[Congressional Record Volume 152, Number 25 (Thursday, March 2, 2006)]
[Senate]
[Pages S1647-S1648]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. LEAHY:
  S. 2356. A bill to prohibit profiteering and fraud relating to 
military action, relief, and reconstruction efforts, and for other 
purposes; to the Committee on the Judiciary.
  Mr. LEAHY. Mr. President, today I am introducing the ``War 
Profiteering Prevention Act of 2006.'' This bill creates criminal 
penalties for war profiteers and cheats who, for ill-gotten gain, would 
exploit the United States Government's taxpayer-funded war and 
reconstruction efforts in Iraq and elsewhere around the world. I am 
pleased that Senator Dorgan has also included this legislation in the 
``Honest Leadership and Accountability in Contracting Act of 2006'' 
that is also being introduced today.
  I previously introduced this legislation in 2003. It came to be 
cosponsored by 21 Senators, including Senators Clinton, Dodd, 
Feinstein, Johnson, Kerry, Landrieu, Bill Nelson, Wyden, Dayton, 
Durbin, Feingold, Harkin, Jeffords, Kennedy, Kohl, Lieberman and Reid. 
The Senate Appropriations Committee unanimously accepted these 
provisions during a Senate Appropriations Committee markup of the $87 
billion appropriations bill for Iraq and Afghanistan for Fiscal Year 
2004, and it passed the Senate. It was the right thing to do then, and 
it is the right thing to do now.
  Regrettably, the Republican leadership in the House stripped this 
legislation out of that appropriations bill, and we regrettably have 
been witnessing the results in the meantime. Billions appropriated for 
the continuing war efforts and for reconstruction are unaccounted for, 
and fraud has been rampant. The recent report of the special inspector 
general confirms that U.S. taxpayer funds appropriated for 
reconstruction have been lost and diverted.
  There are, of course, anti-fraud laws to protect against waste of tax 
dollars at home. But none expressly prohibits war profiteering, and 
none expressly confers jurisdiction for fraud overseas. This bill would 
criminalize ``war profiteering''--overcharging taxpayers in order to 
defraud and to profit excessively from a war, military action, or 
reconstruction efforts. It would prohibit any fraud against the United 
States involving a contract for the provision of goods or services in 
connection with a war, military action, or for relief or reconstruction 
activities. This new crime would be a felony, subject to criminal 
penalties of up to 20 years in prison and fines of up to $1 million or 
twice the illegal gross profits of the crime.
  The bill also prohibits false statements connected with the provision 
of goods or services in connection with a war or reconstruction effort. 
This crime would also be a felony, subject to criminal penalties of up 
to 10 years in prison and fines of up to $1 million or twice the 
illegal gross profits of the crime. These are strong and focused 
sanctions that are narrowly tailored to punish and deter fraud or 
excessive profiteering in contracts, here and abroad, related to the 
United States Government's war or reconstruction efforts.
  Congress has sent more than a quarter of a trillion dollars to Iraq 
with too little accountability and too few financial controls. 
Disturbingly, there are widespread reports of waste, fraud and war 
profiteering in Iraq, and the special inspector general examining the 
use of reconstruction funds in Iraq recently found that billions of 
taxpayer dollars remain unaccounted for.

