Scandal spurs U.S. review of embassy contractors

WASHINGTON (Reuters) - The U.S. State Department will review its use of private contractors at overseas embassies after a scandal over sexual hazing by security guards at the U.S. embassy in Kabul, an official said on Monday.

Secretary of State Hillary Clinton asked both the State Department and USAID, the government's foreign assistance arm, to take an "across the board" look at how contractors are used and prepare to do more of the jobs themselves, department spokesman Ian Kelly said.

"She has made it a priority to build up the capacities of both agencies to, when appropriate, take on tasks that are now being outsourced," Kelly told a news briefing, adding that the review would be part of a larger, four-year assessment of diplomatic strategies and operations.

Kelly said 12 embassy guards had been removed or resigned following the scandal. The entire senior Kabul management team of the contractor, Virginia-based ArmorGroup, has been replaced and alcohol has been banned at the group's camp, Kelly said.

A watchdog report this month accused ArmorGroup of jeopardizing security at the embassy by understaffing the facility and ignoring lewd, drunken conduct and sexual hazing by some guards -- and provided graphic photos as evidence.

ArmorGroup North America, now owned by Florida-based Wackenhut Services, was also hit by a federal whistle-blower lawsuit that said it had ignored brothel visits by guardsmen and other misconduct because of what a lawyer said was a "myopic preoccupation with profit" in its five-year, $187 million contract with the State Department.

The State Department extended ArmorGroup's contract for another year in June despite citing the firm three months earlier for letting 18 guardposts go unstaffed for 30 hours and other shortcomings.

Kelly said State Department believed the safety of embassy staff was never in jeopardy. "Despite the administrative deficiencies discussed with the contractor, the department did not observe any breaches of security of the mission in Kabul," he said."

(Reporting by Andrew Quinn; editing by Alison Williams)