ACCEPTED 14-13-00824-CV FOURTEENTH COURT OF APPEALS HOUSTON, TEXAS 11/23/2015 4:29:17 PM CHRISTOPHER PRINE CLERK No. 14-13-00824-CV FILED IN IN THE 14th COURT OF APPEALS FOURTEENTH COURT OF APPEALS HOUSTON, TEXAS HOUSTON, TEXAS 11/23/2015 4:29:17 PM CHRISTOPHER A. PRINE Clerk TAMIMI GLOBAL COMPANY, LTD. Appellant/Cross Appellee, v. KELLOGG BROWN & ROOT, L.L.C., KELLOGG BROWN & ROOT INTERNATIONAL, INC., AND KELLOGG BROWN & ROOT SERVICES, INC., Appellees/Cross- Appellants.

MOTION FOR REHEARING Lauren B. Harris Texas Bar No. 02009470 [email protected] Nicholas A. Simms Kerry M. McMahon David W. Salton Porter Hedges LLP 1000 Main Street, 36th Floor Houston, Texas 77002 Telephone: (713) 226-6624 Facsimile: (713) 226-6224 Attorneys for Appellees and Cross- Appellants Kellogg Brown & Root, L.L.C., Kellogg Brown & Root International, Inc., and Kellogg Brown & Root Services, Inc. TO THE HONORABLE FOURTEENTH COURT OF APPEALS: Pursuant to the Texas Rules of Appellate Procedure, Appellees and Cross- Appellants Kellogg Brown & Root, L.L.C., Kellogg Brown & Root International, Inc., and Kellogg Brown & Root Services, Inc. (collectively “KBR”) file this Motion for Rehearing, and would respectfully show the Court as follows: Argument KBR files this motion for rehearing to address a single issue: whether this Court properly affirmed the district court’s denial of KBR’s breach of contract counterclaim seeking recovery of $930,000 in attorneys’ fees and costs it incurred in third-party litigation arising from Tamimi’s payment of illegal kickbacks. This Court affirmed the trial court’s findings that the collateral litigation against KBR was not caused by Tamimi’s breach of the contract by offering kickbacks, but the acceptance of those kickbacks by two KBR employees (Terry Hall and Luther Holmes). Op. at 43-47. KBR respectfully urges this Court to reconsider its decision because the Court’s analysis is contrary to controlling standards of causation the Texas Supreme Court has carefully established.

I. Tamimi’s Offers of Kickbacks and Their Acceptance By Hall and Holmes Were Concurring Causes of KBR’s Damages.

The Court’s causation analysis demonstrates that it failed to properly adhere to controlling standards for evaluating causation, and in particular, for applying the “substantial factor” test. Rather than properly considering Tamimi’s conduct in

paying kickbacks, the Court incorrectly determined that causation was not proven because of Hall and Holmes’ acceptance of the illicit offer. The breakdown in the Court’s reasoning, however, is that Tamimi not only initiated the entire chain of events by offering kickbacks, but it paid them over an extended time period and allegedly benefitted from those payments—the very reason the United States government deemed its contract “tainted” and KBR was sued. The acceptance of kickbacks was, at the very least, a concurring cause of KBR’s damages.

The Court’s analysis further demonstrates that it improperly treated the acceptance of kickbacks as a superseding cause that absolved Tamimi from any liability. That theory, however, has no application under these facts where the acceptance of kickbacks was within the scope of the risk created by Tamimi’s conduct and foreseeable. The Court then compounded its error by erroneously concluding that the federal counterclaim attributed any misconduct only to the acceptance of kickbacks, when that interpretation is refuted by its plain language.

Tamimi’s breach of the contractual anti-kickback provision was a “substantial factor” in causing the government’s federal counterclaim as a matter of law.

A. The “Substantial Factor” Standard Does Not Require Tamimi’s Conduct To Be The Sole Cause of Harm.

The trial court misconstrued the “substantial factor” test to require that Tamimi’s conduct be the only cause of KBR’s damages. The trial court criticized KBR for failing to offer proof that the United States would have “filed its

counterclaim had there been an offer of kickback from Mr. Khan but no acceptance by KBR employees.” CR2592-93¶12. In other words, the trial court incorrectly construed the “substantial factor” standard to essentially require KBR to eliminate Hall and Holmes’ conduct as a basis for the counterclaim—disregarding that, at the very least, Tamimi’s conduct was a concurrent cause of KBR’s damages.

The “substantial factor” test permits a finding of causation-in-fact notwithstanding concurrent causation by other intervening events. See Transcontinental Ins. Co. v. Crump, 330 S.W.3d 211, 222-23 (Tex. 2010). The proximate cause standard has been defined to include the substantial factor requirement (cause-in-fact) as well as a foreseeability component: “Proximate cause” means a cause that was a substantial factor in bringing about an event, and without which cause such an event would not have occurred. In order to be a proximate cause, the act or omission complained of must be such that a person using the degree of care required of him would have foreseen that the event, or some similar event, might reasonably result therefrom. There may be more than one proximate cause of an event.

See State Bar of Tex., Texas Pattern Jury Charges: Business, Consumer, Insurance & Employment PJC §100.14 (2012 ed.); Crump, 330 S.W.3d at 223. The trial court’s analysis fails to recognize that there can be more than one cause of an event, and that a concurrent act that cooperates with the original act will not cut off the liability of the original wrongdoer. See Travis v. City of Mesquite, 830 S.W.2d 94, 98 (Tex. 1992); Bell v. Campbell, 434 S.W.2d 117, 122 (Tex. 1968); 2RR41.

The foreseeable conduct of another does not break the chain of causation.1 See Mewhinney v. London Wineman, Inc., 339 S.W.3d 177, 182 (Tex. App.—Dallas 2011, pet. denied).

The trial court mistakenly believed that the “substantial factor” standard imposed a higher burden on KBR that its plain language implies. CR2592¶11. In Crump, the Texas Supreme Court rejected the view that the “substantial factor” requirement imposes a higher threshold, stating: The word “substantial” is used to denote the fact that the defendant’s conduct has such an effect in producing the harm as to lead reasonable men to regard it as a cause, using that word in the popular sense, in which there always lurks the idea of responsibility, rather than in the so-called “philosophic sense,” which includes every one of the great number of events without which any happening would not have occurred. Each of these events is a cause in the so-called “philosophic sense,” yet the effect of many of them is so insignificant that no ordinary mind would think of them as causes.

Crump, 330 S.W.3d at 224 (citing Lear Siegler, Inc. v. Perez, 819 S.W.2d 470, 472 & n.1 (Tex. 1991)). Despite the supreme court’s guidance, the trial court declined to find that Tamimi could be “responsible for whatever happens next.”

CR2592¶14.

These Texas cases discuss the proximate cause standard in the context of tort claims, such as general negligence. However, to the extent the trial court and court of appeals applied the proximate cause standard here, these cases are applicable.

The trial court and Court of Appeals erroneously failed to recognize that Tamimi initiated the chain of events causing the ultimate harm, i.e. paying the kickbacks that “ensured that Tamimi would obtain lucrative dining facility (“DFAC”) subcontracts from KBR,” and that the government alleged resulted in inflated claims. KBR Ex. 23, ¶108; App. Tab A. This is not a situation (as the Court here appears to have accepted) where a mere offer and attenuated acceptance occurred. The scheme between Tamimi, Hall and Holmes took place over an extended period, as Tamimi continued to pay them over the course of more than a year. Id. at ¶115. Throughout this period, Hall and Holmes were allegedly involved in making decisions that continued to benefit Tamimi as it received lucrative contracts from KBR. Id. at ¶116. Tamimi’s conduct was a substantial factor in sparking the government’s counterclaim as a matter of law, and, at least, a concurring cause of KBR’s damages. The trial court’s contrary decision is also against the great weight and preponderance of the evidence.

The trial court never properly focused on the conduct of Tamimi and its contractual breaches, or considered the foreseeability component of the proximate cause test. The possibility that a lower level KBR employee might accept kickbacks was certainly foreseeable to Tamimi. See, e.g. County of El Paso, Tex. v. Jones, No. EP-09-CV-000119-KC, 2009 WL 4730303 *11 (W.D. Tex. 2009) (not designated for publication) (“Because it is also foreseeable that Defendants’

conduct in offering bribes to Flores would lead to acceptance of the offer, the County has established proximate cause.”). In fact, the prohibition on kickbacks was expressly stated in the parties’ subcontracts. These subcontracts were reviewed by Shabbir Kahn (“Kahn”), who ran Tamimi as its chief of operations.

2RR75, 3RR26, 31. And it was Khan who was responsible for initiating the kickbacks. 3RR23, 27-28, 32, 39. Also see El Chico Corp. v. Poole, 732 S.W.2d 306, 314 (Tex. 1987) (recognizing that it is foreseeable that the sale of alcohol to a minor will result in the minor driving while intoxicated and causing injury to himself or others).

Mark Lowes, in-house counsel for KBR, was the only expert witness to testify as to KBR’s attorneys’ fees and the reason why they were incurred: Q: (Mr. Simms): And how did the offer of bribes to Terry Hall cause damages to KBR?

A: (Mr. Lowes): Well, but for that, we would haven’t had the counterclaim and we wouldn’t have had to defend. We would have only had the contract action.

3RR24.

Q: (Mr. Klasing): ….isn’t it true that the trigger for every single one of these causes of action,….is the fact that KBR employees actually took kickbacks from someone?

A: (Mr. Lowes): You and I have and I have had this semantic discussion before and I respectfully disagree. Our contract says you’re not going to make the offer, but for the offer, it’s impossible for anyone to accept it….

3RR80-81. Tamimi did not offer any witness to contradict this testimony. Also see 3RR53 (“…but for the bribe, which the government claimed tainted the contract, I wouldn’t have had to defend these actions.”). Because the court misinterpreted the “substantial factor” test to require KBR to disprove that Hall and Holmes’ conduct was also a reason for the government’s counterclaim, the judgment should be reversed.

B. Hall and Holmes’ Acceptance of Kickbacks Was Not An Intervening Cause That Vitiated Tamimi’s Liability.

Without expressly using the term “new and independent” (or superseding) cause, this Court and the trial court effectively decided that Hall and Holmes’ acceptance of the kickbacks absolved Tamimi of liability for the consequences of its breach. However, this inferential rebuttal theory has no applicability where the intervening forces are foreseeable and within the scope of the risk created by the defendant’s conduct.

A “new and independent cause” is one that intervenes between the original wrong and the final injury such that the injury is attributed to the new cause rather than the first and more remote cause. See Dew v. Crown Derrick Erectors, Inc., 208 S.W.3d 448, 450 (Tex. 2006). An intervening cause supersedes the defendant’s conduct and destroys the causal connection between that conduct and the plaintiff’s injury. Id. However, this Court and the trial court failed to recognize that if the intervening force was foreseeable, it is “considered to be a

concurring cause of the plaintiffs’ injuries and the defendant remains liable.” Id. at 451.

As the Texas Supreme Court noted in Dew, intervening forces are within the scope of the original risk created by the defendant’s misconduct: Obviously the defendant cannot be relieved from liability by the fact that the risk, or a substantial and important part of the risk, to which the defendant has subjected the plaintiff has indeed come to pass.

Foreseeable and intervening forces are within the scope of the original risk, and hence of the defendant’s negligence. The courts are quite generally agreed that intervening causes which fall fairly in this category will not supersede the defendant’s responsibility. Id. at 453. “Where the intervening act’s risk is the very same risk that renders the original actor negligent, the intervening act cannot serve as a superseding cause.” Id. Similarly, it is no defense to Tamimi’s liability that the acceptance of the kickbacks was a criminal act. Intentional criminal conduct is also not a superseding cause of injury where the criminal conduct is foreseeable. See Phan Son Van v. Peňa, 990 S.W.2d 751, 753 (Tex. 1999). As stated in the Restatement of Torts, [t]he act of a third person in committing an intentional tort or crime is a superseding cause of harm to another resulting therefrom, although the actor’s negligent conduct created a situation which afforded an opportunity to the third person to commit such a tort or crime, unless the actor at the time of his negligent conduct realized or should have realized the likelihood that such a situation might be created, and that a third person might avail himself of the opportunity to commit such a tort or crime.

Id. at 753, citing RESTATEMENT (SECOND) OF TORTS §448 (1965). Here, Tamimi’s conduct went well beyond being merely negligent—Tamimi intentionally committed a crime by offering a kickback and created a situation where that offer was accepted.

The Court effectively (but incorrectly) decided that Hall and Holmes’ acceptance of kickbacks relieved Tamimi of any responsibility for its breach, allowing Tamimi to breach its contracts with impunity. Although the trial court acknowledged the federal court of claims’ finding that knowledge of the kickbacks had not been imputed to KBR in the federal court proceeding (CR2591¶6, KBR Ex. 25; 3RR58), the court improperly decided that it was KBR’s acceptance of the kickbacks that caused the collateral litigation against KBR. The trial court, however, never made any finding that KBR was responsible for the illegal actions of Hall and Holmes, or that their conduct was authorized. See J & C Drilling Co. v. Salaiz, 866 S.W.2d 632, 636 (Tex. App.—San Antonio 1993, no pet.) (finding that claim of respondeat superior was waived where no evidence of course and scope of employment was presented). The trial court’s determination that KBR’s conduct, and not Tamimi’s, was the cause of KBR’s damages is in error.

C. The Court Improperly Construed The Federal Pleadings To State That The Counterclaim Was A Result of KBR’s Conduct Alone.

The Court’s affirmance of the trial court’s judgment is also in error because the lower court solely relied on the federal court counterclaim to decide that the lawsuit was caused by “KBR’s acceptance of the offer which triggered the litigation.” CR2592. However, the trial court disregarded the allegations throughout the petition that Tamimi’s repeated illicit payments to Hall and Holmes also served as a basis for the counterclaim.

The allegations in the counterclaim describe a course of payments Tamimi made over several years, after Hall initially declined the offer “but reported it to nobody.” See KBR Ex. 23, ¶114-116; App. Tab A. The pleadings further describe decisions for the “benefit of Tamimi as a KBR subcontractor” during the time the payments were made. Id. at ¶116. The government also alleged that these kickbacks resulted in “inflated contract prices from Tamimi for which KBR sought reimbursement.” Id. at ¶118. Any conclusion that the government filed its counterclaim purely based on Hall and Holmes’ acceptance of the kickbacks, belies the plain language of the pleadings.2 If the focus of the counterclaim was on KBR, it was because Tamimi, as a subcontractor, was not a party to that litigation. It is undisputed that Tamimi and

At the hearing on the motion for entry of judgment, the trial court stated that the basis for his judgment was that “the only actual evidence I had was the federal government saying that it was the acceptance of the offer and not the making of the offer that caused their lawsuit.” 1RR7. To the contrary, the pleadings state that the “counterclaims generally arise from the receipt of kickbacks by KBR employees from Tamimi Global Company.” KBR Ex. 23, ¶108 (emphasis added); 3RR 23. Nowhere do the pleadings state that Tamimi’s payments played no role in the litigation.

Khan were, in fact, separately prosecuted for their roles in the scheme. Tamimi was charged with conspiracy to pay kickbacks and conspiracy to pay gratuities.

