Company’s Secret Contract & Low-Wage Labor
February 12th, 2006
Work for what is
planned to be the largest, most fortified US embassy in the
world was quietly awarded last summer to a controversial
Kuwait-based construction firm accused of exploiting
employees and coercing low-paid laborers to work in war-torn
Iraq against their will.
More than a few U.S. contractors competing for the
$592-million Baghdad project express bewilderment over why
the U.S. State Department gave the work to First Kuwaiti
General Trading & Contracting (FKTC). They claim that
some competing contractors possessed far stronger experience
in such work and that at least one award-winning company
offered to perform all but the most classified work for $60
million to $70 million less than FKTC.
“It's stunning what First Kuwaiti has been able to get
from the State Department,” one contractor said.
contractors that competed for the embassy contracts shared
similar reactions and believe that a high-level decision at
the State Department was made to favor a Kuwait-based firm
in appreciation for Kuwait's support of the invasion and
occupation of Iraq.
“It was political,” said one contractor.
Mohammad I. H. Marafie, chairman and co-owner of FKTC, is a
member of one of the most powerful mercantile families in
Undoubtedly, most of the 900 FKTC workers living and working
on the construction site of the massive embassy project have
been pulled from ranks of low-paid laborers flooding into
Iraq from Asia's poorest countries to work under U.S.
military and reconstruction projects.
Meanwhile, FKTC’s general manager and co-owner, Wadih al-Absi
jets back and forth to the United States, dreaming of
magazine covers celebrating his rise to a global player in
large-scale engineering and construction.
Raised in Beirut, he says he began his career much like the
people he now employs-- as a laborer installing drywall. The
Lebanese Christian escaped war in his home country in the
late 1970s and moved to Kuwait. The Persian Gulf country
welcomes, even recruits, expatriate blue-collar workers like
al-Absi once was to do the grunt work and domestic chores in
its booming, oil-rich economy. Today glitzy shopping malls,
flashy cars and sprawling villas have become the norm and
migrants make up the nearly two-thirds of this tiny desert
state's 2.3 million population.
Building his own personal fortune, al-Absi, too, relies on
migrant labor. FKTC is one of the many Middle East companies
that collectively ship tens of thousands of cheap day
laborers to Iraq's war zones where they are paid just
dollars a day.
Fortune Favors a Few
American contractors witnessing the plight of some of these
migrants at military camps around Iraq have openly
complained that the Asians endure abysmal working
conditions, live in cramped housing, eat poor food, and lack
satisfactory medical care and safety gear.
Typically, these migrants work 12 hours a day, often seven
days a week, and earn as little as $500 a month performing
tasks considered unsuitable for US war fighters. They work
construction, drive trucks, run laundries, clean latrines,
pick up rubbish and operate stores, dining facilities and
warehouses. Without them, and the "body shop"
subcontractors that provide such laborers, the US and
coalition military camps -- virtually small cities -- would
It is a lucrative business for many companies, one that has
helped trigger explosive growth of FKTC.
The company boasted of having $35 million in assets less
than three years ago. Today, the firm has racked up hundreds
of millions of dollars in U.S. contracts in Iraq, pushing
the company well past the $1 billion mark. With 7,000
employees in Iraq, the company claims to be holding $800
million in construction and supply contracts directly with
the Army for military camps, plus more than $300 million
's multibillion dollar contract to perform military
logistics for the occupation forces in Iraq.
It's the kind of success that allows al-Absi to enjoy finely
tailored suits with French cuff shirts, send his children to
American universities and enjoy the fruits of being a
newly-minted millionaire. "I love America," he
Meeting over a morning coffee last September at the posh
Four Seasons Hotel in Washington, a legendary Georgetown
retreat favored by pampered heads-of-state, Hollywood elite,
the Rolling Stones and business executives, al-Absi's eyes
widened as he talked about his company's greatest prize --
the US embassy in Baghdad.
The New Embassy
Indeed, the massive $592-million project may be the most
lasting monument to the U.S. occupation in the war-torn
nation. Located on a on a 104-acre site on the Tigris river
where U.S. and coalition authorities are headquartered, the
high-tech palatial compound is envisioned as a totally
self-sustaining cluster of 21 buildings reinforced to 2.5
times usual standards. Some walls as said to be 15 feet
thick or more. Scheduled for completion by June 2007, the
installation is touted as not only the largest, but the most
secure diplomatic embassy in the world.
