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ARE GOVERNMENT CONTRACTORS EXPLOITING

WORKERS OVERSEAS? EXAMINING ENFORCEMENT OF THE TRAFFICKING VICTIMS PROTECTION ACT

HEARING

BEFORE THE

SUBCOMMITTEE ON TECHNOLOGY, INFORMATION

POLICY, INTERGOVERNMENTAL RELATIONS AND

PROCUREMENT REFORM

OF THE

COMMITTEE ON OVERSIGHT

AND GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

FIRST SESSION

NOVEMBER 2, 2011

Serial No. 112–93

Printed for the use of the Committee on Oversight and Government Reform

(

Available via the World Wide Web: http://www.fdsys.gov

http://www.house.gov/reform
(II)

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

DARRELL E. ISSA, California, Chairman

DAN BURTON, Indiana

JOHN L. MICA, Florida

TODD RUSSELL PLATTS, Pennsylvania

MICHAEL R. TURNER, Ohio

PATRICK T. MCHENRY, North Carolina

JIM JORDAN, Ohio

JASON CHAFFETZ, Utah

CONNIE MACK, Florida

TIM WALBERG, Michigan

JAMES LANKFORD, Oklahoma

JUSTIN AMASH, Michigan

ANN MARIE BUERKLE, New York

PAUL A. GOSAR, Arizona

RAU ́ L R. LABRADOR, Idaho

PATRICK MEEHAN, Pennsylvania

SCOTT DESJARLAIS, Tennessee

JOE WALSH, Illinois

TREY GOWDY, South Carolina

DENNIS A. ROSS, Florida

FRANK C. GUINTA, New Hampshire

BLAKE FARENTHOLD, Texas

MIKE KELLY, Pennsylvania

ELIJAH E. CUMMINGS, Maryland, Ranking

Minority Member

EDOLPHUS TOWNS, New York

CAROLYN B. MALONEY, New York

ELEANOR HOLMES NORTON, District of

Columbia

DENNIS J. KUCINICH, Ohio

JOHN F. TIERNEY, Massachusetts

WM. LACY CLAY, Missouri

STEPHEN F. LYNCH, Massachusetts

JIM COOPER, Tennessee

GERALD E. CONNOLLY, Virginia

MIKE QUIGLEY, Illinois

DANNY K. DAVIS, Illinois

BRUCE L. BRALEY, Iowa

PETER WELCH, Vermont

JOHN A. YARMUTH, Kentucky

CHRISTOPHER S. MURPHY, Connecticut

JACKIE SPEIER, California

LAWRENCE J. BRADY, Staff Director

JOHN D. CUADERES, Deputy Staff Director

ROBERT BORDEN, General Counsel

LINDA A. GOOD, Chief Clerk

DAVID RAPALLO, Minority Staff Director

SUBCOMMITTEE ON TECHNOLOGY, INFORMATION POLICY, INTERGOVERNMENTAL

RELATIONS AND PROCUREMENT REFORM

JAMES LANKFORD, Oklahoma, Chairman

MIKE KELLY, Pennsylvania, Vice Chairman

JASON CHAFFETZ, Utah

TIM WALBERG, Michigan

RAU ́ L R. LABRADOR, Idaho

PATRICK MEEHAN, Pennsylvania

BLAKE FARENTHOLD, Texas

GERALD E. CONNOLLY, Virginia, Ranking

Minority Member

CHRISTOPHER S. MURPHY, Connecticut

STEPHEN F. LYNCH, Massachusetts

JACKIE SPEIER, California
(III)

C O N T E N T S

Page

Hearing held on November 2, 2011 ........................................................................ 1

Statement of:

Klemstine, Evelyn R., Assistant Inspector General for Audits, U.S. Department of State; Kenneth P. Moorefield, Deputy Inspector General

for Special Plans & Operations, U.S. Department of Defense; Linda

Dixon, Combating Trafficking in Persons Program Manager, U.S. Department of Defense; and Michael P. Howard, Chief Operating Officer,

Army and Air Force Exchange Service ....................................................... 88

Dixon, Linda .............................................................................................. 111

Howard, Michael P. ................................................................................... 119

Klemstine, Evelyn R. ................................................................................ 88

Moorefield, Kenneth P. ............................................................................. 99

Wyler, Liana, Senior Analyst, Congressional Research Service; David

Isenberg, independent analyst and writer; Nick Schwellenbach, director

of investigations, Project on Government Oversight; and Sam W.

