U.S. Army paid bonuses to KBR despite deaths

WASHINGTON (Reuters) - The U.S. Army paid $83.4 million in bonuses to KBR Inc., its biggest contractor in Iraq, despite accusations its wiring work has been linked to the electrocution of at least four soldiers and one contractor, a congressional investigative panel said on Wednesday.

The Senate Democratic Policy Committee said it also determined that more than half of the bonuses -- $48.9 million -- were awarded after the Defense Department sounded an alarm in early 2007 about what the panel described as pervasive problems with KBR.

Chairman Byron Dorgan opened the hearing by ripping into the Houston-based company and accusing the Army of "stunning incompetence" in rewarding it for its work.

The Senate Democratic Policy Committee is the research arm of the Senate Democratic leadership and conducts investigations of its own.

Dorgan said his panel's probe "led us to internal Pentagon documents showing that in 2007 and 2008, KBR received bonuses of $83.4 million for work that, according to the Pentagon's own investigation, led to the electrocution deaths of U.S. troops."

The Army declined to attend the hearing but submitted a written statement in which it said bonuses to KBR had been halted pending a review.

"I am committed to ensuring that our men and women deployed in combat operations receive the highest level of support," wrote Deputy Defense Secretary William Lynn.

Dorgan said his committee, which has been investigating defense contracting in Iraq since 2003, had had difficulty in obtaining information from the Pentagon.

Lynn wrote that the Pentagon, which now reports to President Barack Obama, "is grateful for the diligence in your oversight."

HUNDREDS SHOCKED

In addition to the electrocutions under Army investigation cited by the committee as linked to KBR work, hundreds of soldiers have received electrical shocks, a source close to the committee's probe said.

Dorgan said the committee had learned that the January 2008 death of Staff Sergeant Ryan Maseth, electrocuted while showering at a military installation in Baghdad, had recently been reclassified from "accidental" to "negligent homicide."

The four other electrocutions that the panel said involved KBR work included another soldier showering and one swimming in a pool, both in 2004, a soldier operating a power washer in 2005, and a KBR contractor whose air conditioner in his living quarters shorted in 2005.

No charges have been brought against KBR, but the Army is still investigating.

"KBR's position remains that it was not responsible for the electrocution deaths that have been publicized," KBR spokeswoman Heather Browne said in a statement in advance of the hearing.

"Further, the assertion that KBR has a track record of shoddy electrical work is unfounded," Browne said.

KBR was part of Halliburton Co until two years ago. Former Vice President Dick Cheney served as Halliburton's chief executive from 1995 to 2000, when he became George W. Bush's running mate.

During the Bush administration, some critics said Cheney's deferred compensation from the company represented a conflict of interest and questioned Halliburton's winning of lucrative government contracts in Iraq.

(Editing by Xavier Briand)