U.S. Says Kiewit Falsified Minority Firms' Contracts -- Prosecutors Target Northwest Work Of Global Contractor

Federal prosecutors yesterday moved against Peter Kiewit Sons', alleging the Omaha-based construction firm lied about use of minority and women subcontractors on government contracts worth about $136 million.

A suit brought under the federal False Claims Act alleges that Kiewit used the minority firms as fronts or that they didn't perform required minimum work.

The alleged deception occurred on projects in Seattle and Tacoma from 1986 to 1989, including a waste-water-treatment plant in Tacoma, the West Seattle Freeway Bridge and the Seattle bus tunnel.

The government says it sustained more than $1.3 million in damages as a result of the company's false claims. If it prevails, the government is entitled to collect treble damages, plus up to $10,000 for each false claim for payment that Kiewit submitted.

Prosecutors contend Kiewit presented 132 false claims.

An assistant to Seattle attorney Irwin Schwartz, who represents the construction firm, yesterday said he was out of the country. She added that Kiewit would have no comment until it had seen the complaint.

Told of the government's action, Charles Adams, spokesman for the Northwest Minority Contractors and Business Association, said, "That's beautiful. . . . I've been pushing this eight years. . . .

"There is something for the minorities to take heart, that the pendulum swings both ways. Till now it's been swinging toward the violators. Now the minorities can see there is justice in the Justice Department."

The investigation resulting in yesterday's complaint originated in Seattle but was transferred to Justice Department headquarters three years ago after Adams and others alleged there was a conflict of interest involving former U.S. Attorney Mike McKay and Walter Scott Jr., president and board chairman of Peter Kiewit Sons' Inc.

The alleged conflict arose because both men volunteered on the board of Creighton University, where McKay went to law school. McKay left his post as U.S. attorney earlier this year.

With the appearance of conflict gone, the Seattle U.S. attorney's office re-entered the case.

Seattle Assistant U.S. Attorney Brian Kipnis said the suit was filed after talks with Kiewit broke down.

The government's complaint is grounded in a program intended to give a share of federal construction funds to firms run by women or minorities.

Essentially, the government alleges Kiewit falsely represented that Global Consultants/Construction Inc. and 3A Industries Inc. were such firms and that they would perform real work.

The suit alleges, for example, that in September 1988, Kiewit and Global submitted a joint-venture bid in connection with the West Seattle Bridge project.

The bid falsely represented that Global would perform more than $5 million of work on the project, including supplying and installing a hydraulic mechanism.

At $33.5 million, Kiewit was the low bidder, and the contract was awarded to the company based on its false representation, the government contends. The complaint alleges Global did not select the firm that supplied the mechanism, Nicholson Manufacturing Co., nor did it direct its installation.

Identified as defendants in the civil suit are Peter Kiewit Sons', Kiewit Construction Group Inc., Kiewit Construction Co. and Kiewit Pacific Co.