by Cam Simpson
In 2005, a former KBR subcontracts administrator who worked at Al Asad named Harry “Hap” Barko Jr. filed a sealed federal lawsuit against KBR and Daoud under a law called the False Claims Act. The law penalizes companies that defraud the government and allows whistleblowers bringing evidence of such fraud to get a portion of any awards, ranging from about 15 to 25 percent. Barko’s lawsuit, which was unsealed in 2009, alleged that the KBR contracting environment in Anbar Province was rife with fraud, collusion, and other anticompetitive activity, and it accused KBR of submitting false claims to taxpayers by rigging bids, inflating costs, and otherwise engaging in improper procurement practices involving Daoud, all while KBR employees were accepting kickbacks. The suit covered the laundry contract, the overall labor agreement for foreign workers, and other aspects of KBR’s work. Barko’s lawyers eventually obtained, through discovery, a long list of allegations about corruption at Al Asad that KBR executives had received through their “Code of Business Conduct” program, including some that came via a telephone hotline. Robert Gerlach was at the center of the allegations.
Between June 2004 and July 2005 alone, records filed in the case show that KBR employees reported to the company that “political ties between KBR and Daoud and Partners” made it impossible to enforce contract terms; that Gerlach had allegedly “pressured people to manipulate the system so that Daoud would be awarded contracts whether they were the low bidders or not”; that Gerlach had allegedly “abused his authority [by] leak[ing] information from other bids received, giving favored vendor [Daoud] leverage to lower his bid in order to gain contracts”; that Gerlach “has too close a relationship with the D&P subcontractor”; that Gerlach is “in bed with D&P—they are practically married”; that Gerlach allegedly was engaging in unethical conduct; that Gerlach and a handful of other KBR executives in Anbar dealing with Daoud had “received kickbacks from D&P.” Finally, an employee specifically reported seeing another senior KBR manager at Al Asad pocket a large stack of U.S. bills, topped by a one-hundred-dollar note, while standing with a Daoud manager in the Jordanian company’s on-base office, and then, after noticing he had been seen, the KBR manager hastily claimed that the Daoud manager had just been “making change.”
In addition to these allegations, e-mails uncovered by Barko’s lawyers showed that a senior KBR executive had visited Anbar in December 2004 to check out the reports and had concluded in her own report to her supervisors that Daoud was getting the majority of the work “not because they are the best subcontractor,” and that other companies were “begging to conduct business with KBR” but “they are not invited to bid” on work. That same KBR executive who had visited Anbar to personally check out the reports also had received allegations that Gerlach was engaging in “unethical practices,” including “the exchange of money and suppression of competition, [and] receipt of gifts.” Based on her report, the company forced Gerlach to resign the next month, according to internal e-mails. A human resources executive said in one e-mail with the subject line “Bob Gerlach” that there were “enough issues raised to warrant his being sent home. We would prefer to address it from a ‘things have changed here and it is time for a change for you, it is time for you to move on, and we want to give you the opportunity to resign’ approach.”
According to testimony in the case from one of KBR’s in-house lawyers, KBR’s internal personnel had conducted three investigations of Gerlach and the Al Asad corruption allegations based on these reports and others like them, but the company had refused to hand over any of the investigative files to Barko in the lawsuit, claiming that doing so would violate attorney-client privilege; KBR’s in-house lawyers had participated in the probes. Barko’s lawyers also discovered that every employee interviewed about the corruption allegations by KBR’s internal investigators was made to sign a nondisclosure agreement when his or her interview was done, and faced potential firing for violating it. Barko’s lawyers suggested that this was a cover-up.
The federal judge on the case in Washington, U.S. District Court judge James S. Gwin, agreed with Barko’s attorneys that KBR’s internal investigations were not privileged and had to be handed over. Before he made his ruling, Gwin examined the internal investigations for himself, and then he cheekily dribbled out some of the details in his opinion, writing that the internal reports “are eye-openers. KBR’s investigator found Daoud ‘received preferential treatment.’ The reports include both direct and circumstantial evidence that Daoud paid off KBR employees and KBR employees steered business to Daoud.”
