that

subcontractors providing
subcontractors providingDFAC
                         DFAC services
                               services for
                                         for KBR,
                                             KBR, as
                                                  as required
                                                     required by
                                                              by task
                                                                  task orders
                                                                       orders upon
                                                                              upon the
                                                                                    the LOGCAP
                                                                                        LOGCAP

Ill contract, were technically competent to perform such services; were responsible for helping
La

craft statements of
                 ofwork
                    work for
                          for subcontractors
                              subcontractors providing DFAC
                                                       OFAC services;
                                                            services; were
                                                                      were responsible
                                                                           responsible for

formally requisitioning
         requisitioningDFAC
                        DFAC services
                              services (including
                                        (including estimnting
                                                   estimating the
                                                              the costs
                                                                  costs of
                                                                        ofsuch
                                                                           such services)
                                                                                services) from
                                                                                          from the

KBR subcontractingstaff;
KER subcontracting staff; and were responsible
                          and were             for overseeing
                                   responsible for overseeing performance of DFAC
                                                              performance of OFAC

subcontracts.
subcontracts.

       110. In early
       110.    early 2003,
                     2003, Mr.
                           Mr. Hall
                               Hall was
                                    was joined in
                                               in Kuwait
                                                  Kuwait by
                                                         by his
                                                            his newly-hired
                                                                newly-hired deputy,
                                                                            deputy, Mr. Luther

Holmes.

       111. One of
       111.     ofthe
                   the DFAC subcontractors                   Hall was Tarnimi
                            subcontractors supervised by Mr. Hail             Atthe
                                                                      Tamimi. At     lime
                                                                                 the time

that Mr. Hall arrived
              arrived in  Kuwait, Tamimi
                       in Kuwait, Tamimi was
                                         was already                services related to the
                                             already providing DFAC services

LOGCAP Ill
       III contract as
                    as aa KBR
                          KBR subcontractor
                               subcontractoratatCamp
                                                 CampArian,
                                                      Arian, Kuwait.
                                                             Kuwait

       112. Due to
       112.     to an
                   an electrical         the Camp
                      electrical fire at the Camp Ariau
                                                  Arian DFAC,
                                                        OFAC,caused
                                                              causedthrough
                                                                     through the fault of

Tamimi, Mr. Hall
            Hail and
                 and his
                     his superiors
                          superiors at
                                    at KBR
                                       KBR contemplated             KBR’s subcontract
                                           contemplated terminating KBR's subcontract with

Tamimi in November
          November 2002.
                   2002. They  ultimatelychose
                          Theyultimately  chose to   continue to
                                                 to continue   to subcontract      TamimL
                                                                  subcontract with Tamimi.

       113. Through the
       113.         the performance of his duties and his dealings with
                                                      his dealings with Tamimi,
                                                                        Tamimi, Mr. Hall

                 socialize with Tamimi's
came to know and socialize      Tamimi’s chief ofoperations
                                          chiefof            and vice
                                                  operations and      president, Mr.
                                                                 vice president,

Mohammad Shabbir
         Shabbir Khan.
                 Khan,




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        114. In November 2002, Mr. Khan first offered a kickback to Mr. Hall, stating that the

two could “make a lot of money together.” Mr. Hall accepted no money from Mr. Khan during

this conversation, but reported it to nobody.

        115. At some point in late 2002 or early 2003, Mr. Hall began taking money from Mr.

Kiaan. Mr. Hall understood that the money was being provided so that Tamimi would remain in

KBR’s good graces and continue to get DPAC contracts from KBR. The money provided to Mr.

Hall first took the form of $5,000 in cash that Mr. Khan had delivered to him at the airport in

Kuwait prior to ins departure on a vacation in 2003. Mr. Khan. caused $5,000 in cash to be

delivered to Mi. Holmes at the airport at the same time. Mr. Klan also gave Mr. Hall an

automated teller machine (“ATM”) card that could be used to access a bank account into which

Mr. Klan had placed $5,000. Mr. Hall used the ATM card to withdraw approximately $3,500 in

cash from the bank account Mr. Holmes was also given access to the account by Mr. Khan, and

withdrew the remaining $1,500 from the account Mr. Holmes was also given $10,000 or more

in cash by Mr. Klan, which he gave to his secretary. Near the end of2003, Mr. Klan gave Mr.

Hall $20,000 which was ostensibly to be used as an investment in a “Golden Corral” restaurant,

although Mr. Hail did not, in fact, make such an investment with Mr. Klan’s money, nor did Mr.

IChan ever request that it be paid back.

        116. During the time that Mr. Holmes and Mr. Hall were receiving money from Mr.

Klan, they were involved in decisions that were made to the benefit of Tamimi as a KBR

subcontractor. In Yune 2003, KBR convened a board to determine which local contractors would

be awarded “master agreement” suboontacts to perform DFAC services for KBR pursuant to the

LOOCAP UI contact. Once KBR awarded a “master agreement” to a contractor, it intended to


                                                 17




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                                                                             26



            “workreleases"
      issue "work releases”upon  the master
                            uponthe  masteragreement
                                            agreement as
                                                      as means to
                                                               to order
                                                                  order DFAC
                                                                        DFAC services
                                                                             services at particular

                  Contractorsnot
      locations. Contractors  notawarded
                                  awardedmaster
                                         masteragreements
                                                agreements would
                                                           would not
                                                                 not be
                                                                     be eligible
                                                                        eligible for
                                                                                  for subcontracts
                                                                                      subcontracts to

      operate
      operate DFACs
              OFACs for
                    for KBR.
                        KBR

              117.
              117, Mr. Holmes and
                              and Mr. Hall were amongst the KBR employees who sat
                                                                              sat upon the

      board to determine
      board to determine which
                         which contractors
                               contractors would be awarded master agreements.
                                                                   agreements. As
                                                                               As Regional
                                                                                  Regional Food

               Manager for
      Services Manager for KBR,
                           KER, had Mr.
                                    Mr. Hall
                                        Hail objected
                                             objected to the award
                                                             award of
                                                                   of a master
                                                                        master agreement
                                                                               agreement to a

                     would have been highly unlikely that
      contractor, it would                           that such
                                                          such an award
                                                                  award would
                                                                        would be
                                                                              be made.
                                                                                 made. Tamimi and

      five other contractors were
           other contractors were awarded
                                  awarded master
                                          master agreements;
                                                 agreements; the
                                                              the board decided
                                                                        decided not
                                                                                not to
                                                                                     to award
                                                                                        award master

                    several other
      agreements to several other contractors that sought them. The
                                                                The master
                                                                    masteragreement
                                                                           agreement awarded
                                                                                     awarded to

      Tamimi was known
                 known as
                       as "Master
                          “Master Agreement 3."
                                            3.”

              118.
              118. KBR issued multiple work
                                       work releases upon Master Agreement 3 to obtain DFAC

               in response
      services in response to        orders issued upon the LOGCAP UI
                                task orders
                            to task                                M contract. The  relevant LOGCAP
                                                                               The relevant

L._   M
      UI task orders were
         task orders      TaskOrder
                     wereTask Order 59,
                                    59, which
                                        which was
                                              was issued in
                                                         in August
                                                            August 2003, but effective from June
                                                                         but effective

      2003 through
            through April
                    April 2005,
                          2005, and
                                and Task
                                    Task Order
                                         Order 89,
                                               89, which
                                                   which covered
                                                         covered services
                                                                 services from May 2005
                                                                          from May 2005 through

      August 2006. All told1Tamimi
                   Mltold,   Tamimibilled
                                    blUedand
                                          andKBR
                                             KBRpaid  approximately$466,290,328
                                                 paidapproximately $466,290,328 upon all of the
                                                                                     all of

      work releases for
                    for Master
                        Master Agreement 3. KBR
                                            KBRregularly
                                                regularly submitted
                                                          submitted vouchers
                                                                    vouchers to
                                                                              to the United States

      seeking
      seeking reimbursement
              reimbursement for   these amounts
                             for these  amounts as
                                                as direct
                                                   direct costs,
                                                          costs, plus
                                                                 plus aa base
                                                                         base fee of11 percent
                                                                              fee of   percent of
                                                                                               of direct

      costs (also
            (also referred
                  referred to
                            to as
                               as "definitized
                                  “definitized costs"),
                                               costs”), and
                                                        and an
                                                            an award
                                                               award fee
                                                                     fee of
                                                                         ofup
                                                                            up to
                                                                               to two  percent of
                                                                                   two percent of direct

      costs, plus a fee for
                        for indirect
                            indirect costs. Mr.
                                            Mr. Hall
                                                Hailand
                                                     and Mr.
                                                         Mr. Holmes
                                                             Holmes knew,
                                                                    knew, when
                                                                          when they  accepted their
                                                                                they accepted

      kickbacks from
                from Mr.
                     Mr. Khan,
                         Khan, that
                                that KBR
                                     KBR would
                                         would file
                                               file vouchers with
                                                             with the        States seeking
                                                                  the United States

      reimbursement
      reimbursement for any
                        any Tamimi subcontracts as set forth above.
                                                             above. Mr.
                                                                    Mr. Hall and Mr. Holmes also
                                                                        Hall and

      knew or
           or had reason
                  reason to
                          to know
                             know that
                                   that the
                                        the kickbacks
                                            kickbacks that
                                                      that they
                                                           they received
                                                                received would           inflated contract
                                                                                lead to inflated
                                                                         would lead


                                                        18
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prices from Tamimi.

        119. When ICBR was tasked by the Army to take over performance of DFAC services at

Camp Anaconda, Iraq, KBR decided to continue to utilize Tainimi, which was the incumbent

contractor for the Army at Camp Anaconda. This decision was, in the initial instance, made, at

the urging of Mr. Hall and Mr. Gatlin, by Mr. Daniel Petsche, who was a LOGCAP m

subcontracts administrator for KBR, responsible for LOGCAP Ill subcontracting in Iraq. Mr.

Petsche did not possess the authority from KBR to commit the company to more than a certain

amount of spending on a particular subcontract, but he could make provisional decisions to agree

to certain subcontracts and then seek ratification from superiors at KBR wIth the proper authority

to commit the company to the larger contractual amounts. Mr. Petsche did not possess the

authority to commit KBR to the contractual amounts that would be necessary for the Camp

Anaconda OFAC contract.

        120. Mr. Petsche made the decision to acquiesce to the award of the Camp Anaconda

subcontract to Tamlini based in large part upon the pressure supporting the award that he

received from Mr. aafl. Indeed, Mr. ?etsche had contemplated having the Camp Anaconda

DFAC subcontract be awarded to a different subcontractor than Tamimi, but changed his mind

based upon the advocacy for Tamimi that he received from Mr. Hail,

        121. Mr. Hall’s strong advocacy on behalf of Tamimi, and the support given to Mr.

Hail’s positions by Mr. Hall’s direct supervisor, Mr. Robert “Butch” Gatlin, influenced Mr.

Petsche’s decision-maldng relating to TamimI at Camp Anaconda and elsewhere. Additionally,

Mr. Hall ‘rote and signed the memorandum for the KBR procurement file justifying the sole-

source award to Tamimi of the DFAC subcontract at Camp Anaconda.


