Firm blamed for Baghdad embassy flaws gains new jobs

McClatchy NewspapersOctober 24, 2007 

WASHINGTON — The Kuwaiti contractor that's building the new U.S. Embassy in Baghdad — behind schedule and plagued by allegations of shoddy construction and safety flaws — is still winning lucrative new contracts to build U.S. diplomatic installations overseas.

Late last month, First Kuwaiti General Trading & Contracting Co. was part of a team that won a $122 million State Department contract to build a U.S. consulate in Jeddah, Saudi Arabia, according to contract documents.

That's one of at least three State Department jobs, in addition to the Baghdad project, that First Kuwaiti won in association with a U.S. firm, Grunley Walsh LLC of Rockville, Md.

Since 2006, by operating as a subcontractor to Grunley Walsh, First Kuwaiti has won contracts for work on a new U.S. Embassy in Libreville, Gabon; on a consulate in Surabaya, Indonesia; and on the Jeddah project.

Such partnerships are increasingly common as foreign companies try to win shares of embassy construction contracts that are worth hundreds of millions of dollars each year under the State Department's aggressive building program. Under a 1986 law, only U.S. firms can bid on embassy construction.

But industry analysts said that First Kuwaiti appears to be the financial muscle behind the partnership with Grunley Walsh. Lebanese businessman Wadih al Absi founded the company in 1996. News reports and Middle East experts say that Absi is a supporter of Lebanese Christian politician Michel Aoun, an ally of Syria and the Iranian-backed Islamic militant group Hezbollah.

First Kuwaiti, which has hired a public relations firm, Saylor Co., declined to comment. Bassem Soueidan, Grunley Walsh's operations manager, didn't return repeated phone calls seeking comment.

"There's always a concern about a foreign firm trying to use an allegiance with a U.S. firm to get a foothold in," said Marco Giamberardino of the Associated General Contractors of America.

The awards to Grunley Walsh and First Kuwaiti over the past 13 months have sparked criticism from State Department officials and First Kuwaiti's competitors in light of the problems that have delayed the opening of the $740 million Baghdad embassy complex.

The problems include a fire sprinkler system that failed when it was tested in August, electrical problems in a camp intended to house embassy guards and allegations of abuse of foreign workers. First Kuwaiti has denied the abuse allegations, but the Justice Department is investigating.

McClatchy Newspapers reported last week that some aspects of the embassy's construction are now the subject of a Justice Department criminal investigation.

Secretary of State Condoleezza Rice told the House Foreign Affairs Committee on Wednesday that "some flaws in construction" had delayed the Baghdad embassy's opening. "We are going to open as soon as possible," she said, without offering a firm date.

The head of the State Department building program, retired Army Maj. Gen. Charles E. Williams, assured Congress in late July that the Baghdad embassy would be ready "in September as planned at the budget."

Williams' sympathizers say he's overhauled a lethargic building program that built an average of one embassy a year and has delivered more than a dozen annually. Critics say his zeal for on-time and on-budget projects has created new problems.

Rice is expected to be grilled Thursday by members of the House Oversight and Government Reform Committee about the embassy construction, oversight of Blackwater and other private security contractors in Iraq, and Iraqi government corruption.

James F. Archibald III, an attorney who represented Alabama-based Caddell Construction Co. in challenging the award of the contract for the U.S. Embassy in Djibouti to a subsidiary of a Dutch firm, said other foreign companies are using American partners to bid on State Department contracts.

The Government Accountability Office ruled for Caddell, but a federal claims court judge overturned the ruling in August.

After the ruling, Grunley Walsh and First Kuwaiti continued to bid on the Jeddah contract and others.

According to documents posted on the Internet, the former head of U.S. operations for First Kuwaiti, Robert Farah, has been negotiating to purchase Grunley Walsh's international operations, including the embassy construction work.

In a letter dated Dec. 22, 2006, an attorney for Farah said that Farah intended to purchase a renamed firm called Grunley Walsh International LLC, including its contracts in Indonesia, Gabon and at the U.S. Embassy in New Delhi, India. The letter, to an official of the Defense Security Service, which oversees security clearances for contractors, was first posted on the Web site of independent journalist David Phinney.

Farah's lawyer also didn't respond to inquiries, and the status of the proposed sale of Grunley Walsh's international work to Farah, the former First Kuwaiti employee, remains unclear.

ON THE WEB

The documents on the possible sale of Grunley Walsh are at: www.davidphinney.com

McClatchy Newspapers 2007

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