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Fluor Corporation, the US building firm tipped to land a massive reconstruction deal in postwar Iraq, is facing a multibillion-dollar lawsuit claiming that it exploited and brutalised black workers in apartheid-era South Africa.
Lawyers acting for thousands of victims of the racist regime are to file a detailed suit in the US this week, which includes the claim that Fluor hired security guards dressed in Ku Klux Klan robes to attack unarmed workers protesting against poor pay and conditions.

The action comes at an awkward time for Fluor, one of five firms controversially invited by the US government to bid for a $600 million contract to rebuild Iraqi roads and public buildings. John Ngcebetsha, a lawyer for former employees, said: 'This company has a long history of human rights violations in South Africa. It cares nothing about the societies in which it works and its involvement in Iraq would be disastrous.'

Fluor denies all the allegations. Meanwhile, it has emerged that Jay Garner, the retired US general who will oversee Iraqi reconstruction, is facing legal action over his activities while president of a defence company, SY Technology (now SY Coleman).

Lawyers acting for rival DESE Research claim Garner lent his weight to senior officials at the Space and Missile Defence Command, where he previously worked, to deny DESE a research contract on a system for attacking enemy satellites. DESE's lawyer, Howell Riggs, also claims that Garner received a 'payoff' from successors at the defence command in the form of another lucrative contract. That deal was later cancelled.

Riggs said: 'We are investigating Garner's role in the denial of a contract to DESE in September 2001 and whether he has engaged in a conspiracy to deny DESE work. We expect to file a suit against him and SY Technology or its successor soon.'

No one at SY Coleman was available for comment.
 

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Since it emerged last month that the US government is planning to spend $600 million of its taxpayers' money with its own construction companies - the original shortlist included Bechtel, Halliburton, Fluor, Parsons and Louis Berger - to rebuild schools, roads and hospitals in Iraq after the war is over, British companies have been in a bind.

Suspicions are high because of the close connections between several of these companies and the Washington administration, leading many in the UK into demanding they be treated fairly in the competition for work.

Some have spoken out. Stuart Doughty, chief executive of Costain, recently argued that the Government should bypass the United Nations in deciding on governance in post-conflict Iraq, ensuring that 'those who have been violently against this conflict don't share in the reconstruction'.

He was roundly criticised by aid agencies, who believe that both for ethical and practical reasons it is vital that the UN takes a leading role.

But he has also been roundly criticised by his competitors. One executive at another UK company said last week: 'I thought what Stuart Doughty said was disgraceful. I don't think it is at all seemly for companies to be making comments like that.'

Other companies show how sensitive they are to the 'golddigger' label. Thames Water, for example, has been listed, among other companies, as having lobbied the Government to intervene with the US Agency for International Development (USAID). But a company spokeswoman said this was not the case. 'We have not done any lobbying on this.'

Chief executive Bill Alexander had indeed signed a letter to the Government making the case, not as head of Thames but as head of the Water Services Advisory Group, the industry body. The spokeswoman confirmed that Thames was a member of this group, but would not say whether it supported what Alexander had done, given its 'non-lobbying' stance. As it turned out, Alexander and his colleagues were successful - Trade Secretary Patricia Hewitt phoned Andrew Natsios, head of USAID, to make Britain's case.

But none of these concerns is stopping the BCCB from lobbying. The organisation's Nigel Peters says: 'There is quite a lot of concern among our members that, once again, the UK has been up front on the military side, but when it comes to reconstruction it will lose out. Our members are very happy that we are lobbying on their behalf.'

However, it is also clear that the BCCB is acutely aware of the fine line it is treading. Peters says: 'In no way do we want to get into any argument as to why this war started. As far as our members are concerned there is a war under way and that will mean there is a need for reconstruction afterwards. All we are saying is that British companies are well-qualified to do that work.'

One member says: 'We know there is a section of the NGO community that believes we should not be talking about reconstruction, particularly as there are some people arguing that the US went to war simply to get their hands on oil and contracts for their companies.'

But, niceties aside, clearly BCCB members believe they should get a payback for the military and political support Britain has shown the US. Some companies see nothing wrong in admitting this. Michael Jeffries, chief executive of WS Atkins, says: 'We have given not just our military support to the US, but our political support through the UN. It is important that we get a share of the work afterwards.'

He goes as far as to say that contracts should be divided up to particular countries on percentage terms.

However, the fact that the BCCB, if not members such as Costain, sees the importance of support from the aid community is clear from the fact that it is keen for the Department for International Development to be present at Thursday's meeting.

Officials at DfID maintain that the UN must take a leading role in both humanitarian and reconstruction work after the war. They have been appalled by the attitude of some elements of the US administration to the UN's early planning for reconstruction.

Peters says: 'We are currently trying to get someone from DfID to talk about this at the meeting. It is quite possible that they are more sensitive about it.'

The need for support from DfID is just as commercial as the need for support from Trade Partners UK.

Peters says: 'DfID is a major client for many of our members in that they fund aid programmes around the world on which they work.'

This work mainly concerns consultants, particularly engineers and service groups - which make up about 280 of the 300 BCCB members - rather than large contractors. For example, Crown Agents (the privatised logistics group) which received a con tract from USAID, works a lot with DfID.

For its part, DfID, is not going to the meeting. 'We are not involved,' said a spokeswoman. DfID is not considering the issue of contracts for reconstruction before the UN's position is made clear.

There is some evidence, in the way companies talk about these issues, that corporate responsibility is a good commercial tool rather than a soundly held belief.

For example, a representative of one UK company who complained about the 'unseemly haste' with which its competitors were approaching the Government to lobby on their behalf, explained in the same conversation the lobbying it was doing in Washington.

This was primarily focused against Halliburton, the Houston engineering company formerly headed by Vice President Dick Cheney, which makes substantial donations to the Republican party and which had been shortlisted for the USAID contract, along with Bechtel, another US construction giant with Republican links.

In the event, Halliburton has dropped out of the race for prime contractorship on the USAID work, although it hopes to land a sub-contract, and one of its subsidiaries, Kellogg Brown & Root, has already landed a deal to put out wellhead fires.

But while this UK company was very much against Halliburton, WS Atkins has actively been engaging with it. 'We have been talking to a number of US companies with whom we have relationships, and one of them is Halliburton,' a company source said. 'We could see a valuable partnership at sub-contract level with them.'

Meanwhile, Amec, another major British player, which was involved in putting out the Kuwaiti oilfield fires in 1992, has historic links with another of the USAID's shortlisted operators, California-based Fluor.

'We would not be upset,' said one company source with studied understatement when asked what its attitude would be if Fluor won.

In other words, the attitude of British players to the controversy surrounding the US contracting process is driven less by ethical outrage at political fixing, more by the historical commercial links formed by the companies with their US counterparts.

One industry insider said: 'We knew from the outset we were never going to get prime contracts. That was never at issue because this aid is tied. But what this is all about is doing whatever you can to make the contacts you have count so you get in at the subbie level.'

If this is what the problem boils down to, then Thursday's meeting will be important.

As one contractor put it: 'US companies are very interested in talking to us at the moment, and we have had long and interesting discussions. But what they often come down to is "Fine, you are a good company, we'd love to work with you. By the way, how much is your government putting into this?" Then there is a long silence
 

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