4BRR at DX 11, ¶1. Tamimi entered into a Deferred Prosecution Agreement with the government (4BRR at DX 11) (App. Tab B), and Khan went to prison (4B RR at DX 16). As part of the Deferred Agreement, Tamimi expressly admitted that it was responsible for the “past crimes” and “unlawful conduct” of Khan in paying kickbacks to Hall and Holmes (described therein as “Person A”). 4BRR at DX 11, ¶4, 22, Attachment A, ¶1, 41-43; 3RR31, 35. Tamimi also agreed to pay a monetary penalty of $5.6 million. 4BRR at DX 11, ¶8. According to the agreement, Khan made the payments to Hall and Holmes “in order to ensure that [Tamimi] kept the DFAC subcontracts that it had, and to ensure that [Tamimi] would continue to get additional subcontracts as they became available.” Id. at ¶43.

The government’s counterclaim against KBR, as well as Tamimi’s plea agreement, unequivocally describe Tamimi’s pervasive role in paying illegal kickbacks to obtain subcontracts at inflated prices. The trial court and court of appeals’ decisions that the federal court litigation was only attributable to conduct of KBR is simply wrong.

II. Texas Law Allows for The Recovery of Attorneys’ Fees Incurred In Defending Foreseeable Litigation Caused By A Breach of Contract.

Although the trial court and this Court applied the “proximate cause” standard in this case, that test is not typically applied in a breach of contract dispute. See Abraxas Pet. Corp. v. Hornburg, 20 S.W.3d 741, 758 n.12 (Tex. App.—El Paso 2000, no pet.); Winograd v. Clear Lake City Water Auth., 811 S.W.2d 147, 156 (Tex. App.—Houston [1st Dist.] 1991, writ denied) (“While proximate cause must be proven in a tort action, it is not the causal standard applied in a suit for damages for breach of contract.”); see Michol O’Connor, O’CONNOR’S TEXAS CAUSES OF ACTION, ch. 5-B, §2.1 (2015 ed.). The Texas Supreme Court has indicated that the proper test for breach of contract is whether the damages “result from” the alleged breach. See McKnight v. Hill & Hill Exterminators, Inc., 689 S.W.2d 206, 209 (Tex. 1985). Even if this higher standard is applied,3 however, KBR was still entitled to recover its attorneys’ fees as a matter of law.

The requirement of foreseeability is a more severe limitation of liability than is the requirement of substantial or “proximate” cause in the case of an action in tort or for breach of warranty. See RESTATEMENT (SECOND) OF CONTRACTS §351 cmt. a (1981).

Even so, KBR should also prevail under the foreseeability test.

The Restatement (First) of Contracts §334 contemplates that attorneys’ fees incurred in the defense of collateral litigation caused by a defendant’s breach of contract are recoverable. The Restatement provides: If a breach of contract is the cause of litigation between the plaintiff and third parties that the defendant has reason to foresee when the contract was made, the plaintiff’s reasonable expenditures in such litigation are included in estimating damages.

See RESTATEMENT (FIRST) OF CONTRACTS §334 (1932) (emphasis added). As the Restatement recognizes, the key inquiry is the foreseeability of third party litigation expenses resulting from any breach. See Mead v. Johnson Group, Inc., 615 S.W.2d 685, 687 (Tex. 1981) (“In an action for breach of contract, actual damages may be recovered when loss is the natural, probable, and foreseeable consequence of the defendant’s conduct.”). A contracting party is expected to account for those risks that are foreseeable at the time the contract is made. See RESTATEMENT (SECOND) OF CONTRACTS §351 cmt. a, c.

Foreseeability is a fundamental prerequisite to the recovery of consequential damages for breach of contract. Basic Capital Management, Inc. v. Dynex Commercial, Inc., 348 S.W.3d 894, 901 (Tex. 2011). As the Texas Supreme Court has recognized: Consequential damages are those damages that result naturally, but not necessarily, from the defendant’s wrongful acts. They are not recoverable unless the parties contemplated at the time they made the contract that such damages would be a probable result of the breach.

Thus, to be recoverable, consequential damages must be foreseeable and directly traceable to the wrongful act and result from it.

Stuart v. Bayless, 964 S.W.2d 920, 921 (Tex. 1998) (per curiam) (internal citations omitted). Texas jurisprudence regarding the foreseeability requirement has been derived in part from Hadley v. Baxendale, in which the court recognized that: Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally, i.e. according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract as the probable result of the breach of it.

Basic Capital, 348 S.W.3d at 901, citing Hadley v. Baxendale, 9 Exch. 341, 156 Eng. Rep. 145, 151 (1854).

The Texas Supreme Court has specifically acknowledged the applicability of section 351 of the Restatement (Second) of Contracts in which the parameters for determining whether a loss is a foreseeable result of any breach is defined. See Basic Capital, 348 S.W.3d at 901-02. The Restatement provides: (1) Damages are not recoverable for loss that the party in breach did not have reason to foresee as a probable result of the breach when the contract was made.

(2) Loss may be foreseeable as a probable result of a breach because it follows from the breach a. in the ordinary course of events, or

b. as a result of special circumstances, beyond the ordinary course of events, that the party in breach had reason to know.

See RESTATEMENT (SECOND) OF CONTRACTS §351. If the contract is silent as to risks the defendant has assumed, courts will determine what risks were foreseen or foreseeable when the contract was made by viewing the matter in the light of common sense, considering the nature and purpose of the contract, the surrounding circumstances, and what liability the breaching party may reasonably have assumed. See 24 SAMUEL WILLISTON & RICHARD A. LORD, A TREATISE ON THE LAW OF CONTRACTS §64:13 (4th ed.).

In Basic Capital, the Texas Supreme Court, applying this test, reversed the court of appeals’ determination that lost profits a borrower claimed as consequential damages for breach of a commitment to provide financing were not foreseeable. Basic Capital, 348 S.W.3d at 902-03. The lender agreed to loan the borrower $37 million to acquire and rehabilitate three commercial buildings, if its other entities would borrow $160 million over a two year period. After loaning $37 million to acquire the buildings, however, the lender refused to provide further financing once interest rates rose. Id. at 897. The borrower claimed damages for lost profits, which the court of appeals disallowed. The Texas Supreme Court reversed the court of appeals’ determination that the borrower’s lost profits were not foreseeable. Id. at 901-02. The Court reasoned that the lender “cannot profess

blindness to foreseeability that its breach would also cost [the borrower] business.” Id. at 903.

Applying these principles here, there is no question that Tamimi’s breach of the contract precluding the offer of kickbacks was a cause of collateral litigation initiated by the government. As in Basic Capital, Tamimi cannot claim that it was unaware that if it breached the contract by offering kickbacks, those offers might be accepted (unbeknown to KBR). And it is certainly foreseeable that this illegal conduct might be discovered, and the perpetrators prosecuted. It is axiomatic that when a person commits a crime, the actor contemplates the possibility of getting caught. Tamimi, through Khan, knew it would breach the subcontracts and commit a crime by offering kickbacks, yet chose to do so anyway.

The context and purpose of the contract between Tamimi and KBR must also be considered in deciding whether KBR’s attorneys’ fees incurred in the collateral litigation are foreseeable. KBR retained Tamimi as a subcontractor to provide food services to the American troops during wartime in the Middle East.

3RR10-16. The parties certainly contemplated through the inclusion of the “anti- kickback” provision in the contract that such offers were a possibility—especially where the work was to be performed in a country experiencing lawlessness and political unrest. The subcontracts specifically prohibit “kickbacks” not only because they are illegal, but also to avoid the exact course of events that unfolded

here—that the government could decline to reimburse KBR for its payments to Tamimi, and the parties could face criminal prosecution.

KBR included an anti-kickback notice in each of its subcontracts in connection with the war effort in Iraq. 3RR17, 20. Certainly, KBR expected its subcontractors to adhere to this agreement, and expressly contracted for compliance. 3RR17. KBR maintains an active compliance program that is “part of its corporate culture.” 3RR35. KBR has written policies and procedures prohibiting kickbacks, and each employee participates in annual training to reinforce them. 3RR35. Similarly, KBR provides hotlines to allow employees to report potential violations of its corporate policies. 3RR36. The decisions of both the trial court and this Court render KBR’s compliance program and the parties’ anti-kickback provision—which expressly prohibits Tamimi from offering kickbacks—meaningless.

KBR was entitled to the recovery of attorneys’ fees because it was forced to defend itself in collateral litigation that arose from Tamimi’s breach of the contract and illegal conduct. The acceptance of any kickback offer was clearly foreseeable to Tamimi because it occurred “in the ordinary course of events,” or at the very least, occurred “as a result of special circumstances, beyond the ordinary course of events, that [Tamimi] had reason to know.” See RESTATEMENT (SECOND) OF CONTRACTS §351. The reasonably foreseeable consequences of a breach of

contract are compensable, “even if the criminal act of a third person intervened.”

See 24 SAMUEL WILLISTON & RICHARD A. LORD, A TREATISE ON THE LAW OF CONTRACTS §64:13 at n.44. This Court incorrectly determined that the acceptance of the kickback offers by KBR employees precluded KBR’s recovery of its attorneys’ fees. KBR respectfully urges the Court to reconsider that decision.

WHEREFORE, Appellees and Cross-Appellants Kellogg Brown & Root, L.L.C., Kellogg Brown & Root International, Inc., and Kellogg Brown & Root Services, Inc. respectfully requests that the Court grant this Motion for Rehearing, and for such other and further relief to which they may show themselves to be justly entitled to receive.

Respectfully submitted, PORTER HEDGES LLP By: /s/ Lauren Beck Harris Lauren Beck Harris State Bar No. 02009470 Nicholas A. Simms Kerry M. McMahon David W. Salton 1000 Main Street, 36th Floor Houston, Texas 77002 Telephone: (713) 226-6624 Facsimile: (713) 226-6224 Attorneys for Appellees and Cross- Appellants Kellogg Brown & Root, L.L.C., Kellogg Brown & Root International, Inc., and Kellogg Brown & Root Services, Inc.

CERTIFICATE OF SERVICE Pursuant to Rules 6.3 and 9.5(b), (d), and (e) of the Texas Rules of Appellate Procedure, this is to certify that on this 23rd day of November 2015, a true and correct copy of the foregoing was served on the following counsel of record by U.S. first class mail and by electronic delivery as follows: Murphy S. Klasing Weycer, Kaplan, Pulaski & Zuber, P.C.

11 Greenway Plaza, Suite 1400 Houston, TX 77046 Attorneys for Appellant Tamimi Global Company Ltd. /s/ Lauren B. Harris Lauren B. Harris

CERTIFICATE OF COMPLIANCE 1. This brief complies with the type-volume limitation of Texas Rule of Appellate Procedure 9.4(i)(2)(D) because this brief contains 4,274 words, excluding the parts of the brief exempted by Texas Rule of Appellate Procedure 9.4(i)(1).

2. This brief complies with the typeface requirements of Texas Rule of Appellate Procedure 9.4(e) and the type style requirements of Texas Rule of Appellate Procedure 9.4(e) because this brief has been prepared in a proportionally spaced typeface using Microsoft Word in 14-point Times New Roman font or larger.

/s/ Lauren B. Harris Lauren B. Harris

APPENDIX A Case 1:09-cv-00351-CCM Document 47 Filed 03115)11 Page 1 of 26

IN THE UNiTED STATES COURT Of FEDERAL CLAIMS KELLOGG BROWN & ROOT SERVICES, ) INC., ?laintiff, ) v. ) No. 09-351C ) (Judge Christine Miller) THE UNITED STATES, ) ) Defendant ) DEFENDANT’S AMENDED ANSWER AND COUNTERCLAIMSt For its amended answer to plaintiff’s complaint, defendant admits, denies, and alleges as follows: The allegations contained in the first sentence of the first paragraph of plaintiffs “Introduction” are plaintiffs characterization, of its case, to which no response is required; to the extent that they may be deemed allegations of fact, they are denied. Admits the allegations contained in the second sentence of the first paragraph of plaintiffs “Introduction” to the extent supported by the referenced contract, which is the best evidence of its contents; otherwise denies the allegations. Admits the allegations contained in the third sentence of the first paragraph of plaintiffs “Introduction.”

Denies the allegations contained in the first sentence of the second paragraph of plaintiff’s “Introduction” for lack of knowledge or information sufficient to form a belief as to their tmth. The remainder of the allegations contained in the second paragraph of plaintiffs

Although we made earlier filings in this case related to the potential affirmative defenses and fraud counterclaims under seal because of the pendency of Mr. Terry Hall’s testimony in a criminal case, this filing is not made under seal because Mr. Hall’s testimony in that case has been completed and there is no longer any need to keep the information contained herein confidential.

KBRPRODOO58839 Case I :09-cv-00351-CCM Document 47 Filed 03/15/11 Page 2 of 26

“Introduction” constitute plaintiff’s characterization of its case and conclusions oflaw, to which no response is required; to the extent that they may be deemed allegations of fact, they are denied.

The allegations contained in the third paragraph of plaintiffs “Introduction” constitute plaintiffs characterization of its case and conclusions of law, to which no response is required; to the extent that they may be deemed allegations of fact, they are denied.

1. Denies the allegations contained in paragraph 1 for lack of knowledge or information sufficient to form a belief as to their truth.

2. The allegations contained in paragraph 2 are plaintiff’s characterization of its case, to which no response is required; to the extent that they may be deemed allegations of fact, they are denied.

3. The allegations contained in paragraph 3 are conclusions of law to which no response is required; to the extent that they may be deemed allegations of fact, they are denied.

4. Admits the allegations contained in paragraph 4 that, on July 17,2008, plaintiff filed a claim with Ms. Mendoza to the extent supported by the referenced claim document, which is the best evidence of its contents; otherwise denies the allegations.

5. The allegations contained in paragraph 5 are conclusions of law to which no response is required; to the extent that they may be deemed allegations of fact, they are denied.

6. Admits the allegations contained in paragraph 6 to the extent supported by the referenced notification document, which is the best evidence of its contents; otherwise denies the allegations.

KBRPRODOO5884O Case I :09-cv-00351-CCM Document 47 Filed 03/15/11 Page 3 of 26

7. Avers that the referenced letter from the Administrative Contracting Officer was dated November 25, 2008, but other wise admits the allegations contained in paragraph? to the extent supported by the referenced letter, which is the best evidence of its contents; otherwise denies the allegations.

8. Admits the allegations contained in paragraph 8 to the extent supported by the referenced notification document, which is the best evidence of its contents; otherwise denies the allegations.

9. Admits the allegations contained in paragraph 9 to the extent supported by the referenced notification document, which is the best evidence of its contents; otherwise denies the allegations.

10. The allegations contained in paragraph 10 are conclusions of law to which no response is required; to the extent that they maybe deemed allegations of fact, they are denied.

11. Admits the allegations contained in paragraph 11 to the extent supported by the referenced contract, which is the best evidence of its contents; otherwise denies the allegations.

12. Admits the allegations contained in paragraph 12 to the extent supported by the referenced novafion document, which is the best evidence of its contents; otherwise denies the allegations.