KBR launched what is now considered to be, in American corporate legal circles, a precedent-setting, epic fight to keep the records under wraps, taking Judge Gwin to a federal appeals court twice in order to keep privileged the in-house investigations. The company ultimately won, and the Supreme Court declined to intervene on Barko’s behalf. Without access to the internal investigation files, Barko lost a critical motion for summary judgment in his case in the spring of 2017—after twelve long years. The only sanction against KBR: the Securities and Exchange Commission independently filed an unprecedented complaint against the company, alleging that it had violated whistleblower protections through its use of the nondisclosure agreements during the investigation, and KBR settled by paying a fine and agreeing to change the language of the agreements. The company and Gerlach had denied the corruption allegations throughout.
In the case brought by the families of the twelve dead Nepalis, KBR’s lawyers never revealed any of the assertions that the company had collected internally about Gerlach’s alleged unethical relationship with Daoud; nor did they reveal the existence of their internal investigations of him, nor that he had been forced to resign because of those allegations less than four months after the twelve were killed. All the while, they threatened to have Fryszman and Hoffman censured if they tried to approach Gerlach for a deposition, in addition to actually filing a petition for misconduct sanctions against them for, among other things, allegedly withholding important evidence. It’s unclear whether Fryszman’s initial requests for discovery had been broad enough to cover evidence of the alleged corruption at Al Asad involving Gerlach and other KBR personnel critical to her case, or whether the company’s defense team simply frustrated her out of ever getting that far.
Even without any of the evidence regarding alleged corruption, the sworn statements from the workers whom Ganesh Gurung had found contained powerful allegations. Yet the plaintiffs’ team had to put them together so quickly to meet judge Ellison’s final deadline that Fryszman filed some of them without proper signatures or dates. The statements went to Ellison’s clerk just two days before his scheduled hearing on KBR’s motion to kill the lawsuit, and the company’s lawyers tried to get the judge to throw them all out, on substantive grounds and for far less; they even argued that they should be thrown out because the interpreters Fryszman had used hadn’t presented appropriate credentials, although one worked for the same translation firm that KBR’s own lawyers had used in the case. KBR also asked Judge Ellison to strike the statement from fired auditor Duane Banks, along with those from the former KBR employees whom Fryszman had located on her own after she realized KBR wasn’t going to budge on discovery.
When the day arrived for the hearing on KBR’s motion for summary judgment in the case, April 11, 2013, Judge Ellison seemed perturbed before the assembled lawyers. His very first question was “What do we do with this new evidence? I mean, I don’t know why these witnesses were not identified ahead of time, and I don’t know what badges of reliability they have.” He also said he was uncomfortable with the legal arguments Fryszman had made in support of the new witnesses. Paul Hoffman, the human rights lawyer working with Fryszman, jumped in right away. “We have been looking for the men,” he told the judge. “One of the reasons that we switched to presenting our evidence to defeat summary judgment in the way that we have is that we have not had access to KBR’s documents of the crucial people, and we—and we decided we had to presen
t our case through declarations. And, so, we have—we’ve had people in Nepal finding these men, and they were found, and we have their declarations. It was a difficult, laborious task, but we got them.”
KBR lawyer Billy Donley told Ellison that even if the judge allowed the men’s statements into the case, it wouldn’t be enough. “For human trafficking, as well as forced labor, plaintiffs have to prove that KBR had knowledge,” he said. “None of these declarations prove that KBR had knowledge of anything in particular with regard to these plaintiffs”—that is to say, KBR’s specific knowledge that these twelve dead men themselves were being trafficked. Donley then also reverted to the “dead men tell no tales” defense raised throughout the saga’s history: “KBR would have had no knowledge of where they came from or what their story might have been, because those individuals simply never made it inside of the base.”
