Democrats warn of potential Katrina contract abuse

Reuters

Democrats warn of potential Katrina contract abuse

WASHINGTON (Reuters) - Rebuilding from Hurricane Katrina could be ripe for fraud if government whistle-blowers are not better protected than those who lost their jobs after disclosing abuses in Iraq's reconstruction, a leading Senate Democrat said on Friday.

Sen. Byron Dorgan of North Dakota said all necessary resources should be deployed to rebuild New Orleans and the U.S. Gulf Coast, but the billions of dollars in expected government spending must be must be carefully monitored.

"We simply must ensure accountability for these massive expenditures -- so that these dollars don't just wind up lining the pockets of unscrupulous contractors, as we've seen all too often in Iraq," Dorgan said at an unofficial hearing held by the Democratic Policy Committee, a congressional group.

"One of the keys to ensuring accountability is to have civil servants who witness fraud, waste and abuse to blow the whistle," Dorgan said.

Dorgan called the hearing to review the cases of two contracting officers who say they were forced out of jobs at the U.S. Army Corp of Engineers after exposing problems with Iraq contracts.

Democrats, unable to call official hearings in the Republican-controlled Congress, have often used the policy-committee forum to call attention to their priorities.

Bunnatine Greenhouse said she was forced out of her job as a top U.S. Army Corps of Engineers contracting official on August 27 after raising questions about Halliburton Co.'s contracts in Iraq and testifying to an earlier policy committee hearing on the matter.

"I was removed because I steadfastly resisted and attempted to alter what can be described as casual and clubby contracting practices by the U.S. Army Corps of Engineers commanders, and because I presented testimony before this body on June 27, 2005," she said.

Greenhouse told the committee in June that Halliburton's deals in Iraq were the worst example of contract abuse she had seen, adding that "every aspect" of the deal had been under the control of Defense Secretary Donald Rumsfeld's office.

Halliburton has strongly rejected Greenhouse's comments.

Halliburton Co.'s subsidiary Kellogg Brown and Root has already been given a $29.8 million contract to rebuild Navy bases along the Katrina battered Gulf Coast. Vice President Dick Cheney is a former head of Halliburton.

Estimates of the federal government cost in reconstructing the shattered region have been as high as $200 billion.

Christy Watts, a former contracting officer for the Corps of Engineers, said she was forced to sign off on some contracts despite her objections and was told by supervisors not to go over their heads.

"The plight I encountered as a whistle-blower in the Army Corp of Engineers was nothing short of traumatic," said Watts, who described herself as a Republican. "For the first time in my life, I was forced to seek medical assistance to deal with the stress."

Watts said a settlement agreement with the Army Corps included a provision that she was not to contact the special counsel about her concerns about contract abuse.

A Dorgan aide said officials from the Army Corps had been invited to testify but declined.