13. Admits the allegations contained in paragraph 13 to the extent supported by the referenced contract, which is the best evidence of its contents; otherwise denies the allegations.

14. Admits the allegations contained in paragraph 14 to the extent supported by the referenced contract, which is the best evidence of its contents; otherwise denies the allegations.

KBRPRODOO5884I Case I :09-cv-00351 -CCM Document 47 Filed 03/15/11 Page 4 0126

15. Admits the allegations contained in paragraph 15 to the extent supported by the referenced contract, which is the best evidence of its contents; otherwise denies the allegations.

16. Admits the allegations contained in paragraph 16 to the extent supported by the referenced task order, which is the best evidence of its contents; otherwise denies the allegations.

17. Admits the allegations contained in paragraph 17 to the extent supported by the referenced task order, which is the best evidence of its contents; otherwise denies the allegations.

18. Admits, 19. Admits, 20. Admits the allegations contained in paragraph 20 that, on occasion during the performance of Task Order 59, some roads in Iraq were closed due to hostilities and contractors in Iraq were sometimes the targets of insurgent activities. The allegations in this paragraph relating to the means of performing the contract are admitted to the extent supported by the contract task order, which is the best evidence of its contents; otherwise denies the allegations.

Denies all other allegations contained in this paragraph.

21. The allegations contained in paragraph 21 are plaintiffs characterization of its case, to which no response is required and are so vague that they are not susceptible to responsive pleading; to the extent that they may be deemed allegations of fact, they are denIed.

22. Admits the allegations contained in paragraph 22 to the extent supported by the referenced task order, which is the best evidence ofits contents; otherwise denies the allegations.

23. The allegations contained in paragraph 23 are conclusions of law to which no response is required; to the extent that they may be deemed allegations of fact, they are denied.

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24. The allegations contained in paragraph 24 are conclusions of law to which no response is required; to the extent that they may be deemed allegations of fact, they are denied.

25. Admits the allegations contained in paragraph 25 to the extent supported by the referenced task order, which is the best evidence of its contents; otherwise denies the allegations.

26. Admits.

27. Admits the allegations contained in paragraph 27 to the extent supported by the referenced task order modification, which is the best evidence of its contents; otherwise denies the allegations.

28. Admits the allegations contained in the first sentence of paragraph 28 to the extent supported by the referenced statement of work, which is the best evidence of its contents; otherwise denies the allegations. Admits the allegations contained in the second sentence of paragraph 28.

29. Admits the allegations contained in paragraph 29 to the extent supported by the referenced statement of work, which is the best evidence of its contents; otherwise denies the aliegations.

30. Admits.

31. Denies the allegations contained in paragraph 31 for lack of knowledge or information sufficient to form a belief as to their truth.

32. The allegations contained in paragraph 32 are ambiguous and plaintiffs characterization of its case, to which no response is requfred to the extent that they may be deemed allegations of fact, they are denied.

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33. Denies the allegations contained in paragraph 33 for lack of knowledge or information sufficient to foma a belief as to their tiuth.

34. Admits.

35. Admits.

36. Admits the allegations contained in paragraph 36 to the extent supported by the referenced agreement, which is the best evidence of its contents; otherwise denies the allegations.

37. Admits the allegations contained in paragraph 37 to the extent supported by the referenced “work release,” which is the best evidence of its contents; otherwise denies the allegations.

38. Admits the allegations contained in paragraph 38 to the extent supported by the referenced “revised work release,” which is the best evidence of its contents; otherwise denies the allegations.

39. The allegations contained in paragraph 39 are conclusions of law to which no response is required; to the extent that they may be deemed allegations of fact, they are denied.

40. Admits the allegations contained in paragraph 40 to the extent supported by the referenced “Tamimi Subcontract” which is the best evidence of its contents; otherwise denies the allegations.

41. Admits the allegations contained in paragraph 41 to the extent supported by the referenced modification to ‘MA3, which is the best evidence of its contents; otherwise denies the allegations.

42. AdmitS the allegations contained in paragraph 42 to the extent supported by the referenced “Tamimi Subcontract” which is the beet evidence of its contents; otherwise denies the

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allegations.

43. Admits the allegations contained in paragraph 43 that facilities were constructed at Camp Anaconda at sites A-I and A4 by Prime Projects International. Denies the remainder of the allegations contained in paragraph 43 for lack of knowledge or information sufficient to form a belief as to their truth.

44. The allegations contained in paragraph 44 are ambiguous and plaintiffs characterization of its case, to which no response is required; to the extent that they may be deemed allegations of fact, they are denied.

45. Denies the allegations contained in paragraph 45 for lack of knowledge or information sufficient to form a belief as to their truth.

46. Denies the ailegations contained in paragraph 46 for lack of knowledge or information sufficient to form a belief as to their truth.

47. Admits the allegations contained in paragraph 47 to the extent supported by the referenced change order which is the best evidence of its contents; otherwise denies the allegations.

48. Denies the allegations contained in paragraph 48 for lack of knowledge or information sufficient to form a belief as to their truth.

49. Admits the allegations contained in the first sentence of paragraph 49 to the extent supported by the referenced change order which is the best evidence of its contents; otherwise denies the allegations. Denies the allegations contained in the seconds sentence of paragraph 49 for lack of knowledge or information sufficient to form a belief as to their truth.

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50.

50. Denies.

51. the allegations 51. Admits the 51, regarding the contents of plaintiff’s allegations contained in paragraph 51, plaintiff's "RFP" theextent to the “RPP” to supportedby extentsupported the referenced bythe referenced document, document, which is the best evidence of its evidence of contents; otherwise the allegations. denies the otherwise denies allegations. Denies the remainder of contained in of the allegations contained paragraph 51 paragraph lack of for lack for knowledge or ofknowledge or information information sufficient to forra form a belief to their truth. belief as to 52. Admits the 52. aUegation contained the allegation responded contained in paragraph 52, that Tamimi and others responded to the "RFP." Deniesthe “RFP.” Denies remainderof theremainder ofthe the allegation allegation contained contained in paragraph 52.

53.

53. Admits the allegations contained the allegations in the first sentence of containedin the extent of paragraph 53 to the supported by the supported by the referenced change order referenced change order which is the best evidence of otherwise of its contents; otherwise denies the allegations.

54. Admits the 54. the allegations contained in paragraph 54 to the extent supported by the allegations contained referenced change change order which is order which is the best evidence of of its contents; otherwise denies the allegations. allegations.

55. Admits the 55. allegations contained the allegations supported by the contained in paragraph 55 to the extent supported referenced referenced change change order order which which is the the best best evidence evidence of denies the of its contents; otherwise denies allegations.

56, Admits the 56. the allegations contained in allegations contained in paragraph 56 to the extent supported by the referenced referenced change change order order which is the best evidence which is of its contents; otherwise denies the evidence of allegations.

57. Admits the 57. allegations contained the allegations contained in supported by the in paragraph 57 to the extent supported referenced change change order order which is is the best evidence of the of its contents; otherwise denies the allegations.

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58. Denies the allegations contained in paragraph 58 for lack of knowledge or information sufficient to form a belief as to their truth.

59. Admits the allegations contained in paragraph 59 that plaintiff solicited and received proposals from vendors for the recruitment and transportation of laborers to Camp Anaconda.

Denies the remainder of the allegations contained in paragraph 59 for lack of knowledge or information sufficient to form a belief as to their truth.

60. Admits the allegation contained in paragraph 60 that plaintiff awarded a subcontract to “ESS” in August 2004 to provide labor. Denies the remainder of the allegations contained in paragraph 60 for lack of knowledge or information sufficient to form a belief as to their truth.

61. Denies the allegations contained in paragraph 61 for lack of knowledge or information sufficient to form a belief as to their truth.

62. Admits the allegations contained in paragraph 62 to the extent supported by the referenced change order which is the best evidence of its contents; otherwise denies the allegations.

63. Denies the allegations contained in paragraph 63 for lack of knowledge or information sufficient to form a belief as to their truth.

64. Admits the allegation contained in paragraph 64 that plaintiff terminated its subcontract with ESS. Denies the remainder of the allegations contained in paragraph 64 for lack of knowledge or information sufficient to form a belief as to their truth.

65. Denies the allegations contained in paragraph 65 for lack of knowledge or information sufficient to form a belief as to their truth.

.Vc.

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66. Denies the allegations contained In paragraph 66 for lack of knowledge or information sufficient to form a belief as to their truth.

67. Denies the allegations contained in paragraph 67 for lack of knowledge or information sufficient to form a belief as to their truth.

68. Admits the allegations contained in the second sentence of paragraph 68 that Tamimi continued to perform its contract with plainti during negotiations. Denies the allegations contained in paragraph 68 for lack of knowledge or information sufficient to form a belief as to their truth.

69. Denies the allegations contained in paragraph 69 for lack of knowledge or information sufficient to form a belief as to their truth.

70. Admits the allegations contained in paragraph 70 to the extent supported by the referenced contract modification which is the best evidence of its contents; otherwise denies the allegations for lack ofknowledge or information sufficient to form a belief as to their truth.

71. Admits the allegations contained in paragraph 71 to the extent supported by the referenced change orders which are the best evidence of their contents; otherwise denies the allegations.

72. Denies the allegations contained in paragraph 72 because the phrase, “substantially based upon” is ambiguous and for lack of knowledge or information sufficient to form a belief as to their truth.

73. Admits the allegations contained in paragraph 73 to the extent supported by the referenced change order which is the best evidence of its contents; otherwise denies the allegations.

10•

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74. Denies.

75. The allegations contained in paragraph 75 are plaintiffs characterization of its case, to which no response is required; to the extent that they may be deemed allegations ofct, they are denied.

76. The allegations contained in paragraph 76 are ambiguous and plaintiffs characterization of its case, to which no response is required; to the extent that they may be deemed allegations of fact, they are denied.

77. The allegations contained in paragraph 77 are ambiguous and plaintiff’s characterization of its case, to which no response is required to the extent that they may be 4eemed allegations of fact, they are denied.

78. The allegations contained in paragraph 78 are ambiguous and plaintiffs characterization of its case, to which no response is required to the extent that they may be deemed allegations of fact, they arc denied.

79. Denies the allegations contained in paragraph 79-for lack of knowledge or information sufficient to form a belief as to their truth.

20. Admits the allegations, contained in paragraph 80, that plaintiff provided vouchers to the Government, that included statements of amounts paid to Tamimi pursuant to Task Order 59.

Denies the remainder of the allegations contained in paragraph 80 for lack of knowledge or information sufficient to form a belief as to their truth.

81. Admits. -

82. Admits.

83. Admits the allegations contained in paragraph 83 to the extent supported by the

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referenced audit report which is the best evidence of its contents; otherwise denies the allegations.

84. Admits.

85. Admits the allegations contained in paragraph 85 to the extent supported by the referenced DCAA form lwhich is the best evidence of its contents; otherwise denies the allegations.

86, Admits the allegations contained in paragraph 86 to the extent supported by the referenced DCAA form lwhich is the best evidence of its contents; otherwise denies the allegations.

87. The allegations contained in paragraph $7 are plaintiffs characterization of its case, to which no response is required; to the extent that they may be deemed allegations of fact, they are denied.

88. Admits the allegations contained in paragraph 88 to the extent supported by the referenced DCAA Form lwhich is the best evIdence of its contents; otherwise denies the allegations.

89. Admits the allegation contained in paragraph 89, that the “PCO” has withheld $41,070,624 from plaintifl The remainder of the allegations contained in paragraph 89 are plaintiff’s characterization of its case, to which no response is required; to the extent that they may be deemed allegations of fact, they are denied.

90. Defendant incorporates by reference its responses to the allegations of paragraphs 1 through 89 of the complaint.

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91. The allegations contained in paragraph 91 are conclusions oflaw and plaintiffs characterization of its case, to which no response is required; to the extent that they may be deemed allegations of fact, they are denied.

92. The allegations contained in paragraph 92 are conclusions of law and plaintiffs characterization of its case, to which no response is required; to the extent that they may be deemed allegations of fact, they are denied.

93. Admits the allegations contained in paragraph 93 to the extent supported by the referenced regulation, which is the best evidence of its contents; otherwise denies the allegations.

94. The allegations contained in paragraph 94 are conclusions of law and plaintiff’s characterization of its case, to which no response is required; to the extent that they may be deemed allegations of fact, they are denied, 95. The al]egations contained in paragraph 95 are conclusions of law and plaintiff’s characterization of its case, to which no response is required; to the extent that they may be deemed allegations of fact, they are denied.

96. Denies.

97. The allegations contained in paragraph 97 are conclusions of law and plaintiffs characterization of its case, to which no response is required; to the extent that they may be deemed allegations of fact, they are denied.

98. The allegations contained in paragraph 98 are conclusions of law and plaintiffs characterization of its case, to which no response is required; to the extent that they may be deemed allegations of fact, they are denied.

‘3

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contabed in paragraph 99 99. The allegations contained 99. 99 are conclusions of law and plaintiff’s plaintiff's characterization characterization of its case, of its case, to which no response is required; to the extent to which that they may be extent that deemed allegations deemed allegations of fact, they offact, are denied. they are 100. The 100. allegations contained The allegations 10 are conclusions of law and plaintiff’s contained in paragraph 10 plaintiff's characterization of characterization its case, of its to which case, to no response which no response isis required; to the extent to the that they extent that may be they may deemed allegations of deemed allegations offact, they are fact, they are denied. denied.

101. Denies 101. that plaintiff Denies that plaintiffis is entitled entitled to the relief set forth in the prayer for relief relief set relief immediately following immediately paragraph 100, following paragraph 100, or reliefwhatsoever. any relief or to any whatsoever.

and every each and 102. Denies each 102. previously admitted or otherwise qualified. every allegation not previously

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DEFENDANT’S FIRST AYFIRiv1JJIVE DEFENSE 103. Plaintiff’s claim is unenforceable because of the taint of”ldckbacks,” DEFENDANT’S COUNTERCLAIMS 104. These counterclaims arise pursuant to the Special Plea in fraud, 28 U.S.C. § 2514, the Anti-Kickback Act, 41 U.S.C. § 53, 55, the False Claims Act, 31 U.S.C. S 3729, and under common law fraud.

105. The Court possesses jurisdiction pursuant to 28 U.S.C. § 1503 and 2508.

106. Defendant and counterclaim plaintiff is the United $tate.

107. Plaintiff and counterclaim defendant is Kellogg Brown & Root Services, Inc. (“KBR”). V

108. These counterclaims generally arise from the receipt of kickbacks by KBR employees from Tamimi Global Company (“Tamimi”). The two KBR employees most directly implicated in this case are Mr. Terry Hall, who was KBR’s head of food services for Kuwait and fracj from late 2002 through early 2004, and Mr. Luther Holmes, his deputy. Mr. Hall and Mr. Holmes were both receiving kickbacks from a high-level Tamimi employee at the same time that they were making decisions and recommendations that ensured that Tarnimi would obtain lucrative dining facility (9)FAC”) subcontracts from KBR pursuant t the LOGCAP Ut contact for which KBR would be reimbursed by United States taxpayer dollars along with a fee determined by the subcontract costs. These actions resulted in, among other things, the submission of falsely inflated and fraudulent claims to the contracting officer for payment from the United States Treasury.