                                                19




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                      122.
                      122. Work Release 33 of Master
                                              Master Agreement
                                                     Agreement 33 was
                                                                  was the
                                                                      the contractual
                                                                          contractual vehicle
                                                                                      vehicle by
                                                                                              by which
                                                                                                 which KBR
                                                                                                       KBR

              obtained DFAC services from
                                     from Tamimi at Camp Anaconda, Iraq from August 2003
                                                                                    2003 through

              December 2005. Tamimi
                             Tamimibilled
                                    billedand
                                           and KBR
                                               KBR paid
                                                   paid approximately
                                                        approximately $307,630,344 upon Work Release

              33 of Master Agreement 3. KBR
                                        KBR then
                                             then sought
                                                  sought and obtained payment of the $307,630,344, plus
                                                         and obtained                              plus

              base and award fees and fees for indirect costs, from the United States.
                                                                               States.

                      123.
                      123. In
                           In late
                              late December 2003
                                            2003 Mr.
                                                 Mr. Petsche was flred
                                                                 fired by     for receiving a gift from a
                                                                       by KBR for

              subcontractor not Tamimi        february2004,
                                Tarnimi. InInFebruary         shortlyafter
                                                       2004, shortly  after his
                                                                            his termination,
                                                                                termination, Mr. Petsche was
                                                                                                         was

              contacted by KBR employee David
                                        David Hadcock.
                                              Hadcock. Mr. Hadcock had been reviewing
                                                                            reviewing KBR’s
                                                                                      KBR's Camp
                                                                                            Camp

              Anaconda DFAC procurement
                            procurement files and
                                              and was searching for both an authorization and justification
                                                                                              justification

              for the cost of
                           of Master Agreement 3, Work Release 3.
                                                               3.

                     124.
                     124. Mr.
                          Mr. Petsohe
                              Petsche discussed the matter briefly with Mr. Hadcock on the telephone and
                                                                        Mr. Hadoock

                                             Hadoock at
              sent a follow-up e-mail to Mr. Hadcock at his
                                                        his request                     Petsche stated that he
                                                            request. In the e-mail, Mr. Petsohe

              had previously referred to the Anaconda DFAC as, “the
                                                               "the mother of all DEAC      deals” because
                                                                                  DFAC drug deals"

                                           surrounding it.
              of all of the irregularities surrounding  it. In Mr: Petsche’s words, the Anaconda OFAC
                                                               Mr. Petsche's                     DFAC was
                                                                                                      was

              "predestined
              “predestined and out of              the start.”
                                              from the
                                   of control from     start." Mr.
                                                               Mr. Petsche            Tamimi's pricing for the
                                                                   Petache wrote that Tamimi’s             the

              Anaconda DFAC was "very
                                “very close
                                      close to
                                             to the [amount
                                                    amount in. the internal
                                                            in the internal KBR  requisition," which Mr.
                                                                            KBR] requisition,1’      Mr.

              Petsche had thought
              Petsohe     thought indicated
                                  indicated that              been previously agreed to by
                                            that the deal had been                         others from
                                                                                        by others from KBR
                                                                                                       KBR

              and Tamimi, but that he had
                                      bad chosen not to
                                                     to question
                                                        question it  Mr. Petsche further wrote that he had
                                                                 it. Mr.

              drafted a work release to effect this agreement, but had not signed it because he felt that he

              needed more data to justify
                                   justify its expense.
                                               expense. Mr.
                                                        Mr. Petsche explained the
                                                            Petsche explained          of a signed work release
                                                                              the lack of

              and price justification
                        justification memorandum by
                                                 by writing,
                                                    writing, “I
                                                             "I did not execute
                                                                did not execute the
                                                                                 the Work Release. I did not
                                                                                     WorkRelease.

              do a Price Reasonableness
              do                        write-up on
                         Reasonableness write-up    it. II could
                                                 on it           not present it with the data and support II had.”
                                                           could not                                         had."


                                                               20
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Mr. Petsche added that, “[t]liere is a whole lot more to this story” and suggested that similar

irregularities could be found in other Tamimi subconftacts with KBR.

        125. Upon receipt of Mr. Petsehe’s e-mail, Mr. Hadoock forwarded it to Mr. William

Jonas, head of procurement for KBR, and Mr. Charlie Carr, the head of KBR’s ‘DEAC team,”

which, by that time, had oversight of all DFACS in Kuwait and Iraq. Neither Mr. Hadoock, Mr.

Jonas, Mr. Carr, nor any other KBR employee took any action based upon Mr. Petsche’s e-mail

or the allegations contained therein. No KBR employee ever conveyed Mr. Petsohe’s concerns

(or any of their own) regarding the Camp Anaconda and other Tamimi contacts to any

representative of the United States Government. In March 2004, after Ms receipt of Mr.

Petsche’s e-mail and after his forwarding of the e-mail to Mr. Jonas and Mr. Carr, Mr. Hadcock

wrote a memorandum purporting to justify the costs for Master Agreement 3, Work Release 3.

Only after Mr. Hadoock’s memorandum was Master Agreement 3, Work Release 3 officially

ratified by KBR officials with the authority to do so.

        126. The original period of performance for Master. Agreement 3, Work Release 3

concluded in March 2004. Through the issuance of change orders, KBR extended the period of

performance of Master Agreement 3, Work Release 3 through December 31, 2005.

                                               Count I

                              Special Plea In fraud—28 U.S.C.      2514

        127. The United States incorporates by reference the allegations set forth in paragraphs

104 through 126 above.

        12$. Pursuant to 28 U.S.C. § 2514, defendant’s special plea in fraud seeks the forfeiture

of the plaintiff’s claim in this action.


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         129. The special plea in fraud statute, 28 U.S.C.   § 2514, mandates, inter a/ia, the
forfeiture of any claim asserted against the United States where fraud is practiced or attempted

against the Government in inducing the Government to enter the contract, during performance of

the contract, or in the proof or statement of a claim against the Government.

        130. Performance of the LOGCAP Ill contract, in particular Task Orders 59 and 89.

under which KBR was compensated for the costs of work performed under the various work

releases of Master Agreement 3, was tainted by the fraud of the kickbacks received by KBR’s

employees, Mr. Hall and Mr. Holmes, when they sat upon the board that awarded Master

Agreement 3 and when they took actions to encourage the issuance of Work Release 3 to Master

Agreement 3 to Tamimi for work at Camp Anaconda.

        131. Accordingly, pursuant to 28 U.S.C.    § 2514, plaintiff’s claim in this action is subject
to forfeiture in its entirety.

                                               Count U

                                 Anti-Kickback Act—41 U.S.C.    § 53,55
         132. The United States incorporates by reference the allegations set forth in paragraphs

104 through 131 above.

         133. The Anti-Kickback Act, 41 U.S.C.    § 53, 55, prohibits employees of Government
contractors from accepting “kickbacks” from subcontractors and establishes penalties for persons

who iciowingly violate the Act and for companies that violate the Act. A “kickback’ is payment

of money or a thing of value for the purpose of obtaining or rewarding favorable treatment of the

subcontractor by the prime contractor.




                                                  22




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       134. By virtue of accepting funds from Mr. Khan in return for their favorable treatment

of Tamimi and in reWard of that treatment, Mr. Holmes and Mr. Hall both violated the Anti

Kickback Act.

       135. The violations of the Anti-Kickback Act by Mr. Hall and Mr. Holmes are

attributable to KBR because the two were acting as KBR’s agents at the time that they accepted

the kickbacks.

                                           Count UI

                           False Claims Act—31 U.S.C.    § 3729(a)(1)
       136. The United States incorporates by reference the allegations set forth in paragraphs

104 through 135 above.

       137. KBR knowingly presented and caused to be presented to officers and employees of

the United States Government false or fraudulent claims for payment or approval by submitting

vouchers for payment for costs associated with Master Agreement 3 and all of the work releases

upon it, The claims were false or fraudulent because KBR knew that the award ofMaster

Agreement 3 and the work releases upon it, including but not limited to Work Release 3, were

tainted by kickbacks given by Mr Khañ to Mr. Hall and Mr. Holmes.

                                            Count IV

                      Rescission And Disgorgement (Master Agreement 3)

       138. The United States incorporates by reference the allegations set forth in paragraphs

104 through 137 above.




                                               23




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        139. Because
        139. Because of the kickbacks
                     ofthe  kickbacks to
                                       to Mr.
                                          Mr. Hall and
                                                   and Mr.         the portion of
                                                       Mr. Holmes, the         ofthe  LOGCAP
                                                                                  the LOGCAP

III contracttainted
III contract         bysuch
             taintedby  suchkickbacks
                             kickbacksisisvoid
                                           voidororvoidable.
                                                    voidable. Accordingly, the Government is

entitled to be restored to its pre-contract position
                                            position relating
                                                     relating to                of the LOGCAP
                                                              to these portions of     LOOCA? III
                                                                                              Ill

contract.
contract

       140. Based upon the facts described
       140.                      described above,
                                           above, the Government isis entitled
                                                  the Government               to the
                                                                      entitled to the rescission
                                                                                      rescission

of
of the portion of the LOGCAP M
               of the        DI contract
                                contract involving
                                         involving all work performed by KBR
                                                   all work                  through its
                                                                         KBk through

Master Agreement 3 subcontract with Tarnirni,
                                    Tsmimi, inasmuch as that subcontract was tainted by

kickbacks and it would
                 would be contrary
                          contrary to
                                   to public policy for the Government to pay for such
                                      public policy

unlawMly
unlawfully awarded work.     Government is
                   work. The Government                                  of all sums paid to
                                        is also entitled to disgorgement of

KBR as
    as compensation  related to
       compensation related  to the   tainted subcontract.
                                 the tainted  subcontract.

                                             Count
                                             Count V

                                  Disgorgement (Task Order
                                                     Order 59)
                                                           59)

       141. The United States
       141.            States incorporates                   allegations set
                               incorporates by reference the allegations  setforth
                                                                              forth in paragraphs
                                                                                     inparagraphs

            140 above.
    through 140
104 through

                  Order 59 to the LOGCAP DI contract was issued
        142. Task Order
        142.                                                        KBR shortly after the
                                                                 to KBR.
                                                         issued to

kickback-tainted award byKBR
                 awardby KBR of Master Agreement33 toto TamImi.
                                MasterAgreement                  All work releases upon
                                                        Taminai. All

                         issued under
Master Agreement 33 were issued       the authority
                                under the           of Task
                                          authority of Task Order 59. Because the kickbacks to
                                                            Order59.

    Hall and
Mr. Hall
Mr.          Mr. Holmes
         and Mr. Holmes necessarily tainted Task Order 59 at or about the
                        necessarily tainted                           the time of award by
                                                                          time of

                                                pricing and
                                            the pricing
establishing a relationship that influenced the             cost of
                                                        and cost ofthat
                                                                    that task order, Task
                                                                         task order,      Order 59
                                                                                     Task Order

unjustly enriched KBR.
                  KBR.

