Socialize the Risk, Privatize the Profits: It's Just Wrong

One of the most troubling changes of the past several decades, I believe, is the mantra that Private Industry can do it (whatever "it" we are talking about) better than Government can.

It has led to a steady outflow of work by the government to private contractors with little or no oversight. It has lead to the Socialization of Risk and the Privatization of Profit.

I find that ethically repugnant.

Today's example comes from Ryan Reilly's article in the Huffington Post: "KBR, Guilty in Iraq Negligence, Wants Taxpayers to Foot the Bill".

Here's the story: Some 800 US soldiers were exposed to sodium dichromate, a known serious carcinogen, when they were securing an Iraqi water treatment facility, operated by KBR contractors, in 2003. Soldiers were apparently told that the substance was, at worst, "a mild irritant".

In November of last year, Oregon jurors awarded 12 Guard soldiers and veterans $85 million in damages for KBR's negligence. Other suits against the company are still pending.

Here's the kicker:

KBR, however, says taxpayers should be on the hook for the verdict, as well as more than $15 million the company has spent in its failed legal defense, according to court documents and attorneys involved with the case. [emphasis added]

KBR's contract with the U.S. to rebuild Iraq’s oil infrastructure after the 2003 invasion includes an indemnity agreement protecting the company from legal liability, KBR claims in court filings. That agreement, KBR insists, means the federal government must pay the company's legal expenses plus the verdict won by 12 members of the Oregon National Guard who were exposed to the toxin at the Qarmat Ali water treatment plant.

What does the indemnity agreement actually say? We don't know, because it's classified.

Most government agencies -- but not the Pentagon -- are banned from open-ended indemnification agreements. The agreement was declassified in late December and given to a Houston-based lawyer who helped with the successful suit against KBR, but was given to him "under a protective order that banned him from sharing the language to parties not involved in the case" [emphasis added here, too]. The Huffington Post has filed a Freedom of Information Act request for the document.