V

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109. October 2002, Mr. Hail 109. In October Hall was was assiied assigned to to Kuwait Kuwaitby byKBR.

KBR. Mr. Mr. Hall’s Hall's respcnsibiities included responsibilities being the included being the Regional Services Manager Regional Food Services Manager for for Kuwait Kuwait (and (and Iraq, subsequent to its subsequent its invasion invasion by by Coalition forces) under the LOGCAP m Coalition forces) III contract. contract. The The Regional Food Services Manager food Services his staff and his Manager and staff were responsible for, among other things, ensuring that subcontractors providing subcontractors providingDFAC DFAC services services for for KBR, KBR, as as required required by by task task orders orders upon upon the the LOGCAP LOGCAP Ill contract, were technically competent to perform such services; were responsible for helping La craft statements of ofwork work for for subcontractors subcontractors providing DFAC OFAC services; services; were were responsible responsible for formally requisitioning requisitioningDFAC DFAC services services (including (including estimnting estimating the the costs costs of ofsuch such services) services) from from the KBR subcontractingstaff; KER subcontracting staff; and were responsible and were for overseeing responsible for overseeing performance of DFAC performance of OFAC subcontracts. subcontracts.

110. In early 110. early 2003, 2003, Mr. Mr. Hall Hall was was joined in in Kuwait Kuwait by by his his newly-hired newly-hired deputy, deputy, Mr. Luther Holmes.

111. One of 111. ofthe the DFAC subcontractors Hall was Tarnimi subcontractors supervised by Mr. Hail Atthe Tamimi. At lime the time that Mr. Hall arrived arrived in Kuwait, Tamimi in Kuwait, Tamimi was was already services related to the already providing DFAC services LOGCAP Ill III contract as as aa KBR KBR subcontractor subcontractoratatCamp CampArian, Arian, Kuwait.

Kuwait 112. Due to 112. to an an electrical the Camp electrical fire at the Camp Ariau Arian DFAC, OFAC,caused causedthrough through the fault of Tamimi, Mr. Hall Hail and and his his superiors superiors at at KBR KBR contemplated KBR’s subcontract contemplated terminating KBR's subcontract with Tamimi in November November 2002.

2002. They ultimatelychose Theyultimately chose to continue to to continue to subcontract TamimL subcontract with Tamimi.

113. Through the 113. the performance of his duties and his dealings with his dealings with Tamimi, Tamimi, Mr. Hall socialize with Tamimi's came to know and socialize Tamimi’s chief ofoperations chiefof and vice operations and president, Mr. vice president, Mohammad Shabbir Shabbir Khan.

Khan,

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114. In November 2002, Mr. Khan first offered a kickback to Mr. Hall, stating that the two could “make a lot of money together.” Mr. Hall accepted no money from Mr. Khan during this conversation, but reported it to nobody.

115. At some point in late 2002 or early 2003, Mr. Hall began taking money from Mr. Kiaan. Mr. Hall understood that the money was being provided so that Tamimi would remain in KBR’s good graces and continue to get DPAC contracts from KBR. The money provided to Mr. Hall first took the form of $5,000 in cash that Mr. Khan had delivered to him at the airport in Kuwait prior to ins departure on a vacation in 2003. Mr. Khan. caused $5,000 in cash to be delivered to Mi. Holmes at the airport at the same time. Mr. Klan also gave Mr. Hall an automated teller machine (“ATM”) card that could be used to access a bank account into which Mr. Klan had placed $5,000. Mr. Hall used the ATM card to withdraw approximately $3,500 in cash from the bank account Mr. Holmes was also given access to the account by Mr. Khan, and withdrew the remaining $1,500 from the account Mr. Holmes was also given $10,000 or more in cash by Mr. Klan, which he gave to his secretary. Near the end of2003, Mr. Klan gave Mr. Hall $20,000 which was ostensibly to be used as an investment in a “Golden Corral” restaurant, although Mr. Hail did not, in fact, make such an investment with Mr. Klan’s money, nor did Mr. IChan ever request that it be paid back.

116. During the time that Mr. Holmes and Mr. Hall were receiving money from Mr. Klan, they were involved in decisions that were made to the benefit of Tamimi as a KBR subcontractor. In Yune 2003, KBR convened a board to determine which local contractors would be awarded “master agreement” suboontacts to perform DFAC services for KBR pursuant to the LOOCAP UI contact. Once KBR awarded a “master agreement” to a contractor, it intended to

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“workreleases" issue "work releases”upon the master uponthe masteragreement agreement as as means to to order order DFAC DFAC services services at particular Contractorsnot locations. Contractors notawarded awardedmaster masteragreements agreements would would not not be be eligible eligible for for subcontracts subcontracts to operate operate DFACs OFACs for for KBR.

KBR 117.

117, Mr. Holmes and and Mr. Hall were amongst the KBR employees who sat sat upon the board to determine board to determine which which contractors contractors would be awarded master agreements. agreements. As As Regional Regional Food Manager for Services Manager for KBR, KER, had Mr. Mr. Hall Hail objected objected to the award award of of a master master agreement agreement to a would have been highly unlikely that contractor, it would that such such an award award would would be be made. made. Tamimi and five other contractors were other contractors were awarded awarded master master agreements; agreements; the the board decided decided not not to to award award master several other agreements to several other contractors that sought them. The The master masteragreement agreement awarded awarded to Tamimi was known known as as "Master “Master Agreement 3." 3.”

118.

118. KBR issued multiple work work releases upon Master Agreement 3 to obtain DFAC in response services in response to orders issued upon the LOGCAP UI task orders to task M contract. The relevant LOGCAP The relevant L._ M UI task orders were task orders TaskOrder wereTask Order 59, 59, which which was was issued in in August August 2003, but effective from June but effective 2003 through through April April 2005, 2005, and and Task Task Order Order 89, 89, which which covered covered services services from May 2005 from May 2005 through August 2006. All told1Tamimi Mltold, Tamimibilled blUedand andKBR KBRpaid approximately$466,290,328 paidapproximately $466,290,328 upon all of the all of work releases for for Master Master Agreement 3. KBR KBRregularly regularly submitted submitted vouchers vouchers to to the United States seeking seeking reimbursement reimbursement for these amounts for these amounts as as direct direct costs, costs, plus plus aa base base fee of11 percent fee of percent of of direct costs (also (also referred referred to to as as "definitized “definitized costs"), costs”), and and an an award award fee fee of ofup up to to two percent of two percent of direct costs, plus a fee for for indirect indirect costs. Mr. Mr. Hall Hailand and Mr. Mr. Holmes Holmes knew, knew, when when they accepted their they accepted kickbacks from from Mr. Mr. Khan, Khan, that that KBR KBR would would file file vouchers with with the States seeking the United States reimbursement reimbursement for any any Tamimi subcontracts as set forth above. above. Mr. Mr. Hall and Mr. Holmes also Hall and knew or or had reason reason to to know know that that the the kickbacks kickbacks that that they they received received would inflated contract lead to inflated would lead

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prices from Tamimi.

119. When ICBR was tasked by the Army to take over performance of DFAC services at Camp Anaconda, Iraq, KBR decided to continue to utilize Tainimi, which was the incumbent contractor for the Army at Camp Anaconda. This decision was, in the initial instance, made, at the urging of Mr. Hall and Mr. Gatlin, by Mr. Daniel Petsche, who was a LOGCAP m subcontracts administrator for KBR, responsible for LOGCAP Ill subcontracting in Iraq. Mr. Petsche did not possess the authority from KBR to commit the company to more than a certain amount of spending on a particular subcontract, but he could make provisional decisions to agree to certain subcontracts and then seek ratification from superiors at KBR wIth the proper authority to commit the company to the larger contractual amounts. Mr. Petsche did not possess the authority to commit KBR to the contractual amounts that would be necessary for the Camp Anaconda OFAC contract.

120. Mr. Petsche made the decision to acquiesce to the award of the Camp Anaconda subcontract to Tamlini based in large part upon the pressure supporting the award that he received from Mr. aafl. Indeed, Mr. ?etsche had contemplated having the Camp Anaconda DFAC subcontract be awarded to a different subcontractor than Tamimi, but changed his mind based upon the advocacy for Tamimi that he received from Mr. Hail, 121. Mr. Hall’s strong advocacy on behalf of Tamimi, and the support given to Mr. Hail’s positions by Mr. Hall’s direct supervisor, Mr. Robert “Butch” Gatlin, influenced Mr. Petsche’s decision-maldng relating to TamimI at Camp Anaconda and elsewhere. Additionally, Mr. Hall ‘rote and signed the memorandum for the KBR procurement file justifying the sole- source award to Tamimi of the DFAC subcontract at Camp Anaconda.

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122.

122. Work Release 33 of Master Master Agreement Agreement 33 was was the the contractual contractual vehicle vehicle by by which which KBR KBR obtained DFAC services from from Tamimi at Camp Anaconda, Iraq from August 2003 2003 through December 2005. Tamimi Tamimibilled billedand and KBR KBR paid paid approximately approximately $307,630,344 upon Work Release of Master Agreement 3. KBR KBR then then sought sought and obtained payment of the $307,630,344, plus and obtained plus base and award fees and fees for indirect costs, from the United States.

States.

123.

123. In In late late December 2003 2003 Mr. Mr. Petsche was flred fired by for receiving a gift from a by KBR for subcontractor not Tamimi february2004, Tarnimi. InInFebruary shortlyafter 2004, shortly after his his termination, termination, Mr. Petsche was was contacted by KBR employee David David Hadcock.

Hadcock. Mr. Hadcock had been reviewing reviewing KBR’s KBR's Camp Camp Anaconda DFAC procurement procurement files and and was searching for both an authorization and justification justification for the cost of of Master Agreement 3, Work Release 3.

3.

124.

124. Mr. Mr. Petsohe Petsche discussed the matter briefly with Mr. Hadcock on the telephone and Mr. Hadoock Hadoock at sent a follow-up e-mail to Mr. Hadcock at his his request Petsche stated that he request. In the e-mail, Mr. Petsohe had previously referred to the Anaconda DFAC as, “the "the mother of all DEAC deals” because DFAC drug deals" surrounding it. of all of the irregularities surrounding it. In Mr: Petsche’s words, the Anaconda OFAC Mr. Petsche's DFAC was was "predestined “predestined and out of the start.” from the of control from start." Mr. Mr. Petsche Tamimi's pricing for the Petache wrote that Tamimi’s the Anaconda DFAC was "very “very close close to to the [amount amount in. the internal in the internal KBR requisition," which Mr. KBR] requisition,1’ Mr. Petsche had thought Petsohe thought indicated indicated that been previously agreed to by that the deal had been others from by others from KBR KBR and Tamimi, but that he had bad chosen not to to question question it Mr. Petsche further wrote that he had it. Mr. drafted a work release to effect this agreement, but had not signed it because he felt that he needed more data to justify justify its expense. expense. Mr. Mr. Petsche explained the Petsche explained of a signed work release the lack of and price justification justification memorandum by by writing, writing, “I "I did not execute did not execute the the Work Release. I did not WorkRelease.

do a Price Reasonableness do write-up on Reasonableness write-up it. II could on it not present it with the data and support II had.” could not had."

—.-..-----,

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Mr. Petsche added that, “[t]liere is a whole lot more to this story” and suggested that similar irregularities could be found in other Tamimi subconftacts with KBR.

125. Upon receipt of Mr. Petsehe’s e-mail, Mr. Hadoock forwarded it to Mr. William Jonas, head of procurement for KBR, and Mr. Charlie Carr, the head of KBR’s ‘DEAC team,” which, by that time, had oversight of all DFACS in Kuwait and Iraq. Neither Mr. Hadoock, Mr. Jonas, Mr. Carr, nor any other KBR employee took any action based upon Mr. Petsche’s e-mail or the allegations contained therein. No KBR employee ever conveyed Mr. Petsohe’s concerns (or any of their own) regarding the Camp Anaconda and other Tamimi contacts to any representative of the United States Government. In March 2004, after Ms receipt of Mr. Petsche’s e-mail and after his forwarding of the e-mail to Mr. Jonas and Mr. Carr, Mr. Hadcock wrote a memorandum purporting to justify the costs for Master Agreement 3, Work Release 3.

Only after Mr. Hadoock’s memorandum was Master Agreement 3, Work Release 3 officially ratified by KBR officials with the authority to do so. 126. The original period of performance for Master. Agreement 3, Work Release 3 concluded in March 2004. Through the issuance of change orders, KBR extended the period of performance of Master Agreement 3, Work Release 3 through December 31, 2005.

Count I Special Plea In fraud—28 U.S.C. 2514 127. The United States incorporates by reference the allegations set forth in paragraphs through 126 above.

12$. Pursuant to 28 U.S.C. § 2514, defendant’s special plea in fraud seeks the forfeiture of the plaintiff’s claim in this action.

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129. The special plea in fraud statute, 28 U.S.C. § 2514, mandates, inter a/ia, the forfeiture of any claim asserted against the United States where fraud is practiced or attempted against the Government in inducing the Government to enter the contract, during performance of the contract, or in the proof or statement of a claim against the Government.

130. Performance of the LOGCAP Ill contract, in particular Task Orders 59 and 89. under which KBR was compensated for the costs of work performed under the various work releases of Master Agreement 3, was tainted by the fraud of the kickbacks received by KBR’s employees, Mr. Hall and Mr. Holmes, when they sat upon the board that awarded Master Agreement 3 and when they took actions to encourage the issuance of Work Release 3 to Master Agreement 3 to Tamimi for work at Camp Anaconda.

131. Accordingly, pursuant to 28 U.S.C. § 2514, plaintiff’s claim in this action is subject to forfeiture in its entirety.

Count U Anti-Kickback Act—41 U.S.C. § 53,55 132. The United States incorporates by reference the allegations set forth in paragraphs through 131 above.

133. The Anti-Kickback Act, 41 U.S.C. § 53, 55, prohibits employees of Government contractors from accepting “kickbacks” from subcontractors and establishes penalties for persons who iciowingly violate the Act and for companies that violate the Act. A “kickback’ is payment of money or a thing of value for the purpose of obtaining or rewarding favorable treatment of the subcontractor by the prime contractor.

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134. By virtue of accepting funds from Mr. Khan in return for their favorable treatment of Tamimi and in reWard of that treatment, Mr. Holmes and Mr. Hall both violated the Anti Kickback Act.

135. The violations of the Anti-Kickback Act by Mr. Hall and Mr. Holmes are attributable to KBR because the two were acting as KBR’s agents at the time that they accepted the kickbacks.

Count UI False Claims Act—31 U.S.C. § 3729(a)(1) 136. The United States incorporates by reference the allegations set forth in paragraphs through 135 above.

137. KBR knowingly presented and caused to be presented to officers and employees of the United States Government false or fraudulent claims for payment or approval by submitting vouchers for payment for costs associated with Master Agreement 3 and all of the work releases upon it, The claims were false or fraudulent because KBR knew that the award ofMaster Agreement 3 and the work releases upon it, including but not limited to Work Release 3, were tainted by kickbacks given by Mr Khañ to Mr. Hall and Mr. Holmes.