                                  described the
        143. Based upon the facts described
        143.                                the Government                  disgorgement of all
                                                                         to disgorgement
                                                Government isis entitled to

             KBR pursuant
fees paid to KBR                  Order 59.
                 pursuant to Task Order 59.


                                                 24




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                                             FOR RELIEF
                                      PRAYER FOR RELIEF

        WHEREFORE, defendant,     United States,
                   defendant, the United States, requests
                                                 requests that the Court eater
                                                                         enter judgment  in its
                                                                                judgment in its

favor,
favor, and
       and against KBR as
                       as fo1lows
                          follows:

        a. As
        a. As to Count I,I, under
                            under the
                                  the Special
                                      Special Plea
                                              Plea in
                                                    inFraud,
                                                      Fraud, 28
                                                             28U.S.C.
                                                                U.S.C. §§2514,
                                                                          2514,against
                                                                                againstplaintiff
                                                                                        plaintiff for

the forfeiture
    forfeiture of
               of KBR’s
                  KBR's entire claim;
                               claim;

       b. As
       b. As to Count II, under the
                      II, under the Anti-Kickback Act,
                                                  Act, 41
                                                       41 U.S.C.
                                                          U.S.C. §
                                                                 §§ 53, 55, against plaintiff,
                                                                    53, 55,         plaintiff, for
                                                                                               for

damages
damages in the amount of double the amount of the
                                              the kickbacks
                                                  kickbacks given to
                                                                  to Mr.
                                                                     Mr. Hall and Mr.
                                                                                  Mr. Holmes,
                                                                                      Holmes,

plus civit
plus civil penalties
           penalties as are allowable by law
                                         law of $5,500
                                                $5,500 to
                                                       to $11,000
                                                          $11,000 per
                                                                  per violation,
                                                                      violation, post-judgment.
                                                                                 post-judgment

interest, and
interest, and costs;
              costs;

       c. As
       c. As to
             to Count fl],
                      III, under
                           under the
                                 the False
                                     False Claims
                                           Claims Act,
                                                  Act, 31
                                                       31 U.S.C.
                                                          U.S.C. §§ 3729,         the plaintiff,
                                                                    3729, against the plaintiff, for
                                                                                                 for

       the damages
treble the damages sustained by the
                                the United
                                    United States,
                                           States, plus
                                                   plus civil
                                                        civil penalties
                                                              penalties as
                                                                        as are allowable by
                                                                           are allowable     law of
                                                                                         by law  of

$5,500 to
$5,500 to $11,000
          $11,000 per violation,
                      violation, post-judgment
                                 post-judgment interest,
                                               interest, and
                                                         and costs;
                                                             costs;

        d. As
        d. As to
              to Count W,
                       N, rescission
                           rescission and  disgorgement related to Master Agreement 3,
                                       and disgorgement                             3, for

rescission of the portion of the LOGCA?
                                 LOGCAP Ill
                                        El contract that was effected by KBR         the use
                                                                             through the
                                                                         KBR through     use

          Agreement 3,
of Master Agreement 3, and for disgorgement of all
                                               all moneys
                                                   moneys paid
                                                          paid to
                                                               to KDR            costs, indirect
                                                                  KBR for direct costa, indirect

costs, fixed
costs, fixed fees,
             fees, and award fees
                             fees related
                                  related to any work
                                                 work release
                                                      release upon Master Agreement 3,3, post-
                                                              upon Master                post-

 judgment interest,
judgment  interest, and
                    and costs;
                        costs;

        e. As
        e. As to
              to Count V,
                       V for
                          for disgorgement
                              disgorgement of
                                           ofall                                         fees
                                              all moneys paid to KBR for fixed and award fees

related to
related  to Task
            Task Order 59,
                       59, post-judgment
                           post-judgment interest, and costs.
                                                       costs.

        f.f. For the
                 the dismissal
                     dismissal of
                               of KBR’s
                                  KBR's complaint; and
                                        complaint, and

        g. For such other and further relief as
        g.                                                    deem appropriate.
                                             as the Court may deem appropriate.




                                                  25
                                                  25




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                                                                                     KBRPR0D0058863
      Case f:,O,9-cv-003   -CMDoccjmnt 47     Filed 03115t11 Fage of 2



                                   Rspectfufly submittd

                                   TONY WEST
                                   Assistut Attorney General

                                   s1Ieanne ‘E ]iisoi
                                   JEANNE E. DAVIDSON
                                   Dfrectör

                                   a’J. Reid Prouty’
                                   3. aEID PROUTY
                                   SeniirTiai Counsel
                                   Commercial tAtiatin Branok
                                   ‘Civil Division
                                   Depatrnen of justice
                                    11OaLs:tree, N.W.,
                                   Atti: Classification Unit
                                           BUi ‘Floor’
                                   Wasbiugton, D.C., 2O3’O
                                   TeIe (2O2)O5-7586
                                   Fax: (2,02)514.7969

                                    Attorneys for Defendant
March15, 20fl



       EO

  a’




                                      26




                                                                KBRPRODOO58864
APPENDIX B
        4:11-cr-40083-MMM-JAG # 6 Page 1 of 13                                                       E-FILED
                                                                Monday, 19 September, 2011 10:32:32 AM
                                                                           Clerk, U.S. District Court, ILCD
                          IN TIiI 17Arrpo STATES DISTRICT COURT                              FILED
                                              rattiziet tint:AIWA
                                       AT, E0 a ISLAND                                     gEP
'UNITED STATES' OF AMERICA,                                                             FfAmstAtfsiisissoNbishic
                                                                                          IAS: DISTROTCOUAT. -
                                                                                       CENTRAL D.ISTRIcrtnialpfs'

                         Plaintiff,                             CaSeNml, I- 4083
         vs.

TAMIMI oLoBAI., co., LTD;a/k/a fTAFGA,"

                         Defendant:
                          BEFERREBTROSECUTION AGREEMENT .
        Defendant Taminii dobarCii.,:14:18„ also.            as,:"1.0.0e(aii,ciL ST08ftettOgrreai to

as "TAFGA"), by its underSighedattorileys,puMuiliitte!atitlitkitY, &anted by TAFGA'a

Executive Board; and the, United StateSAfterney foro.octiitia)Thistrldt ofIllinoistat times

referred to herein as the "Goverrimentiventerliiimilihtleterredprosecutiowagreement
"Agreement").

        The terms and toriditionstittiieldeferied proSteittibMagretthent are as fO1LowS:

        1.      TAFGA acknoWledges40 agreds:tliatthe:GOvetninent NSii.fliesfoteoubt.
crimifiathit'OrinatiOn,MtaChed,                                  in.theUriited.StatesDistrictCourt
for the Central :Disti•iet'of IllinoiSyeliargingin:Counil Conspiracy to.PayKickbacksin viOlation
of Title 18; United States            Section 371, and:tharging in :Count2 Conspiracy to-Pay

Gratuities in violatibridTitle,•13, -.United States, Code Section 311•Irtdoing:so, TAFGA.(a)

knowingly,waives its righttelndiottrientlin these ehargesi.as well as rights to peedy.Trial:

pursuant to the.Sbitb                        Unit44:$t4fOcp#0400piffitLelti;Linitect atatee'Peclei:
Section 3161, and,Federal Rule of Criminal Pmcedure 48(1)1.and (b) consents to thefiling of the

Information, as provided under theIerms.ofthis Agreement, irithe united:States District' Court;

for the Central District of Illinois.




                                                                                    KBRPROD0057701
            4:1 1-cr-40083-MMM-JAG # 6 Page 2 of 13
A.

            2..     TAPQA *laths that IS responsible for the WS of its officers, employees and
     agents aSSerforthin theittforMatifiii and:the Statement of                            as Attnehinetit
     A (incorporated by:refer-en:dein thiS.Agreemelit), With the execptiOn ofthe.paragraphs in the

     Statementof Facts beginning with, the:Phrase (Accordingia the gov.ernineties tvidenee;”

     Shotild the Government pursue' theprosecutiontliat is treferredbythis Agreement; TA.FdA

     agrees thabit will neither ethitestrhe adraiSsibilityttnerboritradintrhethateinentbf Factsj.ivith

     theekeeptiontofttie:ptitagrapiiS begititting."Attording td thegtiVeriirneitra2eVidefiee,"- in any

     criniffialiirodeeding; including<duniig aiig gutlty pidafir SentenCingtiOdeeditiga. Subjeettrithe
 provisions of this Agreementrhowever, TAPGAis free fadefend:any criminal,. civil,tm

 administrative action broughtby the 'Government.

                                          tatimaftheAtreetrient
            3.      ThisAgreement is,effectiVeto,raperiocibeginningefitherlate of the Siming:tif

 this Agreement, and ending, eighteew(110itrionths from:that:date (tlieffrterm.

                                         .12ntevarittansiderations
            4.      The- bovenunententerstite ibis Agreement basedon the individirai factsand

 circumstances presented hy..tlits,ease. •Amorigtheladts considered weretheitelleMing: (a):

 tAEdA's:acknOvAdgM0c Opi4!;.011n0S.1.5"-etripipyoes actteSPtiliedin theetP:064 8tatemenr

 of Facts acid (b);TAFQA'sifirglehiefitatitiri and maintenance o f zemedial measures and

 compliance prograin, itielading                      rilarieVVICticVaitiitiariageriteMteatii andran etltieS
 and compliance, team with oversightoverthS,,governmentcontracts-andSubtontracts,

 strengtheniiig,offistodo-altusitiesstbnduct;modernizationmfats. 'Standard Operating

 Procedures for financial and accounting functions; instituticin, bfa: compliance hotline; and

 retaining of a toattaotarid cornpliandotoanftantIO;'044;0,:aridntOiliti#:itsortiplfaiio

 program; and.(c),00llatcra.1 conequpncea; including vittethdrthexe:Nquid be disproportionate.

                                                      2



                                                                                          KBRPROD0057702
     • 4:11-cr-40083-MMM-JAG # 6 Page 3 of 13



 harm to eriaployees and other piers* not. culpable Of the co:hist arising from the prosecution as
set forth in the Staten-teat of Facts:

                              Pittnithit.ofMonetiry .Criminal
                                                      .............. Penalty
          5.    The GoterratientandkOaagfee:tlieflippliealIonorIlielIfiltedBtates

Sentencing QuidelitieartISSG" Of'"Senteneing:Buideliiidel fo deterininethe nfiPlinable 'fine
range yields the following for Count 2:
                Base offense level:                        ffS8G §2C1 .2(e)(2)      9
                More than onogrelnity:                                  (?)().
                More than $400,000?                                     (1)(2)     14
                Total:                                                             25
          6.    The- Government and trAP.dA agree iliateounts and2 constitute "ClUs4

RelSted Count? under §3D1 .2, 'silk as:sucti,. rity increase.ih'the riffenSelevel results froth those
counts.