The 1,000 or more U.S. government officials calling the new
compound home will have access to a gym, swimming pool,
barber and beauty shops, a food court and a commissary. In
addition to the main embassy buildings, there will be a
large-scale US Marine barracks, a school, locker rooms, a
warehouse, a vehicle maintenance garage, and six apartment
buildings with a total of 619 one-bedroom units. Water,
electricity and sewage treatment plants will all be
independent from Baghdad's city utilities. The total site
will be two-thirds the area of the National Mall in
Unlike most of Iraq's reconstruction, the embassy is
"on time and on budget," according to a December
report to U.S. Senate Foreign Affairs Committee which calls
the progress an "impressive" feat given that
construction is taking place in a country besieged by war.
"Most major construction projects undertaken in Iraq
since 2003 have not met these standards," writes
Patrick Garvey, a member of the Senate Foreign Relations
staff who traveled to Baghdad in November 2005.
With the embassy making a prestigious notch on the company's
belt, First Kuwaiti will step onto the world stage, al-Absi
beamed. "I dream about what it means," he said.
"We have become a global company."
But putting pride aside, al-Absi asked to keep the embassy
contract a secret until the first floors were built. The
dangers of an attack are just too serious, he said last
September. Even his personal residence had been bombed in
the past. "I am all for transparency, but this is
Iraq," he explained.
Despite the new embassy's importance, and its rare
on-schedule progress, the State Department has also resisted
publicizing the contract. It was only after weeks of
inquiries, that it confirmed that FKTC had been selected to
construct the unclassified portions of the project. One day
after the web site FedBizOpps posted a standard public
notice for the first $370-million in FTKC contracts, it
yanked the announcement. Department spokesman Justin Higgins
cited security concerns.
Trafficking Labor into War Zones?
While safety is
part of the reason for keeping a profile low, labor
conditions for Iraq's migrant workers are nothing to boast
When first asked about mistreatment of FKTC's labor force
last August, al Absi threatened to sue if the allegations
were published. At the time, CorpWatch was investigating the
claims of Ramil Autencio and other Filipinos working for
FKTC in Tikrit in late 2003 and early 2004. They claimed
they were overworked, served poor food, and received less
salary than what was agreed to in their contracts.
Originally recruited for employment by MGM Worldwide
Manpower in the Philippines, Autencio said he had planned to
work at Crown Plaza Hotel in Kuwait for $450 a month. Then
his recruitment contract was sold to FKTC when he reached
Kuwait where he says he was pressured to work in Iraq
against his will.
brought me to Iraq when my contract provided that I would
work in Kuwait,” he claimed in an October 3 CorpWatch
story. In late 2003, he and other Filipinos found themselves
cooped up in FKTC housing for a month without pay and
minimal food as they awaited their transfer to Iraq, he
said. “They threatened to put us in prison and they took
everything we had, including our passports. The
police would arrest us if we went out.”
Once in Iraq,
Autencio said that conditions became so bad that he and a
group of 46 Filipinos decided to escape Iraq by hitching
rides from Filipino truckers with the help of another
Filipino serving in the US Army. Traveling by night, they
reached Kuwait in three days time. Their numbers were so
large that the Kuwaiti police could not stop them and they
sought refuge in the Philippines Embassy, Autencio said.
“The Kuwait police couldn’t do anything because we
outnumbered them. We shoved them back
when they asked for our papers. We were
bolder because one of us had died by then.”
Al-Absi, who speaks
excellent English occasionally peppered with bluntness of a
construction worker, denies the allegations of ill-treatment
and labor trafficking.
"It's bullshit," he said, after emailing
electronic documents apparently signed by Autencio and
others agreeing to work in Iraq. "Total bullshit."
does not back down on his story. “All the contracts I had
referred to Kuwait,” he said. “They pushed me into Iraq
when they opened jobs there.”
And Autencio is not
alone in his complaints. An October 10 story in The
Chicago Tribune reported on four-dozen other Nepalese
workers waiting in Kuwait for jobs on American military
bases in Iraq. In September 2004, after watching television
reports that 12 Nepalese hostages in Iraq executed at the
hands of insurgents, they changed their minds.
