Good news in contracting fraud

Mon Apr. 4, 2005 2:54 PM EDT

As it turns out, contractors in Iraq who worked for the Coalition Provision Authority (CPA) may not, in fact, be above the law after all. That was the outcome of a Friday ruling against Custer Battles, a private contractor that has been accused of fraud by former employees. Lawyers for the company had claimed that the U.S. had no jurisdiction over the fraud case because the CPA was akin to a sovereign entity. But under that logic, contractors would also have been exempt from Iraqi law, meaning that country would have the legal means to battle contractor corruption.

The ruling sets an important precedent, and aids the Justice Department's efforts to sue CPA contractors in US courts under anti-war profiteering laws. It's also an important win for attorneys like Alan Grayson, who is currently representing former Custer Battles employees. But even though the ruling is a positive step towards enforcing accountability among contractors, another lawyer, Victor Kubli "the [Justice Department's] brief raises the 'pregnant question' of why U.S. officials originally said CPA contracts were not covered by the U.S. anti-fraud law." Why, indeed.

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