          7.   The 'etiVerhriietitdrid TAEGA;tigree leU the terndining ClildUlatiOns of the

applidable fine range: for TAFGMSerlinirialidondltet ltridniqhe;Senteileing.Gtildelines:
               Base Fine .for Offense Level 1. 15:          §8C2A(u)(1)          $I& Million
               Base Culpability adj.*"                      §$c2.5(a)    ,     .5 points.
               Mote than 1•,000 employees:in Unit:                (b)(2)(B)(i) 4points
               Obstruction•opustice,                              (0)           3 points
               Adeeptaneelif Respensibility                       (g)(3)        =1:ptiint
               Teta!:                                                            Li 0/nit
               Multiplier range                             §802,6.              2.60 = 4.00
               Fine range'                                ' §80Z7,               $54 to $11:1Millipn




       l ' Tina figure iriCludes televtdit                drindObt `that   dtitikttalgU fOt sentencing
purposes.


                                                     3.




                                                                                        KBRPROD0057703
       4:11 -cr-40083-MM M-JAG # 6 Page 4 of 13



        8.      'MEGA agrees:te pay a monetary .criblinalpobaity irx thcomount of.SS.d million.

TAFGA and the •Government agree' hat.t1S,fine is appropriate                  nature and'. extent of the

criminal conduct Of the TAFGA employees deSeribetiiiilthe Statement:of Facts, the degree to

which TAFGA has instituted programs-by which tmensurefuture compliance, and TAVGA's'

agreement to comply with the otherterms of this"Agreement. The monetary criminal penalty 'in

•the amountof S5:6 million shallhe pard.ktliree: equal installinents imactehet 2611, April 2012,

and Septeinbet 2612. The payments are'Cluthythe 18th dityOf each dithose tricitithS: This

         fibe is 'final and. Shall not bo'sefubdabk initiertinYteitatiMStarioeS. Flistlierniore, nothing

in this Agteetnent shall be deeineitatorieeSsion by the Government thatS5:6'millicinis the.

maxiinutn.penalty thatmay be imposed:in any finure.prosecutibn,and tlie, Governmentis:not

precluded from ;arguing in any ;future prosecution that the CourtSimatil itupose ahiglier fine;

although the boternitent agrees that-Under those eireuinstancesilt;Will recommend to              dtnitt.:

that any abiount paid under Nils Agfeetheashiiiild Offiet agailistany fine the Court imposes

    paift of a. futiike jUdginent.

              Candi tionalRel cas:criminal Liability as:10.Past Misconduct
        9.      fit retired fotTAITQN-SeeitiplianceWiththe.terniS abd c,onditibris.tif this

Agreeirient,:lhel.Goemment agreeSilleCteAlsetifiy/infoftiratienielitted10-the conduct-described

lathe attached Statement ofiFacts,..or any information TAFGA-disolosecho •the 'United States

Attorney lbr the                              eirWhiehmas othermiisellcriewnhy tlietTrtite&States

Attorney :for the Central District of Illinois,.prior Waledaft of thiS.Agobitient; agailiStFAEGAi.

or any Of its tiliollyroWned                                                             (a) iii a,

proSecution.or other[pro.ceediug relatin&to.a iy. ciiinq of violence; (b): in a. proseeutioofor

making:false .stitenicntser pedurymnder Title:18. of thelibited„States,,C,ecle;.(e):Inaprosecution,

or.other proceedingtrelating to-a violation. of any.provision of Tiele:26of the.UnitedStates Code;

                                                   4



                                                                                      KBRPROD0057704
           4:11-cr-40083-MMM-JAG # 6 Page 5 of 13
4




    or (ci) any oriole related to national spPtattytna,tters dteliniteci State. in addition, the

    Govarnthentagrees, excOptrie;piti3lidedliereitythatit Will, nothrjng. anY'etiniinal in:dee410On
    •againatTAFGA, or any of its viholly-:ciyined Ot'cotittdlledinb'sidt4riess.related fo the conduct: 6f.

    presentanatbriner officers; directors, managers,: employess„agerit:s:,:constiltantsj.contraetors and

    subcontractors, as tesoribedilittlie.attachectrStatomefit-of Pieta; Orreihtins to inforrnation

    tik.E.GA diselOsed to the lifilithStates:Attbrneitortdie dentratbistriattilliiindis, bt.ixta

    otherwise knoivn. ipy thclInited'atat&Atteitaytbrtite Central'Diattiet Of

    dat&ofthis Agreement: ThiSParagiiiiiikdOeSitiOtinrOidet nytitOilOtiiiii.agailiaf the 6;01 it

    'erithinaharosectition for. any crimes . orvidlations, if any, comniittedlittlit fliturehrtAfThei,

    any.of its wholly-owned or controlled stibsidiaries,or any.iTAPGA.riwtret; director, .officer,
    manaser,employee, or agent: TriadaitiOnptliiSI'mtagraphdoStiouvrovideanyliroteetitaingainSt

    civil or criiii ilia' 'proseention of attypreSent COnript                  employee, shareholder,,
    agent,' abhatiltant, eantraetor, Or. Snlieolgr.aetotietTAFakethhet.:Or ViOlatiO4 iflny„

    ,cOlninitted:by: the&

                                     Cornoratei.Conintianea Program
            10.    TAFGA.reproSentS thatitihaSiniNeinentadatid*J:oontititreteiniplenaenta

    compliance and othicsprogrant designeilto,d*ctand preyent.thetypeatoffenses describedin

    the attached. tatement-of Facts, and.anyttither crimes undetiholaWs of the united States,
    throughout itstperatious; includingthoSeoiitsaffillates. linplethentation:otthesspolibles anti

    procedures:shalltnatbe Construed hiarlyfuttireerifoteetitentpiocteditigas.proVidifigimiriniiity

    or amnesty far•taPY 'cranes, POPCIis0910(1:$0111* Pciv04400t 6016.thtil#W1061410Wilt0- thP

    Government as of the date of sigbingof this Agreement fortich TAk':OAIRPnidtaherwisebe

    responsible,



                                                       5



                                                                                        KBRPROD0057705
           4:1 1-or-40083-MMM-JAG # 6 Page 6 of 13



           11.     In. order to address any; deficiencies in its internaleontrols, policies, and

    procedures, TAFGArepresents thatithasiundertaken, and willeontinue toundettakeinthe.
    future, in a manner consiStentWith ail elks ohligaiionsunderthiS Agreement, a review of Its.

    existing internattontrolt;.liolioies„"wid:plo66dureidit compliance WitliVerlerat Aegiiisitidii

Regulation                  TAFGA will adept new or modify existing internal

    proc'edures„ deSighed to(enstne chinpliatteWith                      The           compliance

standards, and procedures Will Maude; lintriatbeliniitedte,themiliiriluntelementssetiorthin

    Attachment 3, wilithisiiworporaleaby reference into thisAgreement

                                    Cot•porate'CornpliaiiceRepoi1ing
                   TAFGA agrees thatl,vithinahrmonthstilsigning this:Agreeinent it will StIbmita.

wriften repo:rt to the Government regarding remediatiorrand implementkitomol the compliance

Measures Clescrihedin Attachinentlt, therepo'rusliall betratismittetito the DaitedState

;Mtornef &Office ter the teqtrattSPIri$:OitiAtidis,..310path.Slx-th:Street; Springfield,

62701: TAMA:May ektelid.the'tittienededfabistif4heOf itibi0.0ifikitAtp*6e Written

apprayal.ofthe Governineut basednoM,good.::.eauge.she*ntherefOre.: TAFGAahalidcsigilateitS
-


    Corporate Ethics. Director as the- persortresponsiblehr overseeing,TAVGAts corporate
compliance reporting obligafions• Duringthe Term of                                          be

reaSonablegrotindSte'hefieVethat aviblatitin Of UnitetbStatestaWfias odeurred:or that

queStiOnable or ebriuptpaythents tittlhesliOnallle'dti:601MPttransterai0 piopetty or interests

MaY:liaYe been offeted,.PrentiSed,P0dc.nf authorized by,:aily- TAPCK
minty orperson working directly for TAFGA,:.or that:related:false hook&and recordslayeeen

maintained; in connection- With contractswiththe United Statesgovernmentorsubcontracts-that
relafetoilhiteatatestgOVernmentobatractSc,TAFGA-ShEill promptlyreporbanahconductid the

Uniteci:StatesAtterney!s -office for the Centrg.DiStrictofillinoiS.

                                                      6



                                                                                         KBRPROD0057706
       4:1 1-cr-40083-MMM-JAG # 6 Page 7 of 13



                                        Deferred Prosecution.
         3.     Inconsideration O1'.:(1)'TA.PGA. aeknOWlectaiiient of iiaSt,.CririeS-6y"employees

described        a401.141Stateriferit'OfPuett,(b)IAPC.           -ayinent'ef a monetary ciimiiial
penalt5i of $5...6 Million; and (e)', TAP9A'.0tebtitiiiiied.deitipliiMeetiiariagemerifgha.GOVeinment

agrees that any prosecution of TAPOA forTheconduct set forth in theInfOrmation antrthe

attaehed'Statement.ofPacts,endfor the conductrthat TAFGA                            Governinentoris
otherwise known:by the'doVerninemprior tolhesigninrefthiSagreernerityte and liereby:ie

deferred'foiiiie.terintf 0;4 Agreement.: Coucittetyia,vonircoriSidered diselOed‘tellie:

Coverrundrit if TAFGApidindeal.vtittehriiitifieatibri tellie1.1.SiAtteriiey''anffiee fok,the

CentralDiatrict of Illinois, 318 3..:60 Street, Spiingfielklli, Prior to tlie:signing of this
Agreement.

       14:     The eovenimtent furtheragteesiliatifTAPOktilitytcoinpflesWitlialt.ot.

'obligations under this Agreements the:GMferinethWilituittoritinuelitettliiiinat prosecution

against:TAFGA,described. it. Paragraph 1 and, at tlie:ebneltisiUttuftheTerMithieAgreetnenf.

shall ekpire. Within thirty (30) ilaYkof thiliAgeeetrienfiSieiPitittion, tlieq0einnionthall sbelc

dismissal with prejudice of the, cringneitiformatiOnliled against TAF.GAdescribedin

Paragraph 1.

                 lircaeitof the Mreetheritmid.6trittite.oftiniitittibtisMitliteri
       15,     If, during:the Term of this:Agreement die:Gov.erturienteoncludes,anitthe Court

determines thatTAFOA.hat'(a) eomthitted.anylaloriymn'der.federallaWsubsequentto the,

signing:Of-this .Agreementi and thatsubstantiatuutbo.tiitypersotmeITas:defiiied in the

Commentatyto-§341,A &kite United .6ta1esAunpUcipg qt$Olities...rOstaxitia1Autliority .