Such stories of
mistreatment recently prompted the U.S. State Department to
join forces with the Defense Department into possible labor
trafficking by Middle East firms doing business in Iraq.
"Our people are investigating the issues," said
State Department spokesman Justin Higgins after U.S.
Ambassador John Miller, head of the Office to Monitor and
Combat Trafficking of Persons, left for the Middle East in
When CorpWatch inquired last July about widespread
complaints about the poor working conditions and possible
coercion of low-paid Asian laborers in Iraq working under Halliburton
's logistics contract, the Army said an investigation was
underway. That inquiry began and ended with the Army raising
the issues with Halliburton
"for them to address with appropriate action within the
terms of the contract," said Army spokeswoman Melissa
Bohan in an e-mail this month.
The contracts for building the largest, most-strongly
fortified embassy in the world is a tale of fits and starts.
From the Bush Administration's initial request for more than
a billion dollars in emergency funding for the project to
the selection of an inexperienced Kuwaiti firm to build it
-- to even the small oversight effort is also a tale of
Although White House had signaled Congress in early 2004
that it was planning a permanent embassy in Baghdad, it
wasn't until spring 2005 that the Bush Administration
formally pushed the funding request veiled as an emergency
measure. The original proposal for $1.3 billion was almost
three times the price of the new embassy in China.
Reeling from overcharges and costs around other Iraq
contracts, Congress immediately cut the price tag for the
new Baghdad project in half to $592 million and called for
strict oversight. Wired with the most up-to-date technology
and surveillance equipment, it will still be a super-bunker
and the biggest US embassy every built.
Once funding was secured last spring, the U.S. State
Department quietly put the project up for competition among
seven competitors – including some of the most
accomplished US engineering companies. Among the bidders,
Framaco, Parsons, Fluor, and the Sandi Group have
established track records for building secure embassies or
large-scale construction projects.
But the award went to FKTC, a company with little experience
in projects on the scale envisioned for the embassy.
"First Kuwaiti got the embassy job. [It] kinda
surprised everyone that a foreign company would win,"
said an executive of one prominent firm in an email to
another, both of whom bid against FKTC.
But publicly, the losing companies simply shrugged their
shoulders and buttoned their lips. It takes guts for a
contractor to publicly gripe about the decisions of
government contract officers. Many fear they may not get
future business if they do.
There may also be little reason for some of the losing
competitors to complain. Some, including Framaco and The
Sandi Group of Washington, DC, soon received other State
Department contracts. The open-ended contracts call on the
companies to work anywhere in Iraq when needed, including on
the new embassy project.
The Sandi Group was given notice to prepare for some site
clearing and for building temporary housing for the embassy
workers, said Sandi's vice president for development, Muge
Karsli. Then the order was abruptly suspended in January.
"I was supposed to hear more from them in a week, but I
didn't," she said matter-of-factly. "Now, it is on
Bill Waldron is one contractor who will talk about the
embassy project. He claims his Rocky Mountain Group lost
more than $250,000 while preparing a bid to perform
engineering oversight for FKTC and project inspection.
Waldron said that his 25-year-old, veteran-owned Colorado
company had already been given the word that his company
would be the leading contender for the deal, which is why
the firm spent so much effort on the proposal, including
compiling a two inch thick file on the company's personnel
experience in Iraq – experience that State Department
contract officers said they were looking for.
Then the State Department put the job up for open bid three
different times, each time with a new revision. The last
solicitation was cancelled after the contracting officer
went of vacation, according to Waldron.
Waldron's patience finally burst. Only after doggedly
hounding the State Department for reasons why the
competition had been cancelled did he find out what
The contract was awarded without competition on an emergency
basis to a Maryland company, Mil Vets, Waldron said.
"We contacted Mil Vets and asked if they had any
experience working in Iraq prior to being awarded the
embassy project," Waldron said. "The answer was
Al-Absi, for his part, views his embassy agreement as based
on merit and it is the success of his company that draws
fire from his critics.
FKTC never, ever got any job without offering the best value
at the lowest price," he said. "People will never
criticize someone who fails."
That, says al-Absi,
is a price he is willing to pay.