[Congressional Record Volume 153, Number 1 (Thursday, January 4, 2007)]
[Senate]
[Pages S118-S120]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. LEAHY (for himself, Mr. Bingaman, Mr. Harkin, Mr. Kerry, 
        Mr. Lautenberg, Mr. Rockefeller, Mr. Dorgan, Mr. Schumer, Mr. 
        Wyden, Ms. Cantwell, Mrs. Clinton, Mr. Menendez, and Mr. Nelson 
        of Florida):
  S. 119. 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 reintroducing a bill that 
creates criminal penalties for war profiteers and cheats who would 
exploit taxpayer-funded efforts in Iraq and elsewhere around the world. 
Last year, despite the mounting evidence of widespread contractor fraud 
and abuse in Iraq, the Republican-controlled Senate would not act on 
it. Instead, the Congress took a terrible misstep in seeking to end the 
work of the Special Inspector General for Iraq Reconstruction. I have 
been proposing versions of this bill

[[Page S119]]

since 2003, when it did pass the Senate. Unfortunately, this crucial 
provision was stripped out of the final version of a bill by a 
Republican-controlled conference committee.
  There is growing evidence of widespread contractor fraud in Iraq, yet 
prosecuting criminal cases against these war profiteers is difficult 
under current law. We must crack down on this rampant fraud and abuse 
that squanders American taxpayers' dollars and jeopardizes the safety 
of our troops abroad. That is why I renew my efforts for accountability 
and action with the introduction of the War Profiteering Prevention Act 
of 2007. I am pleased to join with Senators Bingaman, Kerry, Harkin, 
Rockefeller, Dorgan, Wyden, Schumer, Cantwell, Bill Nelson, Clinton, 
Lautenberg and Menendez to introduce this legislation.
  Congress has sent billions upon billions of dollars to Iraq with too 
little accountability and too few financial controls. More than $50 
billion of this money has gone to private contractors hired to guard 
bases, drive trucks, feed and shelter the troops and rebuild the 
country. This is more than the annual budget of the Department of 
Homeland Security.
  Instead of results from these companies, we are seeing penalties 
levied for allegations of fraud and abuse. At least 10 companies with 
billions of dollars in U.S. contracts for Iraq reconstruction have paid 
more than $300 million in penalties since 2000, to resolve allegations 
of bid rigging, fraud, delivery of faulty military parts and 
environmental damage. Seven other companies with Iraq reconstruction 
contracts have agreed to pay financial penalties without admitting 
wrongdoing.
  In 2005, Halliburton took in approximately $3.6 billion from 
contracts to serve U.S. troops and rebuild the oil industry in Iraq. 
Halliburton executives say that the company received about $1 billion a 
month for Iraq work in 2006. In addition, last month, we learned of new 
plans to spend hundreds of millions more to create jobs in Iraq.
  Last year, the Special Inspector General for Iraq Reconstruction 
found that millions of U.S. taxpayer funds appropriated for Iraq 
reconstruction have been lost and diverted. Yet we continue to send 
more taxpayer funds to Iraq, without accountability.
  Too much of this money is unaccounted for, and many of the facilities 
and services that these funds were supposed to pay for are still 
nonexistent. We in Congress must ask--where did all the money go? We 
need to press for more accountability over the use and abuse of 
billions of taxpayers' dollars sent as development aid to Iraq, not 
less.
  A new law to combat war profiteering in Iraq and elsewhere is sorely 
needed and long overdue. Although there are anti-fraud laws to protect 
against the waste of U.S. tax dollars at home, no law expressly 
prohibits war profiteering or expressly confers jurisdiction on U.S. 
federal courts to hear fraud cases involving war profiteering committed 
overseas.
  The bill I introduced today would criminalize ``war profiteering''--
overcharging taxpayers in order to defraud and to profit excessively 
from a war, military action, or reconstruction efforts. It would also 
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.
  The measure also addresses weakness in the existing laws used to 
combat war profiteering, by providing clear authority for the 
Government to seek criminal penalties and to recover excessive profits 
for war profiteering overseas. These are strong and focused sanctions 
that are narrowly tailored to punish and deter fraud or excessive 
profiteering in contracts, both at home and abroad.
  The message sent by this bill is clear--any act to exploit the crisis 
situation in Iraq or elsewhere overseas for exorbitant gain is 
unacceptable, reprehensible, and criminal. Such deceit demeans and 
exploits the sacrifices that our military personnel are making in Iraq 
and Afghanistan, and around the world. This bill also builds on a 
strong legacy of historical efforts to stem war profiteering. 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 ``a few do not gain from the sacrifices of the many.''
  Our Government cannot in good faith ask its people to sacrifice for 
reconstruction efforts that allow some to profit unfairly. 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.
  Combating war profiteering is not a Democratic issue, or a Republican 
issue. Rather, it is a cause that all Americans can support. When I 
first introduced this bill in 2003, it came to be cosponsored by 21 
Senators. The Senate Appropriations Committee also 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 this provision passed the Senate. Passing bipartisan war 
profiteering prevention legislation was the right thing to do then, and 
it is the right thing to do now.
  I am hopeful that in a new year, and with a new Congress, we can make 
a fresh start and forge a bipartisan partnership on this important 
issue that will result in passage of this bill. I ask unanimous consent 
that a copy 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. 119

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``War Profiteering Prevention 
     Act of 2007''.

     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.''.


[[Page S120]]


       (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),''.
                                 ______