                                                   7



                                                                                     KBRPROD0057707
        4:11-cr-40083-MMM-JAG # 6 Page 8 of 13



PerSandell? of TAFGA :partiCipatedia,:gonciOneti, directed, that crime, or (b) Substantial
AuthorityFOrsonnel of TAFQA:otlierWiSelOn5WifiglY beintiiitteritia directed a material,

substantial breath of this Agre.einent, TAFGA shall thereafter:be subtect.to,prosecution, for any

federal criminal: violation -ofWhich the6-ovelnintiithas. kuowledge,.hicluding the. diarges'in the:

Information, which may be pursuedbythe'6overnmentintheru,S; District Court for the Central

District of Illihois or in any'other federi:distriet. TAFSkagretathatii:Wiii einiSent t&U.3,

personal Jurisdiction foi any'SnefitiiiinitnifproSedutidoihtici.TAFGA                -ai)pciihtelte:
legal CO1.iiisel, eutrentlythelaW f±hi
                                    i f Schiff Hardin LLB, afar:the:designee:10 acceptservice of

legal process,. toinclude numinous, forsuckaction.. Inthe .eventofabreach of this Agreement

any count of prosecution'thatis nottiniebarrecthyllie.applinalth statute of limitations: as ofilie

date' of the signing of ihis'Agreehtentreay'beconiinetided: eg4hist TAFGA nOtsiiitlistandlitigthe

expiration of the. statute of liMitatiOnShetweetrthe d4O                        Agreerneric.and the      •
4piiation-ef. lho Tenn:. In additirirriby•:signing:this::Agreenient; TAFGA fiiiiher.agreesthaftbe

Statute of limitation's Witlfrelpectito:the offenses ehargeclinille Infermattottwere.notttithe-barred

as ofthe date of the signing oftlicsAgreement.andishallbetoiledifromihat,date through-die
expiration of the Term..

       1.6.       the':'eventtli at the.Goveitirierit. conoludes.lhat TAFGA liam6reaplied

Agfeement;,the Government Eigreea -taProiiiide,TAF.Pii.ipi:WrittoilAgfideccifits, intent:to file

with the COUtt arecitieSt thatllie Conti findthat TOGA has:Weacheci Ageetnetit and that

         The commentary provides:that “Substantial.authority personnel" Means individuals who.
within 4be...kei;e of their aiittiOr4 exercise a substantial measure etdiscretion in actingon behalf
of an organation. The termAncludealligli-leVel:persorinel4ik*elorgaifization,
exercise substantial supervisory authority ;(e.g., -a plant manager, a sales manager); and any other
iticib0104 who, although nota ii4rt:a                           th,41*:80iiient; nevertheless exercise
substantial discretion when acting:within the scope of their authority (eig: 'an:individual with
authOritY in au otganization to negotiate or set price leve.,ls or an individual authorized .to
negotiate or approve significant contracts).




                                                                                    KBRPROD0057708
       4:11-cr-40083-MMM-JAG # 6 Page 9 of 13



the ,Geverrinient is seeking to continue or initiate a ct niinal prosecution resulting from

         TAFGA shall, within tliirlyadYtiliyS.6.freeeiptcifslienmoilee, have:the opportunity to

respond. to the Governmentin                             uature,and Circumstances of the alleged.

breach, as-well as the-actionsTADGAlliastakento-address mid reinediatetlie sittration, which.

explanation the Government shall consider in determining whether to seek to 'continue or
institute &prosecution.

        17;            eVehttlitit the GOVeriuneritieinialtdeSilirid thelConft deterrinneS that

TAFQAlia breathed:this Agreethepr:'!(a) all sib:tern:mils made, by or:mite:half:of TAFGA to :the

Government or to the tourt;:ineltdinwthe tacliediStatement of Pacts;                   exceptionelthe

paragraphs begintiing,"According to thezgov.ernmentla evidence;" and:anyleacis'derivedifrom

siicli stateinents,'shalljhendmissibleirr eVidenoeikarry and all trinitind:prciceedingsliatiught by

to GriVentMentagOiSt'll.F9A;:arid(b) TAFGA shall not'attOtCa#Y.:Olaith1a1cter'tlie United
Stat6S CcitiSritution, Ritlett(f) of tlileFederalliti.ileiOf CrithirlarProeedtire, Ittile 410 elate

Federal Rules ofEviderice, or anyother federal rulecthatsliteinentsmade hy Or on behalf:of'

TAFGA prior or subsequent talliis Agreement, and anyleads.derive4Therefrom; should be

suppressed. The deciSibillVlietlier.tild Condubt.br statements 011aiay'entraiitdilleCterler employee,

or any perSOil ,acting onbehalfof, or: at                              will             tt,.T.4FP-Afar.

the purpose of doterixiiiiingmlielberTAFGA has vielatednaY:lifevision Of thikAgreOnient,Sh011:

be,made:by'the Cowl.

        1$.     TAFGA acknowledgesthaVthe Governmentbasmademo 'representations,

assurances; or promises concerning Vilia&serifencemay be Unposed by the-Court if TAFGA

breaelies this Agreement:mid this matter proctedsto judgment •TAFGAftirtheracluiowledges




                                                    9



                                                                                       KBRPROD0057709
       4:11-cr-40083-MMM-JAG # 6 Page 10 of 13



that any such sentence is, solely within the discretioluottlitCypit and thatucithing in this

Agreenienthindi of reattibta 'the Gouttan.the.exer.Olsofatieltdiscretion.

                                       Sale or Merger of TAFGA
        19..    TAFGAagteeat114:th die:evOdlitSellkiiiditei;YE:VansfetS all or substantially all

of its buSineas OeratiOns as illey't                date:of this-Agreement, 'whether such
structured as astock or assetsale,therger:yritansfer,lit shallineludeth anycontract forsale,

merger; or tranSferia proviSienthinclingkiliepurchaser, orany successor. in interestthereto; to the

obligations deScribed inttnikAgteetrierit,

                                   Piiblie:StateinetitsvbttAFGA
        20.     TAFGA expressly'agreesttbat it shantititilitugh ptesentor fthure .attottieyS„

of-fiders; directots,employees; agents Yrany Othei'PeraotitintilofiEetith speak thr TAFGA,Inake

any finnliC;Statenlentr Occept iri eiVil,:atipithiStratiye„j:ofetultitiffy:Pitieegiogoym s-otfArth

ber6x); eohti*dibtingiike accept urce of esponsibility by TAFGA...s4 forth above:or the:Tots

described in-the attached Statement ofEacts,Mith:the.exeepiion'ofitatementsthade in,a criminal

'proceeding as to paragraph's in,the.81afement of Facts heginningnAecording.th"the government's'
evidence:" Anyauch contintliettity.atatetnentsliall; sithleotte*fliteureilebtStifTAFGA

desbribedhelb*;:and (h),a,deteiirthitideri;hr.the Cenrt, etinSfltnte4bteach of thiiAgteoletit

and TAFGA.thereaftef:sliallthe'.ObjeettyprOSeenliOnSafgiithilaiiraglapl*1.$.11itongh 1815€

this.Agreement. If the Oovenunenteoncludes.:that.a.publiestatemeithbrany such person

contradicts in whole Yr-impart:a statement-contained iinheStatementofFactaa's described.

,above,:the.Govemnientahall, ptior to seekingloinitiate.aprosecutloivresetilting from such

breach, so :notify TAFGA, andTAFGA may avoidtbrettch thia'AgrOerttYntby214KiPlY.

'reiatidiatingStich:statenients(S) V4thipliy,O-15).:bitSineSsiday„sinfteiritiAdatiCn. GonSiatOtitWitit

the obligationayITAPGA.as:setfOrthayve; Waif: -shall be permitted:0 yaiseslefensesand

                                                   10



                                                                                       KBRPROD0057710
       4:11-cr-40083-MIVIM-JAG # 6 Page 11 of 13



assert affirmative
       affirmativeclaims
                   claimsinincivil,„arlininistratiVe,
                              ciyil,adridnistratil:,..0,ororregulitOxY:proceedings,relating
                                                              regulitorY:proccedings,relating to
                                                                                              to the
                                                                                                 the aVtte.t.S:
                                                                                                     alSte.r.S:

sot forth
set forth in
           intlie
              theStarethent
                  StafethentofofFact&
                                 Fact&Orin CtirtiiiiatpfOCC,O4iOgS4elating:tote,PaMgfalibS4ftlie.
                                        Orin etiniiiiatplOCeedi4lrelating:toteParagiralibaofthe.

Statement of Factabeginning "According to The government's. 014ence."This
                                              government's:el/Mance   this Paragraph does
not apply to
          to any
             any statement
                 statementmade by. any present or fOrme.remp.toyee'of
                           maddby                                             flie course-Of
                                                  fanue.remp.toyee'of TAFGkin the
any; criminal, civil,
any:criminal,  civil, admilifsfratrve,
                      admilifsfrative, prxegulatory case
                                                    ease initiatetagaihst
                                                         initiatetagaihst such'indiv dual; unless
                                                                          suchindfi4dbaLuilless

such
Stichindividual
      individualisisIspealtirigoii
                     apealtirigoii behalf
                                   behalfofTAFGA.
                                          oftAFGA.

                TAPQAEigiteS.
                TAPQA Eigitestha    ifittittiiyofits,dii-eatti-
                              that ifitetniiybfits              ifidireCtaffiliate
                                                    ,diteetbt ifidireCtaffiliate            SubSidiafies
                                                                                            SubSidithes

issues a PressreleaSe                  OreSS conterenee                              Aiieemojit TAFGA
                                                                                     Agreerneit

shall :first consultthe
      first consult  theGovernment
                        Government to
                                    to determine
                                       determine (a)ANThether theleittorthexeleast or -proposed
                                                 (a)ANThether thelextolthexeleasc

statementratthe presaconference
                presaconferenceare
                                arertrue and accuratemitlitespecflomaatterstetween
                                   true and: aceuratemithrespecflomatterstetween the

Government and TAFGA;                     -Government has
                              vilfetherthe-Government
               TAFOA; and (b) Whothetthe                  any,Olijeetiona to: die release:
                                                      basnnyiblijections.to:

        22,      The Government
                     Governmentagrees
                                agreeslo:imi'ng to theatteritfop
                                       Idki'ng to                    otbergoVernitenvatitlictities,.
                                                       atteritfop Of odieripi/ernitenvatithorities

hicitiding debarinefitoffidialai   thdfaCt..1:40atiretunatanSiclathritO.thiS.Agreetrient;
                       offidialai the:faCt$:anatireuMStanSfelatinitO.thiS4greerrient;
The :natureof
    nature of the underlying
                  underlying conductitidTAFQAks
                             colidtieritidTAFQMs aceePtairce.of
                                                 aceelitithee.of tesiionSib.ility. for the
                                                                  responsibility. for  thourilawfiii
                                                                                           unlawfill

canduCtdescribed
conduct                theStatementxifFacts..ByBy:agreeing
                    theStatementsifFacts..
        ;described io.                             :agreeingtotoprovide:ibis
                                                                 provide:Wsileonnation:
                                                                             heonnation: to

          authorifiesithe Govenunentis
debarment autborifies,..the dovernmentisThat
                                        TIC& agre.eing-to:adVocate'ombelialf     oftAVGA; but
                                               agre.eing-toaditocate'ortifelialfof:TAVGA

ratlicrproVidingfacts to
ratlicrproAildingfacts to be:evaluated:independent&
                          be:evaluated:independent& by
                                                    laydebarment:authorities,
                                                        ddbarmentauthoriiles,
                             Liiiiitationit Binding' Effect--of Akteeiffeiff.
                             LitiiitatiOnOidBiirdingEffeet-of   Akteeiritiff
        11       This Agreement is
                                :isbinditig:onTAFGA,
                                    liiirdfrig:ontAFGA,anti theariVetrithentlititspecihbally
                                                        andtheadslettithentlitt  apecihbally does

not bind:
    bind any
          any other         agencies, ''any
              other tedeial.agencics,:or anystate,,
                                             state,, local pi,f0yellafilatitillbrOn*4 orOrregulatory
                                                     focal OrlfOrei.kfiltil'etribreenient  regulatory

          !*Ony'ottief:atithontiesiig4
agericic, or ony'otrief:atitliontiesiig41.1081:01i0;a0VOrPti:WV4:Wir.ig:TAFPa'SOOPP#de
                                                      VOrPti:WV4:WirAg:TAF.Pa'SOOPP#de of
                                 witli4tts,ptherobligatici3s:iundprilii4;Agreompato
responsibility audits compliance witli4tts,                                               attan.00a.
                                            ptherobligatici3s:iundpriliia;Agreompato The attend:01r

of sueh:agencies.and.authoriiies
   sneh:agencieaand.authoriiiesif.
                                 if Tequestealo
                                    Tequestealoxlia'SQ by TAFOA.
                                                do :so by TAFOA.