McCahon, founder, McCahon Law ............................................................... 4

Isenberg, David .......................................................................................... 19

McCahon, Sam W. ..................................................................................... 72

Schwellenbach, Nick ................................................................................. 49

Wyler, Liana .............................................................................................. 4

Letters, statements, etc., submitted for the record by:

Cummings, Hon. Elijah E., a Representative in Congress from the State

of Maryland, prepared statement of ............................................................ 141

Dixon, Linda, Combating Trafficking in Persons Program Manager, U.S.

Department of Defense, prepared statement of ......................................... 113

Howard, Michael P., Chief Operating Officer, Army and Air Force Exchange Service, prepared statement of ....................................................... 122

Isenberg, David, independent analyst and writer, prepared statement

of ..................................................................................................................... 21

Klemstine, Evelyn R., Assistant Inspector General for Audits, U.S. Department of State, prepared statement of .................................................. 91

McCahon, Sam W., founder, McCahon Law, prepared statement of ........... 74

Moorefield, Kenneth P., Deputy Inspector General for Special Plans &

Operations, U.S. Department of Defense, prepared statement of ............ 101

Schwellenbach, Nick, director of investigations, Project on Government

Oversight, prepared statement of ................................................................ 51

Wyler, Liana, Senior Analyst, Congressional Research Service, prepared

statement of ................................................................................................... 6

(1)

ARE GOVERNMENT CONTRACTORS EXPLOITING WORKERS OVERSEAS? EXAMINING ENFORCEMENT OF THE TRAFFICKING VICTIMS PROTECTION ACT

WEDNESDAY, NOVEMBER 2, 2011

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON TECHNOLOGY, INFORMATION POLICY,

INTERGOVERNMENTAL RELATIONS AND PROCUREMENT

REFORM,

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM,

Washington, DC.

The subcommittee met, pursuant to notice, at 10:05 a.m., in room

2247, Rayburn House Office Building, Hon. James Lankford (chairman of the subcommittee) presiding.

Present: Representatives Lankford, Walberg, Connolly, and

Speier.

Staff present: Richard A. Beutel, senior counsel; Molly Boyl, parliamentarian; Gwen D’Luzansky, assistant clerk; Cheyenne Steel,

press assistant; Nadia A. Zahran, staff assistant; Richard Burkard,

detailee; Jaron Bourke, minority director of administration; Paul

Kincaid, minority press secretary; and Cecelia Thomas, minority

counsel.

Mr. LANKFORD. We are going to go ahead and get started. Mr.

Connolly is on his way; he is in another hearing as well right now,

so he will be back and forth a little bit. But we want to go ahead

and begin at this time as well.

The committee will come to order.

The Oversight and Government Reform Committee exists to secure two fundamental principles: first, Americans have the right to

know that the money Washington takes from them is well spent;

second, Americans deserve an efficient, effective Government that

works for them. Our duty on the Oversight and Government Reform Committee is to protect these rights. Our solemn responsibility is to hold Government accountable to the taxpayers, because

taxpayers have a right to know what they get from their Government. We also work tirelessly in partnership with citizen watchdogs to deliver the facts to the American people and bring genuine

reform to the Federal bureaucracy. This is the mission of the Oversight and Government Reform Committee.

As a Nation, we have certain values that characterize us. We believe that each person has been endowed by their creator with certain rights, including life, liberty, and the pursuit of happiness.

These are not rights given by men or confined to national bound-
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ary; they are unique to each person worldwide. That passion for

freedom and our national security has taken us across the globe.

In the process of doing the right thing, we must also be careful to

do it the right way.

At the height of our overseas contingency operations, we had

hundreds of thousands of military personnel stationed overseas.

While we have our differences of opinion on the current strategy

or the way forward, we must remember there are tens of thousands

of American men and women stationed abroad, and regardless of

whether there are tens or hundreds or thousands of troops abroad,

the support personnel required to ensure these military and diplomatic operations are effective continue to remain.

Within the confusing maze of contractors and subcontractors who

support our operations, there appear to be less than reputable foreign companies that engage labor brokers who apparently are accountable to no one. They exploit unskilled workers from impoverished backgrounds. We are told that these workers are taken advantage of in their unconscionably low wages, in their work expectations, and in their living conditions.

The purpose of this hearing is to stop, ask the questions that will

confirm or deny these accusations. These foreign workers are

known as third country nationals [TCNs]. They are the workers

who tend to the gardens, wash the dishes, prepare fast food meals,

do the laundry for American embassy workers or military personnel stationed in the Middle East, Iraq, and Afghanistan. They

come from countries such as India, Nepal, Bosnia, Pakistan, Bangladesh, Sri Lanka, and the Philippines. They provide what the

military calls base support operations or they are used by embassies throughout the Middle East to perform the menial labor necessary to support embassy operations.

According to various accounts, some of these workers have been

robbed of wages, injured without compensation, subjected to sexual

assault, or held in deplorable living resembling indentured servitude by their subcontractor bosses. Many are paid an illegal job

broker fee equal to or greater than their final pay.

Reports have suggested they are deceived about their work location or conditions when they are recruited. This can best be characterized as involuntary servitude or even labor bondage for the victimized workers. These unsavory labor practices are collectively

called trafficking in persons. It is prohibited by the Trafficking Victims Protection Act of 2000, which establishes minimum standards

for eliminating trafficking in persons around the world. In fact, the

United States has numerous laws, policies, and contractor regulations already on the books to prevent human trafficking.

The purpose of this hearing is to explore whether the United

States, through its unprecedented use of contractors in war zones

and contingency environments, has become an enabler of human

trafficking or if we have knowingly turned a blind eye to trafficking. We also want to examine the role of contractors and their

subcontractors in adopting these abhorrent labor practices. If our

Nation is trafficking in persons, we must stop this practice immediately; apply every option with abusive contractors, including suspension, debarment, or prosecution; and take the appropriate steps
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to impose the law. This is not a case where clear law is lacking;

it seems to be a case where enforcement is lacking.

To examine the facts, we have two panels today. The first panel

combines investigative journalists or lawyers specializing in human

trafficking concerns, and an expert from Congressional Research

Service to describe the problem in more detail.

The second panel consists of representatives from the Inspector

Generals Offices of the State Department, the Department of Defense, as well as representatives from the Department of Defense

Human Trafficking Office and the Army-Air Force Exchange Service to recount their experiences with human trafficking issues and

to offer some insight into what they are doing to prevent American

taxpayer money from supporting these practices.

I look forward to receiving some clarity and answers on this

issue. There is no good explanation of why we would still have contractors using illegal recruiting fees, providing inadequate living

conditions for TCNs, or violating a multitude of other clear human

dignity values.

With that, I would like to recognize Mr. Connolly for his opening

statement.

Mr. CONNOLLY. Thank you, Mr. Chairman, and I agree with you

that this is a matter of enforcement. This is a matter of values.

There is nothing more abhorrent than taking away human autonomy. Human trafficking is unacceptable under any circumstances.

War does not justify it; the mission doesn’t justify it. We cannot

and will not turn a blind eye to this practice. And as far as I am

concerned, and I think eventually this Congress, Federal agencies

will be held responsible, prime contractors will be held responsible

when and if this practice occurs. It needs to be rooted out, stamped

out, and ended. That is as fundamental an American value and a

human rights value as exists on this planet.

I am glad you are holding this hearing today, Mr. Chairman, and

I look forward to working with you on a bipartisan basis to make

sure we end this abhorrent practice.

Mr. LANKFORD. Thank you, Mr. Connolly.

Members may have 7 days to submit opening statements and extraneous materials for the record.

We now welcome our first panel. Ms. Wyler is the Senior