  For example, a recent report on 60 Minutes revealed that more than 
$50 billion of U.S. taxpayer funds have gone to private contractors 
hired to guard bases, drive trucks, feed and shelter the troops and 
rebuild in Iraq. This is more than the entire annual budget of the 
Department of Homeland Security.
  In addition, just this week, the New York Times, reported that the 
Army has decided to reimburse a Halliburton subsidiary--Kellogg Brown & 
Root--for nearly all of its disputed costs on a $2.41 billion no-bid 
contract to deliver fuel and repair oil equipment in Iraq, even though 
the Pentagon's own auditors had identified more than $250 million in 
charges as potentially excessive or unjustified. That article further 
notes that the Army's decision to pay all but 3.8 percent of these 
questionable charges lies well outside the normal practice of the 
military.
  The recent revelations about contract fraud and abuse in Iraq make 
clear that the approach to reconstruction in Iraq has been a formula 
for mischief. We need strong disincentives for those who would take 
advantage of the chaos of war to defraud American taxpayers.
  We also need to strengthen the tools available to federal prosecutors 
to combat war profiteering. Despite well-publicized allegations of 
fraud and war profiteering in Iraq, so far the Government has brought 
only one case to recover these funds--a civil lawsuit brought under the 
False Claims Act. That case involves a contractor accused of 
overcharging the Government millions of dollars under a contract to 
help distribute new Iraqi currency during the first months after the 
collapse of the Hussein government. The Government's ability to recover 
funds in that case is being questioned by the defendant, however, who 
argues that legal technicalities may constrain current law from 
reaching all of the conduct of contractors working in Iraq or elsewhere 
overseas. This bill would address this problem by providing clear 
authority for the Government to seek criminal penalties and to recover 
excessive profits for war profiteering overseas. It should already be 
law, but three years ago the House Republican leadership rejected it.
  Every penny of our taxpayers' money must be expended carefully and 
purposefully and protected from waste. The message sent by this bill is 
that any act taken to financially exploit the crisis situation in Iraq 
or elsewhere overseas for exorbitant financial gain is unacceptable, 
reprehensible--and criminal. Such deceit demeans and exploits the 
sacrifices that our military personnel and National Guard are making in 
Iraq and Afghanistan.
  When U.S. taxpayers have been called upon to bear the burden of 
reconstruction contracts--where contracts are awarded in a system that 
offers little competition and even less accountability--concerns about 
wartime profiteering are a grave matter. Historical efforts to stem 
such profiteering have been successful: Congress implemented excessive-
profits taxes and contract renegotiation laws after both World Wars, 
and again after the Korean War. Advocating exactly such an approach, 
President Roosevelt once declared it our duty to ensure that ``ar few 
do not gain from the sacrifices of the many.'' Then, as now, our 
Government cannot in good faith ask its people to sacrifice for 
reconstruction efforts that allow so many others to profit unfairly.
  There is urgency to this important measure because criminal statutes 
cannot be applied retroactively. These controls should have been put in 
place at least three years ago; they need to be in place now. I urge 
that the Senate make prompt passage of this legislation a high 
priority. I hope that this time the House Republican leadership will 
have learned the hard lessons of the last three years and that, this 
time, they will allow this bill's enactment, on behalf of the Nation's 
taxpayers. I ask unanimous consent that the text of the bill be printed 
in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 2356

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

[[Page S1648]]

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``War Profiteering Prevention 
     Act of 2006''.

     SEC. 2. PROHIBITION OF PROFITEERING.

       (a) Prohibition.--
       (1) In general.--Chapter 47 of title 18, United States 
     Code, is amended by adding at the end the following:

     ``Sec. 1039. War profiteering and fraud relating to military 
       action, relief, and reconstruction efforts

       ``(a) Prohibition.--
       ``(1) In general.--Whoever, in any matter involving a 
     contract or the provision of goods or services, directly or 
     indirectly, in connection with a war, military action, or 
     relief or reconstruction activities within the jurisdiction 
     of the United States Government, knowingly and willfully--
       ``(A)(i) executes or attempts to execute a scheme or 
     artifice to defraud the United States; or
       ``(ii) materially overvalues any good or service with the 
     specific intent to defraud and excessively profit from the 
     war, military action, or relief or reconstruction activities;
     shall be fined under paragraph (2), imprisoned not more than 
     20 years, or both; or
       ``(B)(i) falsifies, conceals, or covers up by any trick, 
     scheme, or device a material fact;
       ``(ii) makes any materially false, fictitious, or 
     fraudulent statements or representations; or
       ``(iii) makes or uses any materially false writing or 
     document knowing the same to contain any materially false, 
     fictitious or fraudulent statement or entry;

     shall be fined under paragraph (2) imprisoned not more than 
     10 years, or both.
       ``(2) Fine.--A person convicted of an offense under 
     paragraph (1) may be fined the greater of--
       ``(A) $1,000,000; or
       ``(B) if such person derives profits or other proceeds from 
     the offense, not more than twice the gross profits or other 
     proceeds.
       ``(b) Extraterritorial Jurisdiction.--There is 
     extraterritorial Federal jurisdiction over an offense under 
     this section.
       ``(c) Venue.--A prosecution for an offense under this 
     section may be brought--
       ``(1) as authorized by chapter 211 of this title;
       ``(2) in any district where any act in furtherance of the 
     offense took place; or
       ``(3) in any district where any party to the contract or 
     provider of goods or services is located.''.
       (2) Table of sections.--The table of sections for chapter 
     47 of title 18, United States Code, is amended by adding at 
     the end the following:

``1039. War profiteering and fraud relating to military action, relief, 
              and reconstruction efforts.''.

       (b) Civil Forfeiture.--Section 981(a)(1)(C) of title 18, 
     United States Code, is amended by inserting ``1039,'' after 
     ``1032,''.
       (c) Criminal Forfeiture.--Section 982(a)(2)(B) of title 18, 
     United States Code, is amended by striking ``or 1030'' and 
     inserting ``1030, or 1039''.
       (d) RICO.--Section 1956(c)(7)(D) of title 18, United States 
     Code, is amended by inserting the following: ``, section 1039 
     (relating to war profiteering and fraud relating to military 
     action, relief, and reconstruction efforts)'' after 
     ``liquidating agent of financial institution),''.
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