                                                      it
                                                      it


                                                                                            KBRPROD0057711
      4:11-cr-40083-MMM-JAG # 6 Page 12 of 13



                                              Notice

       24.     Any notice to the Government under thiS,Agitementsiialt lie given by personal

delivery, overnight          by a-rpcogi:Oad46fiy-Oy service; or reiiStereti or certified mail; AO"

the United •StateS Atterireyfor the Celt& DietiictofElinoia,13 Sonth

IL 62701. Any notice to TAFGA Under this Agreement:shall:be given by personal delivery,
overnight delivery by arecognized defiVery services:or registered or ce.rii8edlnail, kilts 'current •

counsel, which is, as ofthe date of this Agreement, Schiff Hardin LLYs- Suite 6600, 231-South

Wacker Drive, Chicago, IL'60666:




             174E :REST. OF 17.14814GE18•INIENTIONALLI4tEkt BLA1UC




                                                 12:



                                                                                    KBRPROD0057712
 4:11-or-40083-MMM-JAG # 6 Page 13 of 13




                                       Complete Aereement

       25.     ThigAideemeats0sdbrifialltlielerms:oltheagreement: betweeirTAFGAand,the
Government. No ainpndinemsonodiii6ationtekinidaitioavithigAtrboaeiitt.liAll be '1/2.114
unless they are in NWifing•iiiiid.eist*.by the. ptivOilWrit, th attorneys foi TAP0A, !and a dilly.

authorized representative of TAF:QA,


AGREED:
FOR TAMMT GLOBAL CO,, LTD,:
                                                  s/Major General Perry V Dalby
Date: September 7 ,2011                   By:
                                                    JOY              V- alb), (Rd.)
                                                  General M9. ager;TA ,a


                                                          r in            fl
Date: September 61 ,2011                  fly:   s/Matthew C Crowl
                                                  IthriaS
                                                  Matt*/!C:
                                                  Schiffliardin LLP
                                                  Counsel for TAMA


. FOR THE Uicl'PEDSTATES GFAMERTGA:

                                                 'AMEBA. LEWIS
                                                  United States Attorney

                                                             ...41111r
                                                                    t
Date: September      , 2011                               "'WA                  amen_
                                                     TT Or-CANNON
                                                 Supervisory'Assistant   Attorney
                                                 31a South STN-tb.Pftect
                                                 SprileOriM OAT
                                                 (217} 492-400




                                                 13




                                                                                        KBRPROD0057713
  4:11-cr-40083-MMM-JAG # 6-2 Page 1 of 13                               E-FILED •
                                         Monday, 19 September, 2011 10:32:32 AM
                                                    Clerk, U.S. District Court, ILCD

                                         ATTACHMENT A
                                     STATEMENT OF FACTS

        1.       The following Statement of Facts is incorporated by reference as part of the Deferred

Prosecution Agreement (the "Agreement") between the U.S. Attorney's Office for the Central District

of Illinois (the "Government"), and Tamimi Global Co., Ltd., a/k/a "TAFGA," which is hereinafter

referred to as "TAFGA". With the exception of the paragraphs below beginning, "According to the

government's evidence," TAFGA admits, agrees, and stipulates to the following: (a) TAFGA is

responsible for the acts of its officers, employees, and agents as set forth below; (b) the facts set forth

below are true and accurate; (c) should the government pursue the prosecution deferred by this

Agreement, TAFGA will neither contest the admissibility of, nor contradict, this Statement of Facts in

any such proceeding; and (d) if this matter was to proceed to trial, the Government would prove

beyond a reasonable doubt, by admissible evidence, the facts alleged below and set forth in the

criminal Information attached to the Agreement as Exhibit 1. Should this matter proceed to trial,

TAFGA reserves the right to contest the facts set forth in paragraphs below that begin with the

phrase, "According to the government's evidence." The evidence would establish the following:

             TAFGA and TAFGA Managers
        2.       Defendant TAMIMI GLOBAL COMPANY, LTD., also known as "TAFGA," and

hereinafter referred to as "TAFGA," was a Saudi Arabian-based company that provided dining

facility and other services to U.S. military personnel in the Middle East. TAFGA operated dining

facilities ("DFACS") at U.S. military bases in Kuwait and Iraq as a prime contractor to the U.S.

Army, as a subcontractor to a prime contractor to the U.S. Army, and as a contractor to the Kuwait

government. During the period from 2002 through the date of this Information, TAFGA has received

hundreds of millions of U.S. dollars as the result of contracts and subcontracts to provide services to

U.S. military personnel in the Middle East.

        3.       Mohammad Shabbir Khan ("Shabbir Khan") was TAFGA's Director of Operations

for Kuwait and Iraq, whose duties included overseeing DFAC operations. Shabbir Khan was a




                                                                                        KBRPROD0057714
   4:11-cr-40083-MMM-JAG # 6-2 Page 2 of 13



naturalized U.S. citizen.

         4.        Zubair Khan Ahmed Khan ("Zubair Khan") was TAFGA's Operations Manager for

Iraq, whose duties included supervising DFAC operations.

         5.        An individual herein identified as "MSK" was a Project Manager for TAFGA whose

duties included managing food service operations at DFACS operated by TAFGA in Kuwait.

         6.        An individual herein identified as "M14" was an employee of TAFGA in Bahrain

whose responsibilities included renewing employee visa and identification cards.

              Other Persons

         7.        Stephen Lowell Seamans ("Seaman?) was employed by the company now known as

Kellogg Brown & Root Services, Inc. ("KBR") from approximately March 1999 through

approximately May 2003. From approximately October 2002 through November 2002 and from

approximately March 2003 through May 2003, Seamans worked for KBR in Kuwait as a

Procurement Materials and Property Manager. His duties as a Procurement Materials and Property

Manager included the negotiation and awarding of subcontracts under the U.S. Army's prime contract

called the Logistics and Civil Augmentation Program III ( "LOGCAP III"). As such, Seamans was a

public official.

        8.         Ray Scott Chase ("Chase") served as a Sergeant First Class in the United States

Army. From approximately January 2002 through December 2003, Chase was deployed to Kuwait in

connection with Operation Iraqi Freedom, As part of his official duties in 2002 and 2003, Chase

served as the Contracting Officer's Representative ("COR") and the Non-commissioned Officer in

Charge ("NCOIC") for the military dining facility located at the United States Central Command at

Camp Doha, Kuwait and U.S. Army contracts related thereto. As the COR and NCOIC, Chase

supervised the food procurement, preparation and service operations at Camp Doha. In 2003, Chase

also served as the NCOIC for a military dining facility at Camp Arifjan, Kuwait, and had similar

responsibilities to those he had at Camp Doha. As such, Chase was a public official.




                                                                                     KBRPROD0057715
  4:11-cr-40083-MMM-JAG # 6-2 Page 3 of 13



              LOGCAP III Contract

        9.       In December 2001, a United States Army contracting command located at the Rock

Island Arsenal in Rock Island, Illinois, which is within the Central District of Illinois, awarded the

LOGCAP III prime contract to KBR. The Army Field Support Command, also located at the Rock

Island Arsenal, was the procurement command for LOGCAP III. As the procurement command for

LOGCAP III, the Army Field Support Command obligated and committed the funding for this prime

contract.

        10.      Under LOGCAP III, KBR provided goods and services to the Army in Kuwait, Iraq,

and other locations around the world, including DFACS at U.S. military bases in Kuwait and Iraq.

The specific requirements under LOGCAP III were set forth in "Task Order? that the Army Field

Support Command issued to KBR. Under LOGCAP III, the United States Government paid KBR for

the costs KBR incurred, plus an award fee. KBR commonly used subcontractors that invoiced KBR

for their work. KBR thereafter invoiced the government which included the costs of subcontracts.

KBR engaged TAFGA as a subcontractor to fulfill some of its DFAC obligations under the prime

contract. The Resource Management Unit of the Army Field Support Command at the Rock Island

Arsenal managed the money for the LOGCAP III prime contract, including the obligating of funding

for the payment of Task Orders for DFAC operations.

        11.     The LOGCAP HI prime contract incorporated the Anti-Kickback Procedures set forth

in Title 48, Code of Federal Regulations, Section 52.203-7. KBR's subcontracts with TAFGA

likewise incorporated those same Anti-Kickback Procedures set forth in that section.

        12.     KBR's subcontracts with TAFGA also contained a specific Anti-Kickback Notice:

    Subcontractors and suppliers are prohibited from offering any money, fee, commission, credit,
    gift, gratuity, thing of value or compensation of any kind directly or indirectly to [KBR]
    employees for the purpose of improperly obtaining or rewarding favorable treatment in
    connection with a prime contract or in connection with a subcontract relating to a prime contract.




                                                                                       KBRPROD0057716
   4:11-cr-40083-MMM-JAG # 6-2 Page 4 of 13



         13.      In or about October 2002, a LOGCAP HI task order required KBR to establish a

DFAC at Camp Arifjan in Kuwait, known as the Camp Arifjan Zone 2 DFAC. On or about October

14, 2002, KBR awarded the Camp Arifjan DFAC subcontract to TAFGA.

         14.      In or about April 2003, a LOGCAP III task order required KBR to establish a DFAC

at a palace in Baghdad, Iraq. On or about April 14, 2003, KBR awarded the Baghdad Palace DFAC

subcontract to TAFGA.

               Criminal Conduct -Count I of the Information

        15.       On or about October 9, 2002, Shabbir Khan hosted a birthday party for Seamans in

Kuwait. At the party, Shabbir Khan provided Seamans with the services of a prostitute. When

Shabbir Khan drove Seamans back to his quarters following the party, he offered to pay Seamans a

kickback in connection with the Camp Arifjan Zone 2 DFAC.