Paul Hoffman then made an impassioned case that Donley’s years-long drumbeat of “they have no evidence” about KBR’s knowledge of what had happened simply did not survive the weight of the evidence the plaintiffs’ lawyers had amassed. He also told Ellison that those lawyers had presented page upon page of evidence that there was no distinction between the operations of Daoud and KBR at Al Asad—that the two were one and the same in all but name. Calling Daoud an “independent contractor” wasn’t enough to make its actions truly independent. The real relationship “doesn’t depend on labels,” Hoffman said; “it doesn’t depend on”—Ellison interjected with a kind of amen: “No, it doesn’t”—and Hoffman kept running: “It doesn’t depend on what you call it.”
Judge Ellison concluded by asking Hoffman to clean up the statements of the Nepalese workers and to correct the defects that KBR’s lawyers had cited to try to strike them from the record. “Give us the dates, give us certificates of a translator,” the judge said, before saying he would take the arguments under advisement and adjourning the hearing. If he sided with KBR, it would be the final hearing in the case. If he sided with Hoffman, Kamala and the other families could finally get their trial.
As Ellison weighed the evidence in Houston, the Supreme Court of the United States released its long-awaited decision in the case of Esther Kiobel, the Nigerian woman whose husband had been killed for opposing oil exploration and production in their ancestral homelands in the Niger Delta. KBR’s lawyers had believed the case offered a chance for them to pull the rug out from beneath Fryszman and Hoffman. The suit alleged that Royal Dutch Shell had been complicit in a government campaign against drilling opponents that involved attacking villages; beating, raping, killing, and arresting residents; and destroying or looting their property. The victims and their families had used a 1789 law to sue the oil company, the same law invoked in Kamala’s lawsuit.
Human rights lawyers had first started using that law in the 1970s to sue foreign torturers and dictators, including Ferdinand Marcos of the Philippines. At the time, the courts gave such cases a warm reception, seemingly happy, even proud, to let American values be evidenced to the world through America’s courts. It was perhaps the peak of the human rights era in the United States. But the mood in some courts significantly and noticeably shifted decades later, after Paul Hoffman and others had started using the same law to attack international human rights abuses allegedly perpetrated, or aided and abetted, by some of the nation’s largest and most valuable corporations, including the likes of Exxon, Union Carbide, and Chiquita. By 2013, Kiobel v. Royal Dutch Petroleum and other cases like it also fell squarely in the center of the most significant ideological debates playing out in the highly polarized U.S. Supreme Court—debates over the fundamental role of the courts, the role of international law in the United States, and how corporations can be considered legal “persons” when they want protection from the law, as in giving unlimited campaign contributions to politicians, but can avoid the same when they want to escape potential liabilities.
As Kiobel was en route to the Supreme Court, a federal appeals court had ruled that only foreign governments and individuals could be sued under the law, not corporations, even though the lawyers in the case had never raised that argument. The Supreme Court justices, however, didn’t rule on that issue when the case got to them. Instead, they sent it back to the lawyers and asked them to completely rebrief and reargue it on another issue, one that had barely been raised during the case’s existence, or during the more than two-century history of the law. The justices focused on concern that Kiobel was a “foreign-cubed” lawsuit, which is to say that the plaintiffs were foreign citizens when the alleged atrocities occurred, the defendant was a foreign company, and the allegations involved events that had transpired overseas. Was it enough to justify a lawsuit in an American court that Royal Dutch Shell did business through American banks—virtually everyone does, whether they know it or not—and on the New York Stock Exchange?
Supreme Court decisions often are like the modern-day equivalent of pronouncements from oracles, leaving lower courts for years to sort out how they should be interpreted, and this case was no exception. Just after arguments had been wrapped up before Judge Ellison in Kamala’s case, the Supreme Court justices appeared to be unanimous in ruling that foreign-cubed cases had no place in American courts, but they were divided on other key issues covered in separate sections of the opinion that could have a bearing in Houston and beyond. They left open the possibility that some lawsuits in which alleged abuses had occurred overseas could be brought in American courts if the defendants were U.S. citizens or U.S. companies. Cryptically, the justices appeared to leave open this possibility in cases where the events at issue “touch and concern the territory of the United States . . . with sufficient force,” but they didn’t offer any guidance about what they meant. The court had also ruled that no American law could be read to apply internationally unless Congress had explicitly said so.
