Iraq contractor pleads guilty to fraud

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Iraq contractor pleads guilty to fraud
Fri Feb 17, 2006 2:03 PM ET

By Andrew Stern

CHICAGO (Reuters) - An executive has pleaded guilty to adding $1 million in fraudulent "war risk" surcharges for flying cargo into Baghdad under a U.S. military contract with a Halliburton Inc. subsidiary, authorities said on Friday.

Christopher Cahill, 41, formerly a Dubai-based executive of logistics company EGL Inc. of Houston, may implicate others as part of a plea agreement reached on Thursday with federal prosecutors in Rock Island, Illinois, court papers showed.

Cahill, 41, could face up to 10 years in prison and a $5 million fine at a May 26 sentencing.

According to court papers, Cahill hatched his plan to add a 50 cent per kilogram surcharge on freight into Baghdad after the plane of competitor DHL Worldwide Express was hit by a missile and landed in flames. Cahill had heard DHL was seeking war risk insurance and arranged to have EGL's subcontractor write a phony letter declaring it was adding the surcharge.

The extra charges appeared on invoices from Halliburton subsidiary Kellogg Brown & Root and paid by the Army.

Cahill, a regional vice president, was fired in December with another EGL executive when the company admitted the scheme. EGL repaid the government $4 million - $1.14 million in fake surcharges, plus $2.86 million in fines -- which allowed the company to avoid being banned from future contracts.

"There may be two to three other people (at EGL) that they're still interested in," said EGL general counsel Dana Carabin.

Cahill was the fourth person charged in three cases involving supply contracts in Iraq handled in Rock Island in western Illinois, where the Army Field Support Command is located, said Jeffrey Bailey, the local U.S. attorney.

The Justice Department has also charged others servicing Texas-based Halliburton's huge, multibillion-dollar logistics contracts in Iraq and the region. Halliburton was run by Vice President Dick Cheney between 1995 and 2000.

Critics in the U.S. Congress have charged Halliburton has had little competition or oversight for its huge contracts.