Former Native corp executive admits to guilt in bribery case

Accusations involved steering contracts in return for kickbacks.

Associated PressMarch 13, 2012 

WASHINGTON -- A former Alaska Native corporation executive on Tuesday admitted his role in a $28 million bribery scheme involving the awarding of government contracts and is cooperating with prosecutors in their continuing investigation.

Harold F. Babb, 60, pleaded guilty in federal court in Washington to one charge each of bribery and unlawful kickbacks. Babb, then director of contracts at Eyak Technology LLC, was arrested in October along with three other men, including two employees of the U.S. Army Corps of Engineers. Prosecutors say their investigation has unmasked one of the largest and most brazen government procurement frauds in history.

"It took me a while to come to terms (with), but I am guilty," Babb told a federal judge before entering his plea.

Babb, who has been in custody since his arrest, admitted participating in a complex, far-ranging scheme.

Eyak Technology is a subsidiary of Eyak Corp., the Cordova Native village corporation. The bribery and kickback scandal has shed unwanted light on the special privileges available to Alaska Native corporations, which can obtain large government contracts without competitive sealed bidding. Congress has been investigating whether those privileges have benefited Native shareholders and have given the government value for its money.

Prosecutors say the fraud involved contracts steered to favored subcontractors for kickbacks, contracts awarded through bribery and the submission of phony and inflated invoices for payment. Authorities say the illicit proceeds of the scheme were split among multiple defendants and used to purchase clothing, real estate, cars, fine jewelry and other luxuries.

A bribery conviction carries a possible sentence of up to 15 years in prison and the unlawful kickbacks charge can carry up to 10 years, though Babb is likely to face a much shorter sentence because of his guilty plea and cooperation.

"Mr. Babb decided to accept responsibility and cooperate with the government and move on his with his life," his lawyer, Jeffrey Jacobovitz, said after the plea hearing. Eyak Technology has operations in Virginia and the prime contractor for a lucrative contract with the Army Corps of Engineers. EyakTek, in turn, had multiple subcontractors, including Nova Datacom and Big Surf Construction Management.

Babb admitted to accepting more than $1 million in kickbacks from Nova Datacom's chief technology officer, Alex N. Cho, in exchange for giving the subcontractor preferential treatment, and to paying more than $7 million in bribes in return for approval on Army Corps of Engineers contracts and subcontracts, according to authorities.

Babb was arrested along with two Army Corps of Engineers employees, Kerry F. Khan and Michael A. Alexander, and Khan's son, Lee Khan. Alexander pleaded guilty last month to bribery and conspiracy. Prosecutors initially described the scheme as totaling $20 million, but they say the scope of the fraud has increased to $28 million as new bribes and kickback payments have been discovered.

In a prepared statement, the Justice Department described the case as "one of the largest procurement fraud cases in history."

Since the initial arrests, prosecutors also have revealed charges against a handful of other men associated with subcontractors, including Cho, who pleaded guilty last September to money laundering, conspiracy and other charges.

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