Senate panel backs stiff penalties for war profiteering

The Senate Judiciary Committee on Thursday voted to exact million dollar fines and stiff prison sentences on anyone found guilty of garnering excessive profits from war, relief efforts or reconstruction operations.

The committee swiftly approved the bill (S. 119) on a voice vote without amendment making war profiteering a crime. The bill moves to the Senate for consideration.

Under the bill, anyone who schemes to defraud the United States or "materially overvalues" any goods or services to gain excess profits could be sent to prison for up to 20 years, and be subject to fines of $1 million or twice the gross profits gained through the profiteering scheme.

The bill also makes illegal attempts to conceal profiteering schemes or false statements made to authorities regarding profiteering. Penalties include up to 10 years in prison and fines.

When introducing the bill, Leahy said that instead of seeing results from private contractors charged with security, distribution of goods, and providing food and shelter for troops, penalties were being levied for fraud and abuse. Leahy pointed to at least 10 companies that have paid more than $300 million in penalties since 2000 to resolve allegations of wrongdoing including rigging bids and delivery of faulty military parts.

"Last year, the Special Inspector General for Iraq Reconstruction found that millions of U.S. taxpayer funds appropriated for Iraq reconstruction have been lost and diverted. Yet we continue to send more taxpayer funds to Iraq, without accountability," Leahy said.

Ongoing investigations have yielded criminal and civil penalties against companies and individuals found to have engaged in improper business practices, according to Barry Sabin, deputy assistant attorney general in Justice Department's general criminal division during a committee hearing on profiteering last month.

"Department of Justice attorneys in the Commercial Litigation Branch of the Civil Division enforce the False Claims Act, other federal statutes, and common law remedies to address all types of procurement fraud, including overcharging, defective pricing, quality deficiencies and product substitution, and bribery and corruption statutes. These actions often result in the recovery of significant funds," Sabin said. Still he said, investigations that involve procurement are tough.

"Procurement fraud cases, especially those involving the wars in Iraq and Afghanistan, are usually very complex and resource intensive. The cases often involve extraterritorial conduct as well as domestic conduct, requiring coordination between appropriate law enforcement agencies," Sabin said.