Count IV Rescission And Disgorgement (Master Agreement 3) 138. The United States incorporates by reference the allegations set forth in paragraphs through 137 above.

KBRPRODOO5B86I Case 1:09-cv-00351-CCM I :09-cv-00351 -CCM Document Document 4747 Filed Filed 03/15/11 Page 24 03/16/11 Page of 26 of 26

139. Because 139. Because of the kickbacks ofthe kickbacks to to Mr. Mr. Hall and and Mr. the portion of Mr. Holmes, the ofthe LOGCAP the LOGCAP III contracttainted III contract bysuch taintedby suchkickbacks kickbacksisisvoid voidororvoidable. voidable. Accordingly, the Government is entitled to be restored to its pre-contract position position relating relating to of the LOGCAP to these portions of LOOCA? III Ill contract. contract 140. Based upon the facts described 140. described above, above, the Government isis entitled the Government to the entitled to the rescission rescission of of the portion of the LOGCAP M of the DI contract contract involving involving all work performed by KBR all work through its KBk through Master Agreement 3 subcontract with Tarnirni, Tsmimi, inasmuch as that subcontract was tainted by kickbacks and it would would be contrary contrary to to public policy for the Government to pay for such public policy unlawMly unlawfully awarded work. Government is work. The Government of all sums paid to is also entitled to disgorgement of KBR as as compensation related to compensation related to the tainted subcontract. the tainted subcontract.

Count Count V Disgorgement (Task Order Order 59) 59) 141. The United States 141. States incorporates allegations set incorporates by reference the allegations setforth forth in paragraphs inparagraphs above. through 140 through Order 59 to the LOGCAP DI contract was issued 142. Task Order 142. KBR shortly after the to KBR. issued to kickback-tainted award byKBR awardby KBR of Master Agreement33 toto TamImi.

MasterAgreement All work releases upon Taminai. All issued under Master Agreement 33 were issued the authority under the of Task authority of Task Order 59. Because the kickbacks to Order59.

Hall and Mr. Hall Mr. Mr. Holmes and Mr. Holmes necessarily tainted Task Order 59 at or about the necessarily tainted the time of award by time of pricing and the pricing establishing a relationship that influenced the cost of and cost ofthat that task order, Task task order, Order 59 Task Order unjustly enriched KBR.

KBR.

described the 143. Based upon the facts described 143. the Government disgorgement of all to disgorgement Government isis entitled to KBR pursuant fees paid to KBR Order 59. pursuant to Task Order 59.

KBRPR0D0058862 KBRPROD0058862 Case 1:09-ov-00351-CCM I :09-cv-0035-CCM Document Document4747 Flied Page 25 03115/11 Page Filed 03115/11 26 of 26 of

FOR RELIEF PRAYER FOR RELIEF WHEREFORE, defendant, United States, defendant, the United States, requests requests that the Court eater enter judgment in its judgment in its favor, favor, and and against KBR as as fo1lows follows: a. As a. As to Count I,I, under under the the Special Special Plea Plea in inFraud, Fraud, 28 28U.S.C. U.S.C. §§2514, 2514,against againstplaintiff plaintiff for the forfeiture forfeiture of of KBR’s KBR's entire claim; claim; b. As b. As to Count II, under the II, under the Anti-Kickback Act, Act, 41 U.S.C. U.S.C. § §§ 53, 55, against plaintiff, 53, 55, plaintiff, for for damages damages in the amount of double the amount of the the kickbacks kickbacks given to to Mr. Mr. Hall and Mr. Mr. Holmes, Holmes, plus civit plus civil penalties penalties as are allowable by law law of $5,500 $5,500 to to $11,000 $11,000 per per violation, violation, post-judgment. post-judgment interest, and interest, and costs; costs; c. As c. As to to Count fl], III, under under the the False False Claims Claims Act, Act, 31 U.S.C. U.S.C. §§ 3729, the plaintiff, 3729, against the plaintiff, for for the damages treble the damages sustained by the the United United States, States, plus plus civil civil penalties penalties as as are allowable by are allowable law of by law of $5,500 to $5,500 to $11,000 $11,000 per violation, violation, post-judgment post-judgment interest, interest, and and costs; costs; d. As d. As to to Count W, N, rescission rescission and disgorgement related to Master Agreement 3, and disgorgement 3, for rescission of the portion of the LOGCA?

LOGCAP Ill El contract that was effected by KBR the use through the KBR through use Agreement 3, of Master Agreement 3, and for disgorgement of all all moneys moneys paid paid to to KDR costs, indirect KBR for direct costa, indirect costs, fixed costs, fixed fees, fees, and award fees fees related related to any work work release release upon Master Agreement 3,3, post- upon Master post- judgment interest, judgment interest, and and costs; costs; e. As e. As to to Count V, V for for disgorgement disgorgement of ofall fees all moneys paid to KBR for fixed and award fees related to related to Task Task Order 59, 59, post-judgment post-judgment interest, and costs. costs.

f.f. For the the dismissal dismissal of of KBR’s KBR's complaint; and complaint, and g. For such other and further relief as g. deem appropriate. as the Court may deem appropriate.

KBRPRODOO5$863 KBRPR0D0058863 Case f:,O,9-cv-003 -CMDoccjmnt 47 Filed 03115t11 Fage of 2

Rspectfufly submittd TONY WEST Assistut Attorney General s1Ieanne ‘E ]iisoi JEANNE E. DAVIDSON Dfrectör a’J. Reid Prouty’ 3. aEID PROUTY SeniirTiai Counsel Commercial tAtiatin Branok ‘Civil Division Depatrnen of justice 11OaLs:tree, N.W., Atti: Classification Unit BUi ‘Floor’ Wasbiugton, D.C., 2O3’O TeIe (2O2)O5-7586 Fax: (2,02)514.7969 Attorneys for Defendant March15, 20fl

EO a’

KBRPRODOO58864 APPENDIX B 4:11-cr-40083-MMM-JAG # 6 Page 1 of 13 E-FILED Monday, 19 September, 2011 10:32:32 AM Clerk, U.S. District Court, ILCD IN TIiI 17Arrpo STATES DISTRICT COURT FILED rattiziet tint:AIWA AT, E0 a ISLAND gEP 'UNITED STATES' OF AMERICA, FfAmstAtfsiisissoNbishic IAS: DISTROTCOUAT. - CENTRAL D.ISTRIcrtnialpfs' Plaintiff, CaSeNml, I- 4083 vs. TAMIMI oLoBAI., co., LTD;a/k/a fTAFGA," Defendant: BEFERREBTROSECUTION AGREEMENT .

Defendant Taminii dobarCii.,:14:18„ also. as,:"1.0.0e(aii,ciL ST08ftettOgrreai to as "TAFGA"), by its underSighedattorileys,puMuiliitte!atitlitkitY, &anted by TAFGA'a Executive Board; and the, United StateSAfterney foro.octiitia)Thistrldt ofIllinoistat times referred to herein as the "Goverrimentiventerliiimilihtleterredprosecutiowagreement "Agreement").

The terms and toriditionstittiieldeferied proSteittibMagretthent are as fO1LowS: 1. TAFGA acknoWledges40 agreds:tliatthe:GOvetninent NSii.fliesfoteoubt. crimifiathit'OrinatiOn,MtaChed, in.theUriited.StatesDistrictCourt for the Central :Disti•iet'of IllinoiSyeliargingin:Counil Conspiracy to.PayKickbacksin viOlation of Title 18; United States Section 371, and:tharging in :Count2 Conspiracy to-Pay Gratuities in violatibridTitle,•13, -.United States, Code Section 311•Irtdoing:so, TAFGA.(a) knowingly,waives its righttelndiottrientlin these ehargesi.as well as rights to peedy.Trial: pursuant to the.Sbitb Unit44:$t4fOcp#0400piffitLelti;Linitect atatee'Peclei: Section 3161, and,Federal Rule of Criminal Pmcedure 48(1)1.and (b) consents to thefiling of the Information, as provided under theIerms.ofthis Agreement, irithe united:States District' Court; for the Central District of Illinois.

KBRPROD0057701 4:1 1-cr-40083-MMM-JAG # 6 Page 2 of 13 A.

2.. TAPQA *laths that IS responsible for the WS of its officers, employees and agents aSSerforthin theittforMatifiii and:the Statement of as Attnehinetit A (incorporated by:refer-en:dein thiS.Agreemelit), With the execptiOn ofthe.paragraphs in the Statementof Facts beginning with, the:Phrase (Accordingia the gov.ernineties tvidenee;” Shotild the Government pursue' theprosecutiontliat is treferredbythis Agreement; TA.FdA agrees thabit will neither ethitestrhe adraiSsibilityttnerboritradintrhethateinentbf Factsj.ivith theekeeptiontofttie:ptitagrapiiS begititting."Attording td thegtiVeriirneitra2eVidefiee,"- in any criniffialiirodeeding; including<duniig aiig gutlty pidafir SentenCingtiOdeeditiga. Subjeettrithe provisions of this Agreementrhowever, TAPGAis free fadefend:any criminal,. civil,tm administrative action broughtby the 'Government.

tatimaftheAtreetrient 3. ThisAgreement is,effectiVeto,raperiocibeginningefitherlate of the Siming:tif this Agreement, and ending, eighteew(110itrionths from:that:date (tlieffrterm.

.12ntevarittansiderations 4. The- bovenunententerstite ibis Agreement basedon the individirai factsand circumstances presented hy..tlits,ease. •Amorigtheladts considered weretheitelleMing: (a): tAEdA's:acknOvAdgM0c Opi4!;.011n0S.1.5"-etripipyoes actteSPtiliedin theetP:064 8tatemenr of Facts acid (b);TAFQA'sifirglehiefitatitiri and maintenance o f zemedial measures and compliance prograin, itielading rilarieVVICticVaitiitiariageriteMteatii andran etltieS and compliance, team with oversightoverthS,,governmentcontracts-andSubtontracts, strengtheniiig,offistodo-altusitiesstbnduct;modernizationmfats. 'Standard Operating Procedures for financial and accounting functions; instituticin, bfa: compliance hotline; and retaining of a toattaotarid cornpliandotoanftantIO;'044;0,:aridntOiliti#:itsortiplfaiio program; and.(c),00llatcra.1 conequpncea; including vittethdrthexe:Nquid be disproportionate.

KBRPROD0057702 • 4:11-cr-40083-MMM-JAG # 6 Page 3 of 13

harm to eriaployees and other piers* not. culpable Of the co:hist arising from the prosecution as set forth in the Staten-teat of Facts: Pittnithit.ofMonetiry .Criminal .............. Penalty 5. The GoterratientandkOaagfee:tlieflippliealIonorIlielIfiltedBtates Sentencing QuidelitieartISSG" Of'"Senteneing:Buideliiidel fo deterininethe nfiPlinable 'fine range yields the following for Count 2: Base offense level: ffS8G §2C1 .2(e)(2) 9 More than onogrelnity: (?)().

More than $400,000? (1)(2) 14 Total: 25 6. The- Government and trAP.dA agree iliateounts and2 constitute "ClUs4 RelSted Count? under §3D1 .2, 'silk as:sucti,. rity increase.ih'the riffenSelevel results froth those counts.

7. The 'etiVerhriietitdrid TAEGA;tigree leU the terndining ClildUlatiOns of the applidable fine range: for TAFGMSerlinirialidondltet ltridniqhe;Senteileing.Gtildelines: Base Fine .for Offense Level 1. 15: §8C2A(u)(1) $I& Million Base Culpability adj.*" §$c2.5(a) , .5 points.

Mote than 1•,000 employees:in Unit: (b)(2)(B)(i) 4points Obstruction•opustice, (0) 3 points Adeeptaneelif Respensibility (g)(3) =1:ptiint Teta!: Li 0/nit Multiplier range §802,6. 2.60 = 4.00 Fine range' ' §80Z7, $54 to $11:1Millipn

l ' Tina figure iriCludes televtdit drindObt `that dtitikttalgU fOt sentencing purposes.

3.

KBRPROD0057703 4:11 -cr-40083-MM M-JAG # 6 Page 4 of 13

8. 'MEGA agrees:te pay a monetary .criblinalpobaity irx thcomount of.SS.d million.

TAFGA and the •Government agree' hat.t1S,fine is appropriate nature and'. extent of the criminal conduct Of the TAFGA employees deSeribetiiiilthe Statement:of Facts, the degree to which TAFGA has instituted programs-by which tmensurefuture compliance, and TAVGA's' agreement to comply with the otherterms of this"Agreement. The monetary criminal penalty 'in •the amountof S5:6 million shallhe pard.ktliree: equal installinents imactehet 2611, April 2012, and Septeinbet 2612. The payments are'Cluthythe 18th dityOf each dithose tricitithS: This fibe is 'final and. Shall not bo'sefubdabk initiertinYteitatiMStarioeS. Flistlierniore, nothing in this Agteetnent shall be deeineitatorieeSsion by the Government thatS5:6'millicinis the. maxiinutn.penalty thatmay be imposed:in any finure.prosecutibn,and tlie, Governmentis:not precluded from ;arguing in any ;future prosecution that the CourtSimatil itupose ahiglier fine; although the boternitent agrees that-Under those eireuinstancesilt;Will recommend to dtnitt.: that any abiount paid under Nils Agfeetheashiiiild Offiet agailistany fine the Court imposes paift of a. futiike jUdginent.

