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KBR Secret Indemnity Agreement Signed By Army Chief Tainted In Enron Scandal

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Army Secretary Thomas E. White signed an agreement giving legal indemnity to KBR in 2003. (AFP PHOTO by Luke Frazza)

Ryan J. Reilly – (Huffington Post) – Washington – January 24, 2013 – The Army official who signed a secret agreement that military contractor KBR claims should burden taxpayers with the bill for the company’s negligent poisoning of U.S. soldiers in Iraq resigned from the military in 2003 after a tenure marked by questions about his ties to Enron Corp.

Thomas E. White, named secretary of the Army in 2001, signed an indemnity agreement protecting KBR, the military’s largest contractor, from legal liability on March 19, 2003. KBR had asked for the agreement as part of its contract to rebuild Iraq oilfields destroyed in the U.S. invasion. White resigned a month later, on April 23, under fire for his previous role as a senior Enron executive and after clashing with former Defense Secretary Donald Rumsfeld over his advocacy for a multi-billion dollar artillery system.

KBR’s indemnity agreement, obtained by The Huffington Post through a Freedom of Information Act request, was classified as secret until Dec. 21, 2012, the month after a federal jury in Oregon decided the company should pay $85 million for negligence that allowed a dozen soldiers to be exposed to a cancer-causing chemical sodium dichromate at the Qarmat Ali water treatment plant in Iraq.

The agreement, never made public until now, is crucial because KBR claims it means taxpayers have to pay both the verdict and the company’s $15 million in legal expenses. The company faces a separate lawsuit filed by national guardsmen from both Indiana and West Virginia, as well as troops from the U.K. The military has said it believes the agreement doesn’t shield KBR from paying for the lawsuits.

It’s not known how many defense contractors have secret indemnification agreements with the government. While most federal agencies are not allowed to enter open-ended indemnification agreements, the Pentagon is exempt under an executive order signed by President Richard Nixon in 1971. An amendment to the 2013 National Defense Authorization Act pushed by Sen. Ron Wyden (D-Ore.) now requires the Pentagon to disclose indemnification clauses that hold military contractors harmless and to justify the agreements to Congress.

White wrote in his 2003 memo granting KBR the indemnity that he “considered the availability, costs and terms of private insurance to cover these risks, as well as the viability of self-insurance, and have concluded that adequate insurance to cover the unusually hazardous risks is not reasonably available.” He said he had no clue how much the indemnity agreement could cost taxpayers.

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5 Comments

  1. Comment by Conneckting Dots:

    “The report finds that there were at least 112 contacts between Enron and White House or other Administration officials during 2001. The largest number of known contacts — 40 contacts in total — were between Enron and White House officials. The White House officials involved in these contacts included Vice President Dick Cheney, presidential advisor Karl Rove, White House economic advisor Lawrence Lindsey, White House personnel director Clay Johnson III, and White House energy task force director Andrew D. Lundquist…

    …Moreover, the methodology used to count contacts between in-house Enron lobbyists and Administration officials is likely to underestimate the actual number of contacts. The report also does not include any of the 73 disclosed contacts that former Enron executive Thomas E. White had with Enron officials while serving as Secretary of the Army.”

  2. Comment by marc:

    The fact that the Indemnity Agreement was secret tells you all you need to know about it and the motives behind signing it.

  3. Comment by ARMY CONTRACTING COMMAND WATCH:

    As I have said in past posts. The Army is corrupt to the highest levels when it comes to contracting. Camp Arifjan is the Corruption Headquarters Middle East while Rock Island is the Stateside Headquarters for the United States. The Army cannot for the life of it follow Federal Acquisition Regulations and this guy just shows they think they can write new rules and waive what they want to and to hold them financially and personally liable will be some justice that can be handed down to them. Enron – another American legacy to corruption. What can anyone say?

  4. Comment by ARMY CONTRACTING COMMAND WATCH:

    As I have said in past posts. The Army is corrupt to the highest levels when it comes to contracting. Camp Arifjan is the Corruption Headquarters Middle East while Rock Island is the Stateside Headquarters for the United States. The Army cannot for the life of it follow Federal Acquisition Regulations and this guy just shows they think they can write new rules and waive what they want to and to hold them financially and personally liable will be some justice that can be handed down to them. Enron – another American legacy to corruption. What can anyone say?

  5. Comment by Anon12345:

    Why in the hell is this indemnification clause being allowed to stand?

    Once again, the big defense contractors laugh all the way to the bank while soldiers are poisoned and the taxpayers get ROYALLY SCREWED.

    Please tell me that White never should have signed this and the Court should void the clause immediately. For that matter, why do we allow KBR / Halliburton to continue to operate??

    They should have been put out of business years ago!!!

    Oh that’s right — the UPPER echelons of these companies are chock full of ex- Flag Officers ( Gens. And Admirals) who can walk over to the Pentagon and hob-nob with present Flag Officers as well as COLs etc and subtly promise them work after retirement if they play ball now ….

    It amazes me how much the American people have let the military -industrial complex get away with ….. They forgot Eisenhower’s warning and who pays for it…??? The troops get poisoned as I said and we, the taxpayers, get taken to the cleaners … While these ex-Flag Officers walk away with gazillions ….

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