VZCZCXYZ0009
PP RUEHWEB

DE RUEHKU #0091/01 0240535
ZNR UUUUU ZZH
P 240535Z JAN 08
FM AMEMBASSY KUWAIT
TO RUEHC/SECSTATE WASHDC PRIORITY 0651
INFO RUEHGB/AMEMBASSY BAGHDAD PRIORITY 1121

UNCLAS KUWAIT 000091 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR NEA/FO, NEA/EX 
 
E.O. 12958: N/A 
TAGS: ABLD AMGT ECON IZ KU PREL
SUBJECT: MFA PASSES PAPER DEFENDING FIRST KUWAITI'S WORK AT 
EMBASSY BAGHDAD 
 
¶1. (SBU) At a January 11 dinner hosted by the Amir in honor 
of President Bush, MFA Under Secretary Khaled Al-Jarallah 
requested that we pass a paper and DVD to Assistant Secretary 
Welch in support of First Kuwait Trading and Contracting 
Company's work in building the New Embassy Compound in 
Baghdad and other facilities in Iraq.  The paper resembles a 
generic press release and does not appear to have been 
prepared by the MFA.  The DVD, apparently produced by First 
Kuwaiti and bearing the State Department Seal and a 
Confidential label, contains video and still photos of 
 
SIPDIS 
various parts of the NEC with a musical soundtrack but no 
voice-over.  We do not have any information as to how widely 
this DVD, which we will forward to Baghdad RSO via pouch, has 
been circulated. (Comment: Neither the video nor the paper 
adds anything new or significant to the First Kuwaiti - NEC 
controversy.  End Comment.)  The complete text of the paper 
follows. 
 
¶2. (Begin text) 
 
New U.S. Embassy construction - Baghdad design and build by 
First Kuwaiti Trading & Contracting Company 
 
First Kuwaiti Trading & Contracting Company ("First Kuwaiti") 
is proud of its work in support of the Iraq war effort and 
reconstruction and believes that no other firm operating in 
Iraq has done more than First Kuwaiti to demonstrate the 
quality, efficiency and integrity of Kuwaiti business.  Since 
2003, First Kuwaiti has successfully completed over 200 
contracts in support of Coalition Forces, including the 
construction of living compounds for the new Iraqi Army, 
division headquarters for the U.S. military, and other 
critical facilities.  As a result, the company has received 
numerous commendations from U.S. military commanders and 
government officials.  Unfortunately, the high-profile nature 
of this work has prompted critics interested in discrediting 
the U.S. Administration to make unfair and baseless 
allegations against First Kuwaiti. 
 
In 2005, the U.S. State Department recognized First Kuwaiti's 
ability to complete substantial projects in the most 
difficult of circumstances when it chose the company to be 
the prime contractor for its New Embassy Compound ("NEC") in 
Baghdad.  The 104 acre, 28 building compound is the largest 
U.S. embassy in the world and the most complex infrastructure 
project yet completed in wartime Iraq.  The embassy required 
a huge logistical effort undertaken in hazardous conditions. 
Construction has occurred in the midst of a dangerous combat 
one with compromised supply routes and unrelenting risk to 
the lives and safety of First Kuwaiti workers. 
 
Regardless of these and other challenges, First Kuwaiti's 
portion of the embassy project has been substantially 
completed in just over two years within the original fixed 
price budget of $474 million.  While impressive, this success 
could not have been achieved without the active support of 
the Kuwait Government.  Not only did the Kuwait Government 
facilitate the immigration of foreign workers for the 
project, it also assisted greatly with the re-export of 
construction materials; exempted the import and export of 
materials from customs; and provided extraordinary facilities 
for the staging of shipments to Iraq.  For example, the NEC 
required casting over 150,000 cubic meters of reinforced 
concrete using more than 30,000 tons of steel.  Because these 
commodities were not available in Iraq, they had to be 
transported from Kuwait, which was only made possible through 
the close cooperation between the Kuwait Government and the 
Government of the United States. 
 