Candi tionalRel cas:criminal Liability as:10.Past Misconduct 9. fit retired fotTAITQN-SeeitiplianceWiththe.terniS abd c,onditibris.tif this Agreeirient,:lhel.Goemment agreeSilleCteAlsetifiy/infoftiratienielitted10-the conduct-described lathe attached Statement ofiFacts,..or any information TAFGA-disolosecho •the 'United States Attorney lbr the eirWhiehmas othermiisellcriewnhy tlietTrtite&States Attorney :for the Central District of Illinois,.prior Waledaft of thiS.Agobitient; agailiStFAEGAi. or any Of its tiliollyroWned (a) iii a, proSecution.or other[pro.ceediug relatin&to.a iy. ciiinq of violence; (b): in a. proseeutioofor making:false .stitenicntser pedurymnder Title:18. of thelibited„States,,C,ecle;.(e):Inaprosecution, or.other proceedingtrelating to-a violation. of any.provision of Tiele:26of the.UnitedStates Code;

KBRPROD0057704 4:11-cr-40083-MMM-JAG # 6 Page 5 of 13

or (ci) any oriole related to national spPtattytna,tters dteliniteci State. in addition, the Govarnthentagrees, excOptrie;piti3lidedliereitythatit Will, nothrjng. anY'etiniinal in:dee410On •againatTAFGA, or any of its viholly-:ciyined Ot'cotittdlledinb'sidt4riess.related fo the conduct: 6f.

presentanatbriner officers; directors, managers,: employess„agerit:s:,:constiltantsj.contraetors and subcontractors, as tesoribedilittlie.attachectrStatomefit-of Pieta; Orreihtins to inforrnation tik.E.GA diselOsed to the lifilithStates:Attbrneitortdie dentratbistriattilliiindis, bt.ixta otherwise knoivn. ipy thclInited'atat&Atteitaytbrtite Central'Diattiet Of dat&ofthis Agreement: ThiSParagiiiiiikdOeSitiOtinrOidet nytitOilOtiiiii.agailiaf the 6;01 it 'erithinaharosectition for. any crimes . orvidlations, if any, comniittedlittlit fliturehrtAfThei, any.of its wholly-owned or controlled stibsidiaries,or any.iTAPGA.riwtret; director, .officer, manaser,employee, or agent: TriadaitiOnptliiSI'mtagraphdoStiouvrovideanyliroteetitaingainSt civil or criiii ilia' 'proseention of attypreSent COnript employee, shareholder,, agent,' abhatiltant, eantraetor, Or. Snlieolgr.aetotietTAFakethhet.:Or ViOlatiO4 iflny„ ,cOlninitted:by: the& Cornoratei.Conintianea Program 10. TAFGA.reproSentS thatitihaSiniNeinentadatid*J:oontititreteiniplenaenta compliance and othicsprogrant designeilto,d*ctand preyent.thetypeatoffenses describedin the attached. tatement-of Facts, and.anyttither crimes undetiholaWs of the united States, throughout itstperatious; includingthoSeoiitsaffillates. linplethentation:otthesspolibles anti procedures:shalltnatbe Construed hiarlyfuttireerifoteetitentpiocteditigas.proVidifigimiriniiity or amnesty far•taPY 'cranes, POPCIis0910(1:$0111* Pciv04400t 6016.thtil#W1061410Wilt0- thP Government as of the date of sigbingof this Agreement fortich TAk':OAIRPnidtaherwisebe responsible,

KBRPROD0057705 4:1 1-or-40083-MMM-JAG # 6 Page 6 of 13

11. In. order to address any; deficiencies in its internaleontrols, policies, and procedures, TAFGArepresents thatithasiundertaken, and willeontinue toundettakeinthe. future, in a manner consiStentWith ail elks ohligaiionsunderthiS Agreement, a review of Its.

existing internattontrolt;.liolioies„"wid:plo66dureidit compliance WitliVerlerat Aegiiisitidii Regulation TAFGA will adept new or modify existing internal proc'edures„ deSighed to(enstne chinpliatteWith The compliance standards, and procedures Will Maude; lintriatbeliniitedte,themiliiriluntelementssetiorthin Attachment 3, wilithisiiworporaleaby reference into thisAgreement Cot•porate'CornpliaiiceRepoi1ing TAFGA agrees thatl,vithinahrmonthstilsigning this:Agreeinent it will StIbmita. wriften repo:rt to the Government regarding remediatiorrand implementkitomol the compliance Measures Clescrihedin Attachinentlt, therepo'rusliall betratismittetito the DaitedState ;Mtornef &Office ter the teqtrattSPIri$:OitiAtidis,..310path.Slx-th:Street; Springfield, 62701: TAMA:May ektelid.the'tittienededfabistif4heOf itibi0.0ifikitAtp*6e Written apprayal.ofthe Governineut basednoM,good.::.eauge.she*ntherefOre.: TAFGAahalidcsigilateitS -

Corporate Ethics. Director as the- persortresponsiblehr overseeing,TAVGAts corporate compliance reporting obligafions• Duringthe Term of be reaSonablegrotindSte'hefieVethat aviblatitin Of UnitetbStatestaWfias odeurred:or that queStiOnable or ebriuptpaythents tittlhesliOnallle'dti:601MPttransterai0 piopetty or interests MaY:liaYe been offeted,.PrentiSed,P0dc.nf authorized by,:aily- TAPCK minty orperson working directly for TAFGA,:.or that:related:false hook&and recordslayeeen maintained; in connection- With contractswiththe United Statesgovernmentorsubcontracts-that relafetoilhiteatatestgOVernmentobatractSc,TAFGA-ShEill promptlyreporbanahconductid the Uniteci:StatesAtterney!s -office for the Centrg.DiStrictofillinoiS.

KBRPROD0057706 4:1 1-cr-40083-MMM-JAG # 6 Page 7 of 13

Deferred Prosecution.

3. Inconsideration O1'.:(1)'TA.PGA. aeknOWlectaiiient of iiaSt,.CririeS-6y"employees described a401.141Stateriferit'OfPuett,(b)IAPC. -ayinent'ef a monetary ciimiiial penalt5i of $5...6 Million; and (e)', TAP9A'.0tebtitiiiiied.deitipliiMeetiiariagemerifgha.GOVeinment agrees that any prosecution of TAPOA forTheconduct set forth in theInfOrmation antrthe attaehed'Statement.ofPacts,endfor the conductrthat TAFGA Governinentoris otherwise known:by the'doVerninemprior tolhesigninrefthiSagreernerityte and liereby:ie deferred'foiiiie.terintf 0;4 Agreement.: Coucittetyia,vonircoriSidered diselOed‘tellie: Coverrundrit if TAFGApidindeal.vtittehriiitifieatibri tellie1.1.SiAtteriiey''anffiee fok,the CentralDiatrict of Illinois, 318 3..:60 Street, Spiingfielklli, Prior to tlie:signing of this Agreement.

14: The eovenimtent furtheragteesiliatifTAPOktilitytcoinpflesWitlialt.ot. 'obligations under this Agreements the:GMferinethWilituittoritinuelitettliiiinat prosecution against:TAFGA,described. it. Paragraph 1 and, at tlie:ebneltisiUttuftheTerMithieAgreetnenf. shall ekpire. Within thirty (30) ilaYkof thiliAgeeetrienfiSieiPitittion, tlieq0einnionthall sbelc dismissal with prejudice of the, cringneitiformatiOnliled against TAF.GAdescribedin Paragraph 1.

lircaeitof the Mreetheritmid.6trittite.oftiniitittibtisMitliteri 15, If, during:the Term of this:Agreement die:Gov.erturienteoncludes,anitthe Court determines thatTAFOA.hat'(a) eomthitted.anylaloriymn'der.federallaWsubsequentto the, signing:Of-this .Agreementi and thatsubstantiatuutbo.tiitypersotmeITas:defiiied in the Commentatyto-§341,A &kite United .6ta1esAunpUcipg qt$Olities...rOstaxitia1Autliority .

KBRPROD0057707 4:11-cr-40083-MMM-JAG # 6 Page 8 of 13

PerSandell? of TAFGA :partiCipatedia,:gonciOneti, directed, that crime, or (b) Substantial AuthorityFOrsonnel of TAFQA:otlierWiSelOn5WifiglY beintiiitteritia directed a material, substantial breath of this Agre.einent, TAFGA shall thereafter:be subtect.to,prosecution, for any federal criminal: violation -ofWhich the6-ovelnintiithas. kuowledge,.hicluding the. diarges'in the: Information, which may be pursuedbythe'6overnmentintheru,S; District Court for the Central District of Illihois or in any'other federi:distriet. TAFSkagretathatii:Wiii einiSent t&U.3, personal Jurisdiction foi any'SnefitiiiinitnifproSedutidoihtici.TAFGA -ai)pciihtelte: legal CO1.iiisel, eutrentlythelaW f±hi i f Schiff Hardin LLB, afar:the:designee:10 acceptservice of legal process,. toinclude numinous, forsuckaction.. Inthe .eventofabreach of this Agreement any count of prosecution'thatis nottiniebarrecthyllie.applinalth statute of limitations: as ofilie date' of the signing of ihis'Agreehtentreay'beconiinetided: eg4hist TAFGA nOtsiiitlistandlitigthe expiration of the. statute of liMitatiOnShetweetrthe d4O Agreerneric.and the • 4piiation-ef. lho Tenn:. In additirirriby•:signing:this::Agreenient; TAFGA fiiiiher.agreesthaftbe Statute of limitation's Witlfrelpectito:the offenses ehargeclinille Infermattottwere.notttithe-barred as ofthe date of the signing oftlicsAgreement.andishallbetoiledifromihat,date through-die expiration of the Term..

1.6. the':'eventtli at the.Goveitirierit. conoludes.lhat TAFGA liam6reaplied Agfeement;,the Government Eigreea -taProiiiide,TAF.Pii.ipi:WrittoilAgfideccifits, intent:to file with the COUtt arecitieSt thatllie Conti findthat TOGA has:Weacheci Ageetnetit and that The commentary provides:that “Substantial.authority personnel" Means individuals who. within 4be...kei;e of their aiittiOr4 exercise a substantial measure etdiscretion in actingon behalf of an organation. The termAncludealligli-leVel:persorinel4ik*elorgaifization, exercise substantial supervisory authority ;(e.g., -a plant manager, a sales manager); and any other iticib0104 who, although nota ii4rt:a th,41*:80iiient; nevertheless exercise substantial discretion when acting:within the scope of their authority (eig: 'an:individual with authOritY in au otganization to negotiate or set price leve.,ls or an individual authorized .to negotiate or approve significant contracts).

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the ,Geverrinient is seeking to continue or initiate a ct niinal prosecution resulting from TAFGA shall, within tliirlyadYtiliyS.6.freeeiptcifslienmoilee, have:the opportunity to respond. to the Governmentin uature,and Circumstances of the alleged. breach, as-well as the-actionsTADGAlliastakento-address mid reinediatetlie sittration, which. explanation the Government shall consider in determining whether to seek to 'continue or institute &prosecution.

17; eVehttlitit the GOVeriuneritieinialtdeSilirid thelConft deterrinneS that TAFQAlia breathed:this Agreethepr:'!(a) all sib:tern:mils made, by or:mite:half:of TAFGA to :the Government or to the tourt;:ineltdinwthe tacliediStatement of Pacts; exceptionelthe paragraphs begintiing,"According to thezgov.ernmentla evidence;" and:anyleacis'derivedifrom siicli stateinents,'shalljhendmissibleirr eVidenoeikarry and all trinitind:prciceedingsliatiught by to GriVentMentagOiSt'll.F9A;:arid(b) TAFGA shall not'attOtCa#Y.:Olaith1a1cter'tlie United Stat6S CcitiSritution, Ritlett(f) of tlileFederalliti.ileiOf CrithirlarProeedtire, Ittile 410 elate Federal Rules ofEviderice, or anyother federal rulecthatsliteinentsmade hy Or on behalf:of' TAFGA prior or subsequent talliis Agreement, and anyleads.derive4Therefrom; should be suppressed. The deciSibillVlietlier.tild Condubt.br statements 011aiay'entraiitdilleCterler employee, or any perSOil ,acting onbehalfof, or: at will tt,.T.4FP-Afar. the purpose of doterixiiiiingmlielberTAFGA has vielatednaY:lifevision Of thikAgreOnient,Sh011: be,made:by'the Cowl.

1$. TAFGA acknowledgesthaVthe Governmentbasmademo 'representations, assurances; or promises concerning Vilia&serifencemay be Unposed by the-Court if TAFGA breaelies this Agreement:mid this matter proctedsto judgment •TAFGAftirtheracluiowledges

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that any such sentence is, solely within the discretioluottlitCypit and thatucithing in this Agreenienthindi of reattibta 'the Gouttan.the.exer.Olsofatieltdiscretion.

Sale or Merger of TAFGA 19.. TAFGAagteeat114:th die:evOdlitSellkiiiditei;YE:VansfetS all or substantially all of its buSineas OeratiOns as illey't date:of this-Agreement, 'whether such structured as astock or assetsale,therger:yritansfer,lit shallineludeth anycontract forsale, merger; or tranSferia proviSienthinclingkiliepurchaser, orany successor. in interestthereto; to the obligations deScribed inttnikAgteetrierit, Piiblie:StateinetitsvbttAFGA 20. TAFGA expressly'agreesttbat it shantititilitugh ptesentor fthure .attottieyS„ of-fiders; directots,employees; agents Yrany Othei'PeraotitintilofiEetith speak thr TAFGA,Inake any finnliC;Statenlentr Occept iri eiVil,:atipithiStratiye„j:ofetultitiffy:Pitieegiogoym s-otfArth ber6x); eohti*dibtingiike accept urce of esponsibility by TAFGA...s4 forth above:or the:Tots described in-the attached Statement ofEacts,Mith:the.exeepiion'ofitatementsthade in,a criminal 'proceeding as to paragraph's in,the.81afement of Facts heginningnAecording.th"the government's' evidence:" Anyauch contintliettity.atatetnentsliall; sithleotte*fliteureilebtStifTAFGA desbribedhelb*;:and (h),a,deteiirthitideri;hr.the Cenrt, etinSfltnte4bteach of thiiAgteoletit and TAFGA.thereaftef:sliallthe'.ObjeettyprOSeenliOnSafgiithilaiiraglapl*1.$.11itongh 1815€ this.Agreement. If the Oovenunenteoncludes.:that.a.publiestatemeithbrany such person contradicts in whole Yr-impart:a statement-contained iinheStatementofFactaa's described. ,above,:the.Govemnientahall, ptior to seekingloinitiate.aprosecutloivresetilting from such breach, so :notify TAFGA, andTAFGA may avoidtbrettch thia'AgrOerttYntby214KiPlY. 'reiatidiatingStich:statenients(S) V4thipliy,O-15).:bitSineSsiday„sinfteiritiAdatiCn. GonSiatOtitWitit the obligationayITAPGA.as:setfOrthayve; Waif: -shall be permitted:0 yaiseslefensesand

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assert affirmative affirmativeclaims claimsinincivil,„arlininistratiVe, ciyil,adridnistratil:,..0,ororregulitOxY:proceedings,relating regulitorY:proccedings,relating to to the the aVtte.t.S: alSte.r.S: sot forth set forth in intlie theStarethent StafethentofofFact& Fact&Orin CtirtiiiiatpfOCC,O4iOgS4elating:tote,PaMgfalibS4ftlie.

Orin etiniiiiatplOCeedi4lrelating:toteParagiralibaofthe.

Statement of Factabeginning "According to The government's. 014ence."This government's:el/Mance this Paragraph does not apply to to any any statement statementmade by. any present or fOrme.remp.toyee'of maddby flie course-Of fanue.remp.toyee'of TAFGkin the any; criminal, civil, any:criminal, civil, admilifsfratrve, admilifsfrative, prxegulatory case ease initiatetagaihst initiatetagaihst such'indiv dual; unless suchindfi4dbaLuilless such Stichindividual individualisisIspealtirigoii apealtirigoii behalf behalfofTAFGA. oftAFGA.

TAPQAEigiteS.

