1115.org

Everyone’s favorite Iraq contractor, KBR/Halliburton has managed over the years to engage in all manner of wrongdoing in Iraq without ever having to answer for it in the courts. This is, of course, partly thanks to their enormous influence and clout within the government (which causes massive overbilling and fraud, for example, to be routinely rewarded by more lucrative contracts), and partly due to legal loopholes which appear to have been designed precisely to encourage wrongdoing by contractors and their employees. If I had a dollar for every time I’ve read the phrase “legal limbo” in connection with outrageous acts by contractors in Iraq and/or their employees, I would have taken up permanent residence on a South Sea island long ago.

KBR, however, may finally be facing Iraq-related legal proceedings that it won’t be able to wriggle out of quite so easily:

When the American team arrived in Iraq in the summer of 2003 to repair the Qarmat Ali water injection plant, supervisors told them the orange, sand-like substance strewn around the looted facility was just a “mild irritant,” workers recall.

The workers got it on their hands and clothing every day while racing for 2 1/2 months to meet a deadline to get the plant, a crucial part of Iraq’s oil infrastructure, up and running.

But the chemical turned out to be sodium dichromate, a substance so dangerous that even limited exposure greatly increases the risk of cancer. Soon, many of the 22 Americans and 100-plus Iraqis began to complain of nosebleeds, ulcers, and shortness of breath. Within weeks, nearly 60 percent exhibited symptoms of exposure, according to the minutes of a meeting of project managers from KBR, the Houston-based construction company in charge of the repairs.

Now, nine Americans are accusing KBR, then a subsidiary of the oil conglomerate Halliburton, of knowingly exposing them to the deadly substance and failing to provide them with the protective equipment needed to keep them safe.

KBR had their legal defense all ready to go:

Under a World War II-era federal workers compensation law, employers are generally protected from employee lawsuits, except in rare cases in which it can be proven that the company intentionally harmed its employees or committed outright fraud.

KBR is citing the law, called the Defense Base Act, as grounds to reject the workers’ request for damages.

That’s where the petard comes in. You may recall reading about the little payroll taxes scam KBR has been running over in Iraq:

To avoid payroll taxes for its American employees, KBR hired the workers through two subsidiaries registered in the Cayman Islands, part of a strategy that has allowed KBR to dodge hundreds of millions of dollars in Social Security and Medicare taxes.

That gives the workers’ lawyer, Mike Doyle of Houston, a chance to argue to an arbitration board that KBR is not an employer protected by federal law, but a third-party that can be sued.

KBR’s lawyers argued in a legal brief that the workers should be considered employees of KBR because they were part of a corporate subsidiary that was working on a KBR team.

Funny how they are not KBR employees for purposes of payroll taxes, but they are KBR employees for purposes of defending KBR from lawsuits.

Wouldn’t it be wonderful if KBR first loses this arbitration hearing, and then their own legal argument (”the workers should be considered employees of KBR”) is used to compel them to retroactively pay payroll taxes for all their American employees who were put on the rolls of those Cayman Islands subsidiaries? Maybe the retroactive thing can’t happen as long as their Lord Protector is still in office, but January 2009 isn’t all that far away, is it?