Despite First Kuwaiti's success with the NEC project, 
Democratic members of the U.S. Congress and other critics of 
the war in Iraq have used First Kuwaiti and the NEC project 
to attack the Bush Administration.  By making sensational 
allegations about First Kuwaiti and the NEC project, partisan 
critics of President Bush have generated significant media 
attention and portrayed the U.S. State Department in a 
negative light.  Of course, in the American political 
context, it is generally easier to make baseless allegations 
against a foreign company than against one located in the 
U.S. - a fact made worse by the State Department's refusal to 
permit First Kuwaiti to defend itself in the press. 
 
The most damaging allegations made against First Kuwaiti are: 
(1) that First Kuwaiti's construction of the NEC has been 
substandard; (2) that First Kuwaiti trafficked foreign 
workers to the NEC site against their will; and (3) that 
First Kuwaiti's General Manager was involved in an illegal 
bribery and kickback scheme.  All three of these allegations 
are baseless and ample evidence exists to support that 
 
conclusion. 
 
  --  First, a powerful Democratic congressional committee 
chairman and strong critic of the Administration alleged that 
First Kuwaiti installed counterfeit wiring at a diplomatic 
guard camp next to the NEC and that there are widespread 
deficiencies in the NEC's fire suppression system.  These 
claims are absolutely false.  the U.S. State Department 
itself investigated the wiring allegation and concluded that 
"no counterfeit wiring was found."  Similarly, First Kuwaiti 
has ensured that the NEC's fire suppression system meets the 
State Department's standards, and the system has been fully 
inspected by a team of independent engineers. 
 
  --  Second, congressional Democrats highlighted implausible 
claims that First Kuwaiti brought laborers from foreign 
countries to work at the NEC against their will.  These 
allegations are also false.  Because of the serious nature of 
the allegations, they were investigated thoroughly by three 
different entities: the Philippine Government, the Inspector 
General of the U.S. State Department, and the Inspector 
General of the Multinational Force - Iraq.  All three of 
these investigations concluded that the trafficking 
allegations made against First Kuwaiti were entirely without 
merit. 
 
  --  Finally, critics of the war and Democratic members of 
Congress have alleged that First Kuwaiti "participated in an 
illegal kickback scheme to obtain subcontracts under the 
Army's multi-billion logistical support contract."  This 
false allegation is based on an unsubstantiated assertion by 
a former KBR contracting officer who claims he accepted 
$10,000 from First Kuwaiti's general manager in violation of 
U.S. law.  We expect that this matter is under review by the 
U.S. Attorney's Office in Rock Island, Illinois, where the 
KBR employee was indicted.  Though no charges have been 
brought against First Kuwaiti, it is troubling that the U.S. 
Government could pursue a prosecution against a Kuwaiti 
company for actions that allegedly occurred entirely within 
Kuwait.  Moreover, KBR is currently using these allegations 
as an excuse to suspend payment of nearly $90 million to 
First Kuwaiti for materials supplied and work completed under 
unrelated contracts. 
 
The U.S. State Department has declared that the NEC project 
has been substantially completed in just over two years and 
within budget, and First Kuwaiti is currently awaiting the 
Baghdad embassy's final acceptance of the complex.  We are 
confident that the NEC will serve as a model for U.S. embassy 
construction around the world and sincerely hope that 
partisan allegations against First Kuwaiti by critics of 
President Bush and the war in Iraq will not adversely affect 
ongoing relations between the United States and the State of 
Kuwait. 
 
(End text) 
 
********************************************* * 
For more reporting from Embassy Kuwait, visit: 
http://www.state.sgov.gov/p/nea/kuwait/?cable s 
 
Visit Kuwait's Classified Website: 
http://www.state.sgov.gov/p/nea/kuwait/ 
********************************************* * 
MISENHEIMER