        16.       On or about October 14, 2002, Seamans awarded the Camp Arifjan Zone 2 DFAC to

TAFGA in the not-to-exceed amount of US $14,398,505 for a One-year period. Seamans executed

the subcontract on behalf of KBR, and Shabbir Khan executed the subcontract on behalf of TAFGA.

        17.       According to the government's evidence, in or about April 2003, Seamans provided

Shabbir Khan with bid information pertaining to the Baghdad Palace Subcontract. Seamans, knowing

the amount of the bid submitted by another bidder, provided Shabbir Khan with the price TAFGA

needed to bid to secure the award of the subcontract.

        18.       On or about April 14, 2003, Seamans awarded the Baghdad Palace subcontract to

TAFGA in the not-to-exceed amount of US $2,000,000. Seamans awarded the subcontract by way of

a document entitled "Letter Subcontract Anticipating a Fixed Price Type of Subcontract," which

provided for the parties to enter into negotiations for a cum-fixed-price subcontract by April 24, 2003.

Seamans executed the letter subcontract on behalf of KBR, and Sbabbir Khan executed the letter

subcontract on behalf of TAFGA.

        19.       On or about May 21, 2003, Seamans awarded to TAFGA a change order to the

Baghdad Palace subcontract that increased the amount of the subcontract from US $2,000,000 to US




                                                                                     KBRPROD0067717
   4:11-cr-40083-MMM-JAG #6-2 Page 5 of 13



$7,381,725.90 and specified the period of performance as six months from April 14, 2003, or through

October 13, 2003. Seamans executed the change order on behalf of KBR, and Shabbir Khan executed

the change order on behalf of TAFGA.

        20.        From in or about October 2002 through in or about October 2003, on or about the

below-listed dates, in connection with the Camp Arifjan Zone 2 DFAC and Baghdad Palace DFAC

subcontracts, Shabbir Khan paid and caused to be paid kickbacks to Seamans in the total amount of

approximately US $133,000 in the form of U.S. currency, and wire transfers from bank accounts in

the Middle East to accounts in the United States, including the following:

              a.       10/29/02       Wire transfer of US $2,965 from Kuwait;

              b.       11/25/02       Wire transfer of US $20,965 from Kuwait;

              c.       4/17/03        Wire transfer of US $8,000 from Bahrain;

              d.       4/18/03        Wire transfer of US $9,465 from Kuwait;

              e.       4/23/03        Wire transfer of US $9,000 from Bahrain;

              f.       4/28/03        Wire transfer of US $8,500 from Bahrain;

              g.       5/12/03        Wire transfer of US $9,500 from Bahrain;

              h.       5/15/03        Wire transfer of US $8,500 from Bahrain;

              i.       5/16/03        Wire transfer of US $7,500 from Bahrain;

              j.       5/19/03        Wire transfer of US $6,500 from Bahrain;

              k.       5/21/03        Wire transfer of US $3,000 from Saudi Arabia; and

              1.       10/2/03        Wire transfer of US $9,965 from Kuwait.

        21.        In or about April 2005, Shabbir Khan spoke with and otherwise communicated with

Seamans, who was in the United States at the time, informing Seamans that an attache from the

embassy or consulate in Bahrain had recently inquired into the source of wire transfers that TAFGA

or• one or more of its managers had paid to Seamans as kickbacks in the spring of 2003. Shabbir

Khan suggested to Seamans, in sum and substance, that if Seamans were to have a business deal with

Zubair Khan, purportedly involving the joint purchase of a vehicle in the United States for sale in the



                                                -5-




                                                                                     KBRPROD0057718
       4:11-cr-40083-MMM-JAG # 6-2 Page 6 of 13



    Middle East, this would make the wire transfers the authorities inquired about appear to be a

    legitimate business investment by Zubair Khan,

                22.        On or about August 27, 2005, federal law enforcement personnel from the Central

    District of Illinois interviewed Zubair Khan in Kuwait. During the interview, Zubair Khan:

                      a.       Falsely stated, in sum and substance, that he and Seamans agreed in February or

March 2003 to enter into a business venture to purchase armor plated, United States-made vehicles for

sale in Iraq;

                      b.       Falsely stated, in sum and substance, that he directed TAFGA employee "MM"

to wire transfer more than US $60,000 to Seamans as his investment in the business venture; and

                      c.       Falsely stated, in sum and substance, that the armored vehicle deal with Seamans

fell through, and, thereafter, he tried to get Seamans to purchase a recreational vehicle ("RV") in the

United States to sell in the Middle East, but the RV deal also fell through.

                23.        On or about August 26 and 28, 2005, federal law enforcement personnel from the

    Central District of Illinois interviewed Shabbir Khan in Kuwait. During the interview, Shabbir Khan;

                      a.       Falsely stated, in sum and substance, that he thought certain wire transfers of

money that persons affiliated with TAFGA made to Seamans were for a business venture between Zubair

Khan and Seamans for the purchase of armored cars in the United States for sale in the Middle East for

profit; and

                      b.       Falsely stated, in sum and substance, that he was unaware of any kickbacks and

gratuities paid to Seamans by TAFGA personnel.

                24.        According to the government's evidence, by at least August 26, 2005, when

    interviews of Zubair Khan, Shabbir Khan, and others commenced in Kuwait by federal law

    enforcement personnel front the Central District of Illinois, TAFGA was told of the kickback

    payments made to Seamans, and that there were efforts to conceal those past payments through a false

    cover story presented by Zubair Khan, Shabbir Khan, and, unwittingly, by Tamimi's then-counsel, to

    the law enforcement personnel on and after August 26, 2005.


                                                          -6-




                                                                                               KBRPROD0057719
       4:11-cr-40083-MMM-JAG # 6-2 Page 7 of 13



            25.        On or about August 28, 2005, during the interview in Kuwait with federal law

    enforcement personnel from the Central District of Illinois, Shabbir Khan provided the law

    enforcement personnel with false and misleading documents to support his and Zubair Khan's

    fictitious story about a business venture between Zubair Khan and Seamans. These documents

    included a document Shabbir Khan represented as an April 10, 2003, memorandum from Zubair

    Khan to Shabbir Khan in which Zubair Khan requested that Shabbir Khan advise the TAFGA finance

    department to give US $67,000 of Zubair Khan's year 2002 bonus to TAFGA employee "MM."

    These documents also included a document Shabbir Khan represented as an April 13, 2003,

    memorandum between TAFGA finance department employees stating that the Operations Manager of

    TAFGA had approved Zubair Khan's April 10, 2003, request

            26.        On or about the dates below, defendant TAFGA caused the Rock Island Division of

    the United States Attorney's Office, Central District of Illinois, to receive the following false and

    misleading documents from TAFGA's then legal counsel:

                  a.      September 12, 2005: documents relating to wire transfers made to Seamans by

one or more TAFGA employees in the Spring of 2003;

                  b.      September 16, 2005: e-mails between Zubair Khan and Seamans concerning the

fictitious business venture; and

                  c.      September 26, 2005: a memorandum repeating and crediting the fictitious

business venture story.

            27.        On or about October 28, 2005, Shabbir Khan and Zubair Khan met with Seamans in

    London, England. During the meeting, the three discussed the following, in sum and substance,

    among other things:

                  a.      Zubair Khan explained to Seamans the fictitious story he had told to the federal

law enforcement personnel in Kuwait in August 2005;

                  b.      Zubair Khan instructed Seamans to tell this same false story to federal law

enforcement personnel when they questioned him concerning the wire transfers from TAFGA;




                                                                                           KBRPROD0057720
       4:11-cr-40083-MMM-JAG # 6-2 Page 8 of 13




                      c.       Shabbir Khan and Zubair Khan told Seamans that they needed documentation

showing that Seamans had wired approximately US $65,000 back to Zubair Khan's bank account in order

to support the fictitious story they had told federal law enforcement personnel; and

                      d.       Shabbir Khan and Zubair Khan further instructed Seamans to wire transfer a sum

of money to Zubair Khan's bank account, that they would then transfer the same sum of money back to

Seamans, and that this process was to continue until Seamans had sent a total of US $65,000 to Zubair

Khan's bank account, and had received a total of US $65,000 in return, in order to support the fictitious

story they had told federal law enforcement personnel.

                28.        On March 22, 2006, federal law enforcement personnel interviewed Shabbir Khan at

    the United States Attorney's Office in Rock Island, Illinois, in the Central District of Illinois. During

    the interview, Shabbir Khan:

                      a.      Falsely stated, in sum and substance, that in 2003, Zubair Khan had a private side

business deal with Seamans for the purchase of an armored vehicle in the United States for resale in the

Middle East;

                      b.      Falsely stated, in sum and substance, that to obtain money for Zubair Khan's

investment in the armored car deal with Seamans, Zubair Khan asked TAFGA to give US $67,000 of his

year 2002 bonus to TAFGA employee "MM;"

                      c.      Falsely stated, in sum and substance, that none of the money provided to

Seamans by TAFGA employee "MM" had anything to do with TAFGA's business with KBR;

                      d.      Falsely stated, in sum and substance, that the armored vehicle deal with Seamans

fell through;

                      e.      Falsely stated, in sum and substance, that neither Shabbir Khan, Zubair Khan nor

TAFGA intended to pay kickbacks to Seamans through the payments made to Seamans; and

                      f.      Falsely stated, in sum and substance, that the payments to Seamans were not

made because Seamans was involved in awarding or administering any subcontracts between KBR and

TAFGA.




                                                                                             KBRPROD0057721
  4:11-cr-40083-MMM-JAG # 6-2 Page 9 of 13



              Criminal Conduct -Count 2 of the Information

        29.      Tn 2002 and 2003, defendant TAFGA provided dining facility services to the United

States military at Camp Doha in Kuwait through a contract with the Kuwait government. TAFGA

likewise provided the dining facility services at one of the Camp Arifjan DFACS, known as the Camp

Arifjan Zone 1 DFAC, after that facility was set up in 2003.

        30.      Ray Scott Chase was responsible for supervising all food procurement, preparation,

and service at the Camp Doha DFAC and the Camp Arifjan Zone 1 DFAC. Chase was responsible

for ordering food, supplies, and services for those DFACS from private contractors that held Blanket

Purchase Agreements with the U.S. Army.

        31.      According to the government's evidence, in approximately mid-2002, "MSK" met

with Chase and solicited Chase to use Chase's position to order food for the Camp Doha DFAC, and

according to government evidence was done to reduce TAFGA's obligation to provide food under its

contract with the Kuwait government, thereby reducing TAFGA's costs and increasing its profits.

        32.      According to the government's evidence, in approximately mid-2002, "MSK" gave

Chase an envelope containing approximately US $10,000.