TAPQA Eigitestha ifittittiiyofits,dii-eatti- that ifitetniiybfits ifidireCtaffiliate ,diteetbt ifidireCtaffiliate SubSidiafies SubSidithes issues a PressreleaSe OreSS conterenee Aiieemojit TAFGA Agreerneit shall :first consultthe first consult theGovernment Government to to determine determine (a)ANThether theleittorthexeleast or -proposed (a)ANThether thelextolthexeleasc statementratthe presaconference presaconferenceare arertrue and accuratemitlitespecflomaatterstetween true and: aceuratemithrespecflomatterstetween the Government and TAFGA; -Government has vilfetherthe-Government TAFOA; and (b) Whothetthe any,Olijeetiona to: die release: basnnyiblijections.to: 22, The Government Governmentagrees agreeslo:imi'ng to theatteritfop Idki'ng to otbergoVernitenvatitlictities,. atteritfop Of odieripi/ernitenvatithorities hicitiding debarinefitoffidialai thdfaCt..1:40atiretunatanSiclathritO.thiS.Agreetrient; offidialai the:faCt$:anatireuMStanSfelatinitO.thiS4greerrient; The :natureof nature of the underlying underlying conductitidTAFQAks colidtieritidTAFQMs aceePtairce.of aceelitithee.of tesiionSib.ility. for the responsibility. for thourilawfiii unlawfill canduCtdescribed conduct theStatementxifFacts..ByBy:agreeing theStatementsifFacts.. ;described io. :agreeingtotoprovide:ibis provide:Wsileonnation: heonnation: to authorifiesithe Govenunentis debarment autborifies,..the dovernmentisThat TIC& agre.eing-to:adVocate'ombelialf oftAVGA; but agre.eing-toaditocate'ortifelialfof:TAVGA ratlicrproVidingfacts to ratlicrproAildingfacts to be:evaluated:independent& be:evaluated:independent& by laydebarment:authorities, ddbarmentauthoriiles, Liiiiitationit Binding' Effect--of Akteeiffeiff.

LitiiitatiOnOidBiirdingEffeet-of Akteeiritiff 11 This Agreement is :isbinditig:onTAFGA, liiirdfrig:ontAFGA,anti theariVetrithentlititspecihbally andtheadslettithentlitt apecihbally does not bind: bind any any other agencies, ''any other tedeial.agencics,:or anystate,, state,, local pi,f0yellafilatitillbrOn*4 orOrregulatory focal OrlfOrei.kfiltil'etribreenient regulatory !*Ony'ottief:atithontiesiig4 agericic, or ony'otrief:atitliontiesiig41.1081:01i0;a0VOrPti:WV4:Wir.ig:TAFPa'SOOPP#de VOrPti:WV4:WirAg:TAF.Pa'SOOPP#de of witli4tts,ptherobligatici3s:iundprilii4;Agreompato responsibility audits compliance witli4tts, attan.00a. ptherobligatici3s:iundpriliia;Agreompato The attend:01r of sueh:agencies.and.authoriiies sneh:agencieaand.authoriiiesif. if Tequestealo Tequestealoxlia'SQ by TAFOA. do :so by TAFOA.

it it

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Notice 24. Any notice to the Government under thiS,Agitementsiialt lie given by personal delivery, overnight by a-rpcogi:Oad46fiy-Oy service; or reiiStereti or certified mail; AO" the United •StateS Atterireyfor the Celt& DietiictofElinoia,13 Sonth IL 62701. Any notice to TAFGA Under this Agreement:shall:be given by personal delivery, overnight delivery by arecognized defiVery services:or registered or ce.rii8edlnail, kilts 'current • counsel, which is, as ofthe date of this Agreement, Schiff Hardin LLYs- Suite 6600, 231-South Wacker Drive, Chicago, IL'60666:

174E :REST. OF 17.14814GE18•INIENTIONALLI4tEkt BLA1UC

12:

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Complete Aereement 25. ThigAideemeats0sdbrifialltlielerms:oltheagreement: betweeirTAFGAand,the Government. No ainpndinemsonodiii6ationtekinidaitioavithigAtrboaeiitt.liAll be '1/2.114 unless they are in NWifing•iiiiid.eist*.by the. ptivOilWrit, th attorneys foi TAP0A, !and a dilly. authorized representative of TAF:QA,

AGREED: FOR TAMMT GLOBAL CO,, LTD,: s/Major General Perry V Dalby Date: September 7 ,2011 By: JOY V- alb), (Rd.) General M9. ager;TA ,a

r in fl Date: September 61 ,2011 fly: s/Matthew C Crowl IthriaS Matt*/!C: Schiffliardin LLP Counsel for TAMA

. FOR THE Uicl'PEDSTATES GFAMERTGA: 'AMEBA. LEWIS United States Attorney ...41111r t Date: September , 2011 "'WA amen_ TT Or-CANNON Supervisory'Assistant Attorney 31a South STN-tb.Pftect SprileOriM OAT (217} 492-400

KBRPROD0057713 4:11-cr-40083-MMM-JAG # 6-2 Page 1 of 13 E-FILED • Monday, 19 September, 2011 10:32:32 AM Clerk, U.S. District Court, ILCD ATTACHMENT A STATEMENT OF FACTS 1. The following Statement of Facts is incorporated by reference as part of the Deferred Prosecution Agreement (the "Agreement") between the U.S. Attorney's Office for the Central District of Illinois (the "Government"), and Tamimi Global Co., Ltd., a/k/a "TAFGA," which is hereinafter referred to as "TAFGA". With the exception of the paragraphs below beginning, "According to the government's evidence," TAFGA admits, agrees, and stipulates to the following: (a) TAFGA is responsible for the acts of its officers, employees, and agents as set forth below; (b) the facts set forth below are true and accurate; (c) should the government pursue the prosecution deferred by this Agreement, TAFGA will neither contest the admissibility of, nor contradict, this Statement of Facts in any such proceeding; and (d) if this matter was to proceed to trial, the Government would prove beyond a reasonable doubt, by admissible evidence, the facts alleged below and set forth in the criminal Information attached to the Agreement as Exhibit 1. Should this matter proceed to trial, TAFGA reserves the right to contest the facts set forth in paragraphs below that begin with the phrase, "According to the government's evidence." The evidence would establish the following: TAFGA and TAFGA Managers 2. Defendant TAMIMI GLOBAL COMPANY, LTD., also known as "TAFGA," and hereinafter referred to as "TAFGA," was a Saudi Arabian-based company that provided dining facility and other services to U.S. military personnel in the Middle East. TAFGA operated dining facilities ("DFACS") at U.S. military bases in Kuwait and Iraq as a prime contractor to the U.S. Army, as a subcontractor to a prime contractor to the U.S. Army, and as a contractor to the Kuwait government. During the period from 2002 through the date of this Information, TAFGA has received hundreds of millions of U.S. dollars as the result of contracts and subcontracts to provide services to U.S. military personnel in the Middle East.

3. Mohammad Shabbir Khan ("Shabbir Khan") was TAFGA's Director of Operations for Kuwait and Iraq, whose duties included overseeing DFAC operations. Shabbir Khan was a

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naturalized U.S. citizen.

4. Zubair Khan Ahmed Khan ("Zubair Khan") was TAFGA's Operations Manager for Iraq, whose duties included supervising DFAC operations.

5. An individual herein identified as "MSK" was a Project Manager for TAFGA whose duties included managing food service operations at DFACS operated by TAFGA in Kuwait.

6. An individual herein identified as "M14" was an employee of TAFGA in Bahrain whose responsibilities included renewing employee visa and identification cards.

Other Persons 7. Stephen Lowell Seamans ("Seaman?) was employed by the company now known as Kellogg Brown & Root Services, Inc. ("KBR") from approximately March 1999 through approximately May 2003. From approximately October 2002 through November 2002 and from approximately March 2003 through May 2003, Seamans worked for KBR in Kuwait as a Procurement Materials and Property Manager. His duties as a Procurement Materials and Property Manager included the negotiation and awarding of subcontracts under the U.S. Army's prime contract called the Logistics and Civil Augmentation Program III ( "LOGCAP III"). As such, Seamans was a public official.

8. Ray Scott Chase ("Chase") served as a Sergeant First Class in the United States Army. From approximately January 2002 through December 2003, Chase was deployed to Kuwait in connection with Operation Iraqi Freedom, As part of his official duties in 2002 and 2003, Chase served as the Contracting Officer's Representative ("COR") and the Non-commissioned Officer in Charge ("NCOIC") for the military dining facility located at the United States Central Command at Camp Doha, Kuwait and U.S. Army contracts related thereto. As the COR and NCOIC, Chase supervised the food procurement, preparation and service operations at Camp Doha. In 2003, Chase also served as the NCOIC for a military dining facility at Camp Arifjan, Kuwait, and had similar responsibilities to those he had at Camp Doha. As such, Chase was a public official.

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LOGCAP III Contract 9. In December 2001, a United States Army contracting command located at the Rock Island Arsenal in Rock Island, Illinois, which is within the Central District of Illinois, awarded the LOGCAP III prime contract to KBR. The Army Field Support Command, also located at the Rock Island Arsenal, was the procurement command for LOGCAP III. As the procurement command for LOGCAP III, the Army Field Support Command obligated and committed the funding for this prime contract.

10. Under LOGCAP III, KBR provided goods and services to the Army in Kuwait, Iraq, and other locations around the world, including DFACS at U.S. military bases in Kuwait and Iraq.

The specific requirements under LOGCAP III were set forth in "Task Order? that the Army Field Support Command issued to KBR. Under LOGCAP III, the United States Government paid KBR for the costs KBR incurred, plus an award fee. KBR commonly used subcontractors that invoiced KBR for their work. KBR thereafter invoiced the government which included the costs of subcontracts.

KBR engaged TAFGA as a subcontractor to fulfill some of its DFAC obligations under the prime contract. The Resource Management Unit of the Army Field Support Command at the Rock Island Arsenal managed the money for the LOGCAP III prime contract, including the obligating of funding for the payment of Task Orders for DFAC operations.

11. The LOGCAP HI prime contract incorporated the Anti-Kickback Procedures set forth in Title 48, Code of Federal Regulations, Section 52.203-7. KBR's subcontracts with TAFGA likewise incorporated those same Anti-Kickback Procedures set forth in that section.

12. KBR's subcontracts with TAFGA also contained a specific Anti-Kickback Notice: Subcontractors and suppliers are prohibited from offering any money, fee, commission, credit, gift, gratuity, thing of value or compensation of any kind directly or indirectly to [KBR] employees for the purpose of improperly obtaining or rewarding favorable treatment in connection with a prime contract or in connection with a subcontract relating to a prime contract.

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13. In or about October 2002, a LOGCAP HI task order required KBR to establish a DFAC at Camp Arifjan in Kuwait, known as the Camp Arifjan Zone 2 DFAC. On or about October 14, 2002, KBR awarded the Camp Arifjan DFAC subcontract to TAFGA.

14. In or about April 2003, a LOGCAP III task order required KBR to establish a DFAC at a palace in Baghdad, Iraq. On or about April 14, 2003, KBR awarded the Baghdad Palace DFAC subcontract to TAFGA.

Criminal Conduct -Count I of the Information 15. On or about October 9, 2002, Shabbir Khan hosted a birthday party for Seamans in Kuwait. At the party, Shabbir Khan provided Seamans with the services of a prostitute. When Shabbir Khan drove Seamans back to his quarters following the party, he offered to pay Seamans a kickback in connection with the Camp Arifjan Zone 2 DFAC.

16. On or about October 14, 2002, Seamans awarded the Camp Arifjan Zone 2 DFAC to TAFGA in the not-to-exceed amount of US $14,398,505 for a One-year period. Seamans executed the subcontract on behalf of KBR, and Shabbir Khan executed the subcontract on behalf of TAFGA.

17. According to the government's evidence, in or about April 2003, Seamans provided Shabbir Khan with bid information pertaining to the Baghdad Palace Subcontract. Seamans, knowing the amount of the bid submitted by another bidder, provided Shabbir Khan with the price TAFGA needed to bid to secure the award of the subcontract.

18. On or about April 14, 2003, Seamans awarded the Baghdad Palace subcontract to TAFGA in the not-to-exceed amount of US $2,000,000. Seamans awarded the subcontract by way of a document entitled "Letter Subcontract Anticipating a Fixed Price Type of Subcontract," which provided for the parties to enter into negotiations for a cum-fixed-price subcontract by April 24, 2003.

Seamans executed the letter subcontract on behalf of KBR, and Sbabbir Khan executed the letter subcontract on behalf of TAFGA.

19. On or about May 21, 2003, Seamans awarded to TAFGA a change order to the Baghdad Palace subcontract that increased the amount of the subcontract from US $2,000,000 to US

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$7,381,725.90 and specified the period of performance as six months from April 14, 2003, or through October 13, 2003. Seamans executed the change order on behalf of KBR, and Shabbir Khan executed the change order on behalf of TAFGA.

20. From in or about October 2002 through in or about October 2003, on or about the below-listed dates, in connection with the Camp Arifjan Zone 2 DFAC and Baghdad Palace DFAC subcontracts, Shabbir Khan paid and caused to be paid kickbacks to Seamans in the total amount of approximately US $133,000 in the form of U.S. currency, and wire transfers from bank accounts in the Middle East to accounts in the United States, including the following: a. 10/29/02 Wire transfer of US $2,965 from Kuwait; b. 11/25/02 Wire transfer of US $20,965 from Kuwait; c. 4/17/03 Wire transfer of US $8,000 from Bahrain; d. 4/18/03 Wire transfer of US $9,465 from Kuwait; e. 4/23/03 Wire transfer of US $9,000 from Bahrain; f. 4/28/03 Wire transfer of US $8,500 from Bahrain; g. 5/12/03 Wire transfer of US $9,500 from Bahrain; h. 5/15/03 Wire transfer of US $8,500 from Bahrain; i. 5/16/03 Wire transfer of US $7,500 from Bahrain; j. 5/19/03 Wire transfer of US $6,500 from Bahrain; k. 5/21/03 Wire transfer of US $3,000 from Saudi Arabia; and 1. 10/2/03 Wire transfer of US $9,965 from Kuwait.

21. In or about April 2005, Shabbir Khan spoke with and otherwise communicated with Seamans, who was in the United States at the time, informing Seamans that an attache from the embassy or consulate in Bahrain had recently inquired into the source of wire transfers that TAFGA or• one or more of its managers had paid to Seamans as kickbacks in the spring of 2003. Shabbir Khan suggested to Seamans, in sum and substance, that if Seamans were to have a business deal with Zubair Khan, purportedly involving the joint purchase of a vehicle in the United States for sale in the

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Middle East, this would make the wire transfers the authorities inquired about appear to be a legitimate business investment by Zubair Khan, 22. On or about August 27, 2005, federal law enforcement personnel from the Central District of Illinois interviewed Zubair Khan in Kuwait. During the interview, Zubair Khan: a. Falsely stated, in sum and substance, that he and Seamans agreed in February or March 2003 to enter into a business venture to purchase armor plated, United States-made vehicles for sale in Iraq; b. Falsely stated, in sum and substance, that he directed TAFGA employee "MM" to wire transfer more than US $60,000 to Seamans as his investment in the business venture; and c. Falsely stated, in sum and substance, that the armored vehicle deal with Seamans fell through, and, thereafter, he tried to get Seamans to purchase a recreational vehicle ("RV") in the United States to sell in the Middle East, but the RV deal also fell through.

23. On or about August 26 and 28, 2005, federal law enforcement personnel from the Central District of Illinois interviewed Shabbir Khan in Kuwait. During the interview, Shabbir Khan; a. Falsely stated, in sum and substance, that he thought certain wire transfers of money that persons affiliated with TAFGA made to Seamans were for a business venture between Zubair Khan and Seamans for the purchase of armored cars in the United States for sale in the Middle East for profit; and b. Falsely stated, in sum and substance, that he was unaware of any kickbacks and gratuities paid to Seamans by TAFGA personnel.