Word traveled fast to Fryszman, given that Paul Hoffman, her partner on the case for Kamala and the other Nepalis, was the lead lawyer for Esther Kiobel and had argued the case before the Supreme Court. (The justices had cut him off about eleven seconds into his presentation at oral arguments.) Fryszman didn’t panic, however, because she believed her lawsuit could stand on the main claim she had brought under the antitrafficking law. Word also traveled fast to the lawyers working for KBR and Daoud. KBR had hoped all along that a Supreme Court decision would give the company refuge from Kamala’s lawsuit. “The Supreme Court’s ruling in Kiobel v. Royal Dutch Petroleum Co. transformed the law governing this case,” KBR’s lawyers said in a new filing rapidly fired off to Judge Ellison, adding, “Kiobel is a watershed.” Judge Ellison would mull the fate of Kamala’s case for several more months, with the Supreme Court’s decision and subsequent arguments about its meaning complicating the issues before him. In addition to weighing the evidence, he had to sort out what the oracles’ sudden new pronouncements meant.
On August 21, 2013, nine years and two days after Jeet and the others were driven into Iraq on the Highway Through Hell, Ellison issued a twenty-three-page decision and order. It represented KBR’s worst imaginable defeat.
He had heeded the Supreme Court’s Kiobel decision and dismissed the part of the case that relied on the 1789 law, but that part of the lawsuit had always been redundant, serving as a sort of safety net, which Ellison and the plaintiffs’ lawyers believed meant it could be shed without damage. Ellison let stand the main claim brought under the U.S. antitrafficking statute, dismissing each of KBR’s arguments, and hence ordering the company to face Kamala and the other families at a trial in his courtroom. He allowed into evidence the statements of the Nepalese workers found at the last minute by Ganesh Gurung, along with the statements of the former KBR workers, all of which the company’s lawyers had tried to strike. And he dismissed the separately pending misconduct allegations against Fryszman and her team, past and present, in just twenty-five words, refusing even to dignify them with a separate opinion. “This is a complicated and fact intensive case. Emotions und
erstandably run high when human lives have been lost. However, sanctions are not—even remotely—justified.” With that, all the pain and stress that had long been hanging over the plaintiffs’ lawyers’ heads was eliminated.
Perhaps to soften the blow of such a crushing defeat, Ellison decided to grant a request from KBR’s lawyers that he black out roughly two hundred fifty words from the publicly available copy of his decision—the entire section in which he recited his summation of the evidence alleging that KBR knew about human trafficking, including the e-mail saying that the Marines were building a file against the company and were alleging, among other things, that there were “slave labor camps” at Al Asad, and concluding, “We need to squash this immediately.”
Some other damage to the lawsuit, however, had been done by the Supreme Court’s Kiobel decision. Ellison found he had no choice other than to dismiss the case against Daoud in its entirety, given that he saw it as “foreign cubed” because Daoud was a Jordanian company run through a shell in the British Virgin Islands and operating exclusively in Iraq, and the victims were all from Nepal. Rather than risk an appeal, Daoud decided to offer Kamala and the other families a modest settlement, which Fryszman counseled them to accept.
KBR’s lawyers from Baker & Hostetler had some last-ditch efforts pending to try to help them in the event of a trial, including an effort to name the U.S. government as a “responsible third party” in the lawsuit, arguing that “decisions made by the U.S. military in this wartime environment caused or contributed to the alleged injuries for which the plaintiffs seek recovery.” For example, they said that the ill-fated convoy into Iraq had “proceeded without military escort, despite the fact that the military was aware that TCN convoys traveling without military escort were targeted by insurgents and that unrest and violence had grown in 2004 . . . But for these and other military decisions, this case would not exist.” Arguments such as these smacked of desperation.