        33.      According to the government's evidence, between approximately mid-2002 and

December 2003, at monthly or bi-monthly intervals, "MSK" paid Chase cash amounts between

approximately US $8,000 and US $20,000 because of official acts Chase performed and was going to

perform in relation to the Camp Doha DFAC and the Camp Arifjan Zone 1 DFAC. According to the

government's evidence, this included Chase's ordering of food in a manner that reduced TAFGA's

obligation to provide food under its contract with the Kuwait government, thereby reducing Tamimi' s

costs and increasing its profits.

        34.      According to the government's evidence, between approximately mid-2002 and

December 2003, on two or three separate occasions, Shabbir Khan paid Chase cash amounts between

approximately USD$8,000 and US $20,000.

        35.      In addition, Shabbir Khan provided Chase with use of an apartment in Kuwait City




                                                                                   KBRPROD0057722
  4:11-cr-40083-MMM-JAG # 6-2 Page 10 of 13



free of charge.

        36.       In sum, TAFGA admits that it is responsible for the misconduct of its employees,

who (a) agreed to provide Chase illegal gratuities; (b) in furtherance of that conspiracy gave Chase

things of value, that is, United Statei currency and the use of an apartment, because of official acts

performed, and that were to be performed, by Chase during the year 2002 through the end of the year

2003 in connection with contracts for dining facility services at Camp Doha in Kuwait and the Camp

Arifjan Zone I DFAC; and (c) paid these gratuities unlawfully to Chase, that is, the gratuities were

not provided to him as part of the proper discharge of his official duties.

              Other Relevant Conduct and Illicit Payments

        37.       An individual herein identified as "TA" was TAFGA's Area Manager for the Balad

Area in Iraq whose duties included managing the DFACS operated by TAFGA in that area.

        38.       John Rivard (Rivard) served as a Major in the United States Army. From

approximately March 2004 through February 2005, Rivard served as the Army's Chief of Contracting

for Camp Anaconda which was located north of Baghdad in Iraq. His duties included supervising the

process of awarding contracts for obtaining goods and services needed at and near Camp Anaconda.

        39.       Theresa Russell (Russell) served as a Sergeant in the United States Army and

worked and associated with Rivard at Camp Anaconda.

        40.       According to the government's evidence, in or about 2004, Rivard participated in the

awarding of a contract to TAFGA for DFAC operations at several forward operating bases in the

vicinity of Camp Anaconda in Iraq. Approximately a month and a half after the contract was

awarded, "TA" provided Rivard with US $10,000 in cash on account of Rivard's efforts in awarding

the contract to TAFGA, and another US $10,000 in cash that "TA" directed be given to Russell.

        41.       Terry Hall was employed by KBR in Kuwait as a Food Service Manager from

approximately October 2002 through approximately April 2004. His duties included overseeing KBR

food service operations in Kuwait and Iraq, primarily concerning the technical side of DFAC contract

administration.


                                                - 10 -




                                                                                       KBRPROD0057723
  4:11-cr-40083-MMM-JAG # 6-2 Page 11 of 13



        42.       An individual herein identified as "Person A" was employed by KBR in Kuwait

during the time beginning in approximately February 2003 as a Food Service Technician, Food

Service Supervisor, and ultimately the Deputy Regional Food Service Manager of LOGCAP III for

Kuwait and Iraq.

        43.       According to the governments evidence, between the end of 2002 and the beginning

of 2004, Shabbir Khan paid Hall and "Person A" a combined total of approximately US $40,000 in

connection with DFAC subcontracts that TAFGA had been awarded under LOGCAP III. Khan did

so in order to ensure that TAFGA kept the DFAC subcontracts that it had, and to ensure that TAFGA

would continue to get additional subcontracts as they became available.

        44.       From approximately March 2003 through early 2005, an individual herein identified

as "Person B" was employed by KBR. He served primarily as a Subcontracts Administrator in Iraq.

        45.       According to the government's evidence, in early 2005, Zubair Khan paid "Person B"

approximately US $40,000 as a gratuity for the renewal of a KBR subcontract awarded to TAFGA for

a DFAC in Iraq.

        46.       In 2005, Peleti "Pete" Peleti, Jr., was serving in Kuwait as a U.S. Army Chief

Warrant Officer and the Army's Chief Food Service Advisor for the Middle East Region. He was the

advisor to the Commander on all facets of the Army's food service program. Among his duties-was

the monitoring of food service contracts in Kuwait, Iraq and Afghanistan, including the acquisition

and distribution of food and related food service supplies at Army bases and camps.

        47.       According to the government's evidence, during Peleti's time as Food Service

Advisor, Shabbir Khan provided him with airline tickets, food, drinks, several thousands of U.S.

dollars, and the use of a "Party House" maintained by a TAFGA executive and other TAFGA

representatives. Khan provided these gratuities to Peleti in light of Peleti's prominent position with

the Army concerning food service and dining facilities.

                  Medical Records

        48.     In furtherance of TAFGA's operation of DFACS under the LOGCAP III contract,




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TAFGA employed and transported into Kuwait and Iraq several thousand food service workers from

Bangladesh, Nepal, Sri Lanka, and elsewhere,

         49.      One provision of the LOGCAP III task orders relating to DFACS required that food

service personnel shall receive appropriate medical screening prior to employment. Screening was to

include testing for infectious diseases, such as tuberculosis, typhoid fever, and hepatitis A. Food

service workers' medical records were required to be maintained, and could be located at the

respective DFACS.

         50.     In March 2004, the Defense Contract Management Agency (DCMA), an agency

responsible for oversight of the LOGCAP III prime contract, initiated a routine inspection of some of

the DFACS operated by TAFGA, including one at Camp Arifjan in Kuwait. During the inspection,

DCMA reviewed what was purported to be the medical records of TAFGA food service workers.

DCMA questioned the legitimacy of some of the records, and requested additional medical

information on TAFGA food service workers through the prime contractor, KBR.

         51.     In response to a KBR demand for TAFGA's employees' medical screening records,

TAFGA delivered to KBR in Kuwait City sets of photocopied documents purported to be the medical

records of TAFGA's food service workers. Many of the records raised suspicion because they

contained identical lab test results for multiple different food service workers. DCMA then

conducted inspections at three other TAFGA operated DFACS in Kuwait and determined that all the

purported medical records for TAFGA employees at each of those DFACS were forgeries. As a

result, a federal investigation was initiated in the Central District of Illinois at Rock Island.

        52.      In February 2005, a federal grand jury in the Central District of Illinois issued a

subpoena to TAFGA requiring production of all of the company's food service workers' medical

screening records. In response to the grand jury subpoena, from in or about May 2005 through in or

about August 2005, TAFGA caused to be produced to the United States Attorney's Office in Rock

Island, Illinois, in the Central District of Illinois, as the representative of the grand jury,

approximately 300 personnel files for TAFGA food service employees. The medical records


                                                  - 12 -




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contained in those personnel files were different from, and much more elaborate than, the medical

records that TAFGA had provided to DCMA and KBR in Kuwait in March 2004. It was

subsequently determined that many of the purported medical records contained within the personnel

files produced by TAFGA in 2005 to the grand jury were not legitimate and had been fabricated. The

personnel files were produced as follows:

                 a. On or about May 6, 2005, via hand delivery in Chicago, Illinois;

                  b. On or about May 19, 2005, via commercial interstate carrier, from Chicago,

Illinois to Rock Island, Illinois;

                 c. On or about June 22, 2005, via commercial interstate carrier, from Chicago,

Illinois to Rock Island, Illinois;

                 d. On or about July 7, 2005, via commercial interstate carrier, from Chicago,

Illinois to Rock Island, Illinois;

                 e. On or about July 28, 2005, via commercial interstate carrier, front Chicago,

Illinois to Rock Island, Illinois; and

                 f. On or about August 18, 2005, via commercial interstate carrier, from Chicago,

Illinois to Rock Island, Illinois.




                                              - 13 -




                                                                                   KBRPROD0057726
       4:11-cr-40083-MMM-JAG # 6-3 Page 1 of 2
                                                                                                   E-FILED
                                                               Monday, 19 September, 2011 10:32:32 AM
                                                                          Clerk, U.S. District Court, ILCD
                                          ATTACHMENT B

                             CORPORATE COMPLIANCE PROGRAM

        In order to address past deficiencies in its internal controls, policies, and procedures

regarding compliance with the applicable United States anti-corruption laws, TAFGA agrees to

continue to conduct, in a manner consistent with all of its obligations under this Agreement,

appropriate reviews of its existing internal controls, policies, and procedures.

        Where necessary and appropriate, TAFGA agrees to adopt new or to modify existing

internal controls, policies, and procedures in order to ensure that it maintains: (a) a system of

internal accounting controls designed to ensure that TAFGA makes and keeps fair and accurate

books, records, and accounts; and (b) a rigorous anti-corruption compliance code, standards, and

procedures, in compliance with Federal Acquisition Regulation 52 203-13. At a minimum, this

should include, but not be limited to, the following elements:

        1.     Retention of a government contract compliance specialist to monitor

TAFGA's compliance program and report to TAFGA's Legal Department.

       2.      A clearly articulated corporate policy against violations of the anti-corruption laws of

the United States.

       3.      Promulgation of compliance standards and procedures designed to reduce the

prospect of violations of the anti-corruption laws and TAFGA's compliance code. These standards

and procedures shall apply to all directors, officers, and employees and, where necessary and

appropriate, outside parties acting on behalf of TAFGA in a foreign jurisdiction, including but not

limited to, agents, consultants, representatives, and distributors (collectively, "agents");

       4.      The assignment of responsibility to two or more senior corporate executives of

TAFGA for the implementation and oversight of compliance with policies, standards, and




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          4:11-cr-40083-MMM-JAG # 6-3 Page 2 of 2



procedures regarding the anti-corruption laws. Such corporate officials shall have the authority to

report matters directly to TAFGA's Executive Board or any appropriate committee thereof;

          5.    Mechanisms designed to ensure that the policies, standards, and procedures of

TAFGA regarding the anti-corruption laws are effectively communicated to all directors, officers,

employees, and, where appropriate, agents. These mechanisms shall include: (a) periodic training

for all directors, officers, and employees, and, where necessary and appropriate, agents; and (b)

annual certifications by all such directors, officers, and employees, and, where necessary and

appropriate, agents, certifying compliance with the training requirements;

          6.    An effective system for reporting suspected criminal conduct and/or violations of

the compliance policies, standards, and procedures regarding the anti-corruption laws for directors,

officers, employees, and, where necessary and appropriate, agents;

          7.    Appropriate disciplinary procedures to address, among other things, violations of

the anti-corruption laws and TAFGA's compliance code by TAFGA's directors, officers, and

employees;

          8.    Appropriate due diligence requirements pertaining to the retention and oversight of

agents;

          9.    Standard provisions in agreements, contracts, and renewals thereof with all agents

that are reasonably calculated to prevent violations of the anti-corruption laws, which may,

depending upon the circumstances, include anti-corruption representations and undertakings

relating to compliance with the anti-corruption laws; and

          10.   Periodic testing of the compliance code, standards, and procedures designed to

evaluate their effectiveness in detecting and reducing violations of anti-corruption laws and

TAFGA's compliance code.

                                                 2




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