24. According to the government's evidence, by at least August 26, 2005, when interviews of Zubair Khan, Shabbir Khan, and others commenced in Kuwait by federal law enforcement personnel front the Central District of Illinois, TAFGA was told of the kickback payments made to Seamans, and that there were efforts to conceal those past payments through a false cover story presented by Zubair Khan, Shabbir Khan, and, unwittingly, by Tamimi's then-counsel, to the law enforcement personnel on and after August 26, 2005.

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25. On or about August 28, 2005, during the interview in Kuwait with federal law enforcement personnel from the Central District of Illinois, Shabbir Khan provided the law enforcement personnel with false and misleading documents to support his and Zubair Khan's fictitious story about a business venture between Zubair Khan and Seamans. These documents included a document Shabbir Khan represented as an April 10, 2003, memorandum from Zubair Khan to Shabbir Khan in which Zubair Khan requested that Shabbir Khan advise the TAFGA finance department to give US $67,000 of Zubair Khan's year 2002 bonus to TAFGA employee "MM." These documents also included a document Shabbir Khan represented as an April 13, 2003, memorandum between TAFGA finance department employees stating that the Operations Manager of TAFGA had approved Zubair Khan's April 10, 2003, request 26. On or about the dates below, defendant TAFGA caused the Rock Island Division of the United States Attorney's Office, Central District of Illinois, to receive the following false and misleading documents from TAFGA's then legal counsel: a. September 12, 2005: documents relating to wire transfers made to Seamans by one or more TAFGA employees in the Spring of 2003; b. September 16, 2005: e-mails between Zubair Khan and Seamans concerning the fictitious business venture; and c. September 26, 2005: a memorandum repeating and crediting the fictitious business venture story.

27. On or about October 28, 2005, Shabbir Khan and Zubair Khan met with Seamans in London, England. During the meeting, the three discussed the following, in sum and substance, among other things: a. Zubair Khan explained to Seamans the fictitious story he had told to the federal law enforcement personnel in Kuwait in August 2005; b. Zubair Khan instructed Seamans to tell this same false story to federal law enforcement personnel when they questioned him concerning the wire transfers from TAFGA;

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c. Shabbir Khan and Zubair Khan told Seamans that they needed documentation showing that Seamans had wired approximately US $65,000 back to Zubair Khan's bank account in order to support the fictitious story they had told federal law enforcement personnel; and d. Shabbir Khan and Zubair Khan further instructed Seamans to wire transfer a sum of money to Zubair Khan's bank account, that they would then transfer the same sum of money back to Seamans, and that this process was to continue until Seamans had sent a total of US $65,000 to Zubair Khan's bank account, and had received a total of US $65,000 in return, in order to support the fictitious story they had told federal law enforcement personnel.

28. On March 22, 2006, federal law enforcement personnel interviewed Shabbir Khan at the United States Attorney's Office in Rock Island, Illinois, in the Central District of Illinois. During the interview, Shabbir Khan: a. Falsely stated, in sum and substance, that in 2003, Zubair Khan had a private side business deal with Seamans for the purchase of an armored vehicle in the United States for resale in the Middle East; b. Falsely stated, in sum and substance, that to obtain money for Zubair Khan's investment in the armored car deal with Seamans, Zubair Khan asked TAFGA to give US $67,000 of his year 2002 bonus to TAFGA employee "MM;" c. Falsely stated, in sum and substance, that none of the money provided to Seamans by TAFGA employee "MM" had anything to do with TAFGA's business with KBR; d. Falsely stated, in sum and substance, that the armored vehicle deal with Seamans fell through; e. Falsely stated, in sum and substance, that neither Shabbir Khan, Zubair Khan nor TAFGA intended to pay kickbacks to Seamans through the payments made to Seamans; and f. Falsely stated, in sum and substance, that the payments to Seamans were not made because Seamans was involved in awarding or administering any subcontracts between KBR and TAFGA.

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Criminal Conduct -Count 2 of the Information 29. Tn 2002 and 2003, defendant TAFGA provided dining facility services to the United States military at Camp Doha in Kuwait through a contract with the Kuwait government. TAFGA likewise provided the dining facility services at one of the Camp Arifjan DFACS, known as the Camp Arifjan Zone 1 DFAC, after that facility was set up in 2003.

30. Ray Scott Chase was responsible for supervising all food procurement, preparation, and service at the Camp Doha DFAC and the Camp Arifjan Zone 1 DFAC. Chase was responsible for ordering food, supplies, and services for those DFACS from private contractors that held Blanket Purchase Agreements with the U.S. Army.

31. According to the government's evidence, in approximately mid-2002, "MSK" met with Chase and solicited Chase to use Chase's position to order food for the Camp Doha DFAC, and according to government evidence was done to reduce TAFGA's obligation to provide food under its contract with the Kuwait government, thereby reducing TAFGA's costs and increasing its profits.

32. According to the government's evidence, in approximately mid-2002, "MSK" gave Chase an envelope containing approximately US $10,000.

33. According to the government's evidence, between approximately mid-2002 and December 2003, at monthly or bi-monthly intervals, "MSK" paid Chase cash amounts between approximately US $8,000 and US $20,000 because of official acts Chase performed and was going to perform in relation to the Camp Doha DFAC and the Camp Arifjan Zone 1 DFAC. According to the government's evidence, this included Chase's ordering of food in a manner that reduced TAFGA's obligation to provide food under its contract with the Kuwait government, thereby reducing Tamimi' s costs and increasing its profits.

34. According to the government's evidence, between approximately mid-2002 and December 2003, on two or three separate occasions, Shabbir Khan paid Chase cash amounts between approximately USD$8,000 and US $20,000.

35. In addition, Shabbir Khan provided Chase with use of an apartment in Kuwait City

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free of charge.

36. In sum, TAFGA admits that it is responsible for the misconduct of its employees, who (a) agreed to provide Chase illegal gratuities; (b) in furtherance of that conspiracy gave Chase things of value, that is, United Statei currency and the use of an apartment, because of official acts performed, and that were to be performed, by Chase during the year 2002 through the end of the year 2003 in connection with contracts for dining facility services at Camp Doha in Kuwait and the Camp Arifjan Zone I DFAC; and (c) paid these gratuities unlawfully to Chase, that is, the gratuities were not provided to him as part of the proper discharge of his official duties.

Other Relevant Conduct and Illicit Payments 37. An individual herein identified as "TA" was TAFGA's Area Manager for the Balad Area in Iraq whose duties included managing the DFACS operated by TAFGA in that area.

38. John Rivard (Rivard) served as a Major in the United States Army. From approximately March 2004 through February 2005, Rivard served as the Army's Chief of Contracting for Camp Anaconda which was located north of Baghdad in Iraq. His duties included supervising the process of awarding contracts for obtaining goods and services needed at and near Camp Anaconda.

39. Theresa Russell (Russell) served as a Sergeant in the United States Army and worked and associated with Rivard at Camp Anaconda.

40. According to the government's evidence, in or about 2004, Rivard participated in the awarding of a contract to TAFGA for DFAC operations at several forward operating bases in the vicinity of Camp Anaconda in Iraq. Approximately a month and a half after the contract was awarded, "TA" provided Rivard with US $10,000 in cash on account of Rivard's efforts in awarding the contract to TAFGA, and another US $10,000 in cash that "TA" directed be given to Russell.

41. Terry Hall was employed by KBR in Kuwait as a Food Service Manager from approximately October 2002 through approximately April 2004. His duties included overseeing KBR food service operations in Kuwait and Iraq, primarily concerning the technical side of DFAC contract administration.

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42. An individual herein identified as "Person A" was employed by KBR in Kuwait during the time beginning in approximately February 2003 as a Food Service Technician, Food Service Supervisor, and ultimately the Deputy Regional Food Service Manager of LOGCAP III for Kuwait and Iraq.

43. According to the governments evidence, between the end of 2002 and the beginning of 2004, Shabbir Khan paid Hall and "Person A" a combined total of approximately US $40,000 in connection with DFAC subcontracts that TAFGA had been awarded under LOGCAP III. Khan did so in order to ensure that TAFGA kept the DFAC subcontracts that it had, and to ensure that TAFGA would continue to get additional subcontracts as they became available.

44. From approximately March 2003 through early 2005, an individual herein identified as "Person B" was employed by KBR. He served primarily as a Subcontracts Administrator in Iraq.

45. According to the government's evidence, in early 2005, Zubair Khan paid "Person B" approximately US $40,000 as a gratuity for the renewal of a KBR subcontract awarded to TAFGA for a DFAC in Iraq.

46. In 2005, Peleti "Pete" Peleti, Jr., was serving in Kuwait as a U.S. Army Chief Warrant Officer and the Army's Chief Food Service Advisor for the Middle East Region. He was the advisor to the Commander on all facets of the Army's food service program. Among his duties-was the monitoring of food service contracts in Kuwait, Iraq and Afghanistan, including the acquisition and distribution of food and related food service supplies at Army bases and camps.

47. According to the government's evidence, during Peleti's time as Food Service Advisor, Shabbir Khan provided him with airline tickets, food, drinks, several thousands of U.S. dollars, and the use of a "Party House" maintained by a TAFGA executive and other TAFGA representatives. Khan provided these gratuities to Peleti in light of Peleti's prominent position with the Army concerning food service and dining facilities.

Medical Records 48. In furtherance of TAFGA's operation of DFACS under the LOGCAP III contract,

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TAFGA employed and transported into Kuwait and Iraq several thousand food service workers from Bangladesh, Nepal, Sri Lanka, and elsewhere, 49. One provision of the LOGCAP III task orders relating to DFACS required that food service personnel shall receive appropriate medical screening prior to employment. Screening was to include testing for infectious diseases, such as tuberculosis, typhoid fever, and hepatitis A. Food service workers' medical records were required to be maintained, and could be located at the respective DFACS.

50. In March 2004, the Defense Contract Management Agency (DCMA), an agency responsible for oversight of the LOGCAP III prime contract, initiated a routine inspection of some of the DFACS operated by TAFGA, including one at Camp Arifjan in Kuwait. During the inspection, DCMA reviewed what was purported to be the medical records of TAFGA food service workers.

DCMA questioned the legitimacy of some of the records, and requested additional medical information on TAFGA food service workers through the prime contractor, KBR.

51. In response to a KBR demand for TAFGA's employees' medical screening records, TAFGA delivered to KBR in Kuwait City sets of photocopied documents purported to be the medical records of TAFGA's food service workers. Many of the records raised suspicion because they contained identical lab test results for multiple different food service workers. DCMA then conducted inspections at three other TAFGA operated DFACS in Kuwait and determined that all the purported medical records for TAFGA employees at each of those DFACS were forgeries. As a result, a federal investigation was initiated in the Central District of Illinois at Rock Island.

52. In February 2005, a federal grand jury in the Central District of Illinois issued a subpoena to TAFGA requiring production of all of the company's food service workers' medical screening records. In response to the grand jury subpoena, from in or about May 2005 through in or about August 2005, TAFGA caused to be produced to the United States Attorney's Office in Rock Island, Illinois, in the Central District of Illinois, as the representative of the grand jury, approximately 300 personnel files for TAFGA food service employees. The medical records

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contained in those personnel files were different from, and much more elaborate than, the medical records that TAFGA had provided to DCMA and KBR in Kuwait in March 2004. It was subsequently determined that many of the purported medical records contained within the personnel files produced by TAFGA in 2005 to the grand jury were not legitimate and had been fabricated. The personnel files were produced as follows: a. On or about May 6, 2005, via hand delivery in Chicago, Illinois; b. On or about May 19, 2005, via commercial interstate carrier, from Chicago, Illinois to Rock Island, Illinois; c. On or about June 22, 2005, via commercial interstate carrier, from Chicago, Illinois to Rock Island, Illinois; d. On or about July 7, 2005, via commercial interstate carrier, from Chicago, Illinois to Rock Island, Illinois; e. On or about July 28, 2005, via commercial interstate carrier, front Chicago, Illinois to Rock Island, Illinois; and f. On or about August 18, 2005, via commercial interstate carrier, from Chicago, Illinois to Rock Island, Illinois.

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KBRPROD0057726 4:11-cr-40083-MMM-JAG # 6-3 Page 1 of 2 E-FILED Monday, 19 September, 2011 10:32:32 AM Clerk, U.S. District Court, ILCD ATTACHMENT B CORPORATE COMPLIANCE PROGRAM In order to address past deficiencies in its internal controls, policies, and procedures regarding compliance with the applicable United States anti-corruption laws, TAFGA agrees to continue to conduct, in a manner consistent with all of its obligations under this Agreement, appropriate reviews of its existing internal controls, policies, and procedures.

Where necessary and appropriate, TAFGA agrees to adopt new or to modify existing internal controls, policies, and procedures in order to ensure that it maintains: (a) a system of internal accounting controls designed to ensure that TAFGA makes and keeps fair and accurate books, records, and accounts; and (b) a rigorous anti-corruption compliance code, standards, and procedures, in compliance with Federal Acquisition Regulation 52 203-13. At a minimum, this should include, but not be limited to, the following elements: 1. Retention of a government contract compliance specialist to monitor TAFGA's compliance program and report to TAFGA's Legal Department.

2. A clearly articulated corporate policy against violations of the anti-corruption laws of the United States.

3. Promulgation of compliance standards and procedures designed to reduce the prospect of violations of the anti-corruption laws and TAFGA's compliance code. These standards and procedures shall apply to all directors, officers, and employees and, where necessary and appropriate, outside parties acting on behalf of TAFGA in a foreign jurisdiction, including but not limited to, agents, consultants, representatives, and distributors (collectively, "agents"); 4. The assignment of responsibility to two or more senior corporate executives of TAFGA for the implementation and oversight of compliance with policies, standards, and

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procedures regarding the anti-corruption laws. Such corporate officials shall have the authority to report matters directly to TAFGA's Executive Board or any appropriate committee thereof; 5. Mechanisms designed to ensure that the policies, standards, and procedures of TAFGA regarding the anti-corruption laws are effectively communicated to all directors, officers, employees, and, where appropriate, agents. These mechanisms shall include: (a) periodic training for all directors, officers, and employees, and, where necessary and appropriate, agents; and (b) annual certifications by all such directors, officers, and employees, and, where necessary and appropriate, agents, certifying compliance with the training requirements; 6. An effective system for reporting suspected criminal conduct and/or violations of the compliance policies, standards, and procedures regarding the anti-corruption laws for directors, officers, employees, and, where necessary and appropriate, agents; 7. Appropriate disciplinary procedures to address, among other things, violations of the anti-corruption laws and TAFGA's compliance code by TAFGA's directors, officers, and employees; 8. Appropriate due diligence requirements pertaining to the retention and oversight of agents; 9. Standard provisions in agreements, contracts, and renewals thereof with all agents that are reasonably calculated to prevent violations of the anti-corruption laws, which may, depending upon the circumstances, include anti-corruption representations and undertakings relating to compliance with the anti-corruption laws; and 10. Periodic testing of the compliance code, standards, and procedures designed to evaluate their effectiveness in detecting and reducing violations of anti-corruption laws and TAFGA's compliance code.

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