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On heels of EyakTek scandal, renewed 8(a) scrutiny

Alex DeMarban

Rep. Ed Markey, a Democrat from Massachusetts, says he's calling for a Congressional hearing on the "kickback scandal" involving the U.S. Army Corps and an Alaska Native corporation.

The U.S. Attorney's Office in Washington, D.C. released information yesterday about the alleged scheme, noting that four people had attempted to defraud the federal government of $20 million. Criminal charges were brought against two Army Corps contracting officers and Harold Babb, an executive from EyakTek. The company is a subsidiary of an Alaska Native village corporation representing Cordova.

Rod Worl, chief executive of parent company Eyak, said in a written statement Tuesday that Babb was "immediately terminated."

Markey made the request in a letter to Rep. Doc Hastings, chair of the Natural Resources Committee and a Republican from Washington state. The letter immediately raises issues about the controversial  8(a) program that offers Native corporations an edge when they bid for federal contracts. Markey wonders whether the program includes enough oversight to protect U.S. taxpayers and Alaska Natives who are shareholders in the companies.

"The exposure of a massive bribery and kickback scam involving Eyak Technology (EyakTek), an Alaska Native Corporation (ANC) subsidiary that served as prime contractor for the U.S. Army Corps of Engineers, raises questions about whether there are adequate controls in place to prevent fraud and abuse at ANCs and protect U.S. taxpayers and Alaska Native shareholders," Markey wrote in the letter dated this morning.

The letter names only Babb, and focuses on EyakTek. It doesn't mention the others who are charged: Army Corps contracting officers Michael A. Alexander and Kerry F. Khan, as well as Khan's son, Lee A. Khan.

"I am concerned that EyakTek's status as an ANC may have facilitated this scam," Markey writes.

"An investigative hearing on this matter would give the committee an opportunity to investigate whether these requirements were observed at EyakTek, what internal controls the corporation has in place to protect against bribery or other malfeasance by company employees, and whether additional protections are needed," Markey wrote.

Read the full letter here. Here's the press release from Markey's office:  

WASHINGTON (October 5, 2011) - Following the exposure of a massive bribery and kickback scam involving a military contractor and employees of the U.S. Army Corps of Engineers, Rep. Ed Markey (D-Mass.) today called for a hearing
in the Natural Resources Committee, which has jurisdiction over Alaska Native Corporations, of which the company in question is a subsidiary.

"An investigative hearing on this matter would give the committee an opportunity to investigate whether these requirements were observed at EyakTek, what internal controls the corporation has in place to protect against bribery or other malfeasance by company employees, and whether additional protections are needed," writes Rep. Markey, the top Democrat on the committee, to Chairman Doc Hastings (R-Wash.).

EyakTek is a subsidiary of the Eyak Corporation, which is an example of an Alaska Native Corporation. Alaska Native Corporations were established in 1971 to represent the various regions and villages of Alaska Natives, and Alaskan Natives are shareholders in their respective corporations. The corporations receive special consideration for some government contracts, and are subject to corporate governance and disclosure requirements.

Contact Alex DeMarban at alex(at)alaskadispatch.com