Contractor that was subject of iWatch News story reaches settlement with government

Introduction

A controversial security contractor that was featured in an iWatch News piece last year has resolved a whistleblower lawsuit with a $7.5 million payment to the U.S. government. The settlement with ArmorGroup North America (AGNA) and its affiliates was announced Thursday by Department of Justice.

In a collaboration with the Washington Post, iWatch News reported a year ago on the suit brought by James Gordon, AGNA’s director of operations from 2007 until early 2008. Gordon alleged that the firm, which was in charge of protecting the U.S. embassy in Kabul, Afghanistan, ignored his claims that its employees had frequented brothels and might be engaged in sex trafficking. If true, those charges would put the company in violation of both a national security directive issued by President George W. Bush in February, 2002, and an anti-trafficking law first passed in 2000.

The $7.5 million settlement with DoJ also resolves allegations about the alleged lack of work experience of its AGNA’s Kabul guards and problems with a separate Naval contract in Bahrain, among other issues. The settlement was reached “to avoid costly and disruptive litigation,” said Susan Pitcher, a spokeswoman for AGNA parent company Wackenhut Services. “There has been no finding or admission of liability,” she said in a statement.

Nevertheless, at least one government watchdog is cheering the outcome.

“It could be quite significant,” said Nick Schwellenbach, the director of investigations at the Project On Government Oversight, and co-author of the original iWatch News story. “As far as I know, it’s the first time a U.S. government contractor has paid to settle allegations that its employees have been involved in human trafficking.”

“It may affect the community of private security contractors and other government contractors in terms of how they look at the Trafficking Victims Protection Act,” he added. “It remains to be seen if this will change the enforcement environment, but I do think it’s a step in the right direction.”

Gordon first brought charges against AGNA and its affiliates in September, 2009. After his claims were investigated by officials from the Navy, the State Department, and State’s Office of Inspector General, the U.S. government decided to join the False Claims Act lawsuit on April 29.

Under the False Claims Act, the government is entitled to up to three times its losses, plus civil penalties. Gordon, the whistleblower also gets a share of the settlement, $1.35 million. Calls to Gordon’s lawyer and DoJ were not immediately returned.

In addition to sex trafficking charges, ArmorGroup has also been the subject of congressional inquiries related to allegedly lewd conduct by its Kabul guards. Yet as of February, it was still in charge of security at the Kabul embassy. AGNA’s parent company and the State Department Bureau of Diplomatic Security did not respond to calls.