Criminal probe into U.S. Embassy in Iraq construction

The new U.S. Embassy in Baghdad.
The new U.S. Embassy in Baghdad. Jay Price / Raleigh News & Observer

WASHINGTON — A mortar shell smashed into the hulking new U.S. Embassy that's under construction in Baghdad last May, damaging a wall and causing minor injuries to people inside the building. It also exposed enormous problems in the management of what's become a $592 million government construction project.

The State Department contractor in charge of the project, James L. Golden, attempted to alter the scene of the blast, according to government officials familiar with the incident. The State Department inspector general prevented Department officials from investigating the incident, according to interviews and documents.

A congressional committee is examining whether the walls of the still-unfinished embassy complex, which are supposed to be blast-resistant, performed as they should have during the mortar attack.

U.S. Ambassador Ryan Crocker banished Golden from Iraq, but he continues to oversee the construction of the embassy in Baghdad; to be the liaison with the contractor, Kuwait-based First Kuwaiti General Trading and Contracting Co.; and to supervise other projects for the State Department's Overseas Buildings Operations (OBO) bureau.

The embassy — actually a 104-acre, Vatican-size compound of 21 buildings meant to house and sleep about 1,000 U.S. officials was originally meant to open in June, then in September. Now, due to problems with the sprinkler system, the latest in a series of deficiencies blamed on First Kuwaiti, it remains unclear whether it will be ready for occupancy this year. Golden didn't return phone calls seeking comment.

McClatchy Newspapers has also learned that:

— Aspects of the embassy's construction are the subject of at least one U.S. government criminal investigation, according to officials in Congress and the administration. They spoke on condition of anonymity because of the sensitive nature of the matter and declined to divulge more details for publication.

— In order to rush the project, the long-time head of OBO, retired Army Maj. Gen. Charles Williams, signed a waiver in July 2005 allowing a sole-source contract to be awarded to First Kuwaiti.

"The only acquisition option that can be considered is to issue Sole Source Awards to contractors capable of completing the design and construction in accordance with the required schedule, budget and performance parameters," Williams wrote in a memo reviewed by McClatchy.

— Columbia, Md.-based Cosmopolitan Inc., which was awarded the lead contract to build the embassy's classified spaces, where intelligence officers and others work, meet and store information, was kicked off the job for alleged non-performance. It was replaced by Kaseman Corp. of Chantilly, Va.

As recently as August, Williams assured the House Foreign Affairs Committee that the embassy would be ready for occupancy by the end of September.

"This and other incidents involving separate embassy construction projects raise concerns about the adequacy of the Department's management of our overseas building operations," committee chairman Rep. Tom Lantos, D-Cal., wrote to Deputy Secretary of State John Negroponte on October 4.

The State Department declined to make Williams available for an interview and directed questions to Patrick Kennedy, the department's director of management policy.

"The plan was to complete it in two years. It is not done. It is very close to being done," said Kennedy, who toured the new embassy compound last week.

Asked when the structure would be ready to occupy, he said, "Soon. But I'm not going to tell you whether soon is in two weeks, or six weeks or eight weeks."

Kennedy acknowledged that the problems with the fire suppression system were "serious" — joints in underground water mains supplying the sprinklers leaked when they were tested — but he emphasized that this and other problems were discovered as part of OBO's rigorous inspections.

The embassy has been plagued by other deficiencies. The electrical system in the dining facility of a nearby guard camp malfunctioned when it was tested in May. OBO, in a report last month, defended its contractor, First Kuwaiti, and blamed Houston-based KBR, Inc., which was hired to operate the facility.

In a statement Thursday, First Kuwaiti said it "stands by the quality of its work on the US Embassy in Baghdad. The State Department's initial report raised issues that are routine for construction projects. First Kuwaiti has addressed them and anticipates full acceptance of the system when the final inspection occurs."

Current and former U.S. officials argue that many of the problems are symptomatic of the approach pursued by Williams, who they say is determined to deliver a set number of new embassies each year on time and within budget, whatever the consequences.

For example, the new U.S. Embassy on Pariser Platz in the heart of Berlin, Germany, is slated to be within budget when it opens next spring.

But to meet that goal, three State Department officials said, Williams ordered that an entire floor be cut from the building. As a result, the original goal of having all U.S. embassy employees in one place has been dropped, and some diplomats will have to travel back and forth from an annex.

Williams, who was chosen for his post in March 2001 by his friend, then-Secretary of State Colin Powell, runs the overseas buildings operation like a virtual fiefdom, according to numerous current and former officials who refused to discuss personnel matters on the record.

He and his aides refused to let U.S. diplomats and congressional staffers onto the new embassy compound in Iraq, according to congressional testimony in July and a former senior official with first-hand knowledge.

The Baghdad embassy complex, while incomplete, is about to be dramatically expanded to make room for a U.S. military presence that wasn't anticipated when the structures were first planned in 2004.

Kennedy said the $144 million additional price tag isn't a cost overrun, but the result of a decision to locate Gen. David Petraeus, the U.S. military commander in Iraq, and his staff in the compound. That will involve converting some space planned for unclassified use to classified use.

"Crocker and Petraeus don't want to divorce," Kennedy said. "We have about 250 more people to squeeze into the complex than we were planning on squeezing in."

The embassy is the subject of a separate probe by Rep. Henry Waxman, D-Cal, the chairman of the House Oversight Committee.

In a letter to State Department Inspector General Howard Krongard last month, Waxman said that former and current staff members in Krongard's office told the committee that he'd refused to help investigate alleged wrongdoing by First Kuwaiti and an unnamed top State Department official.

"The allegations from the Justice Department implicate a major contractor in 'contract fraud' and a senior State Department official in 'public . . . corruption," Waxman wrote.

Krongard has said that he'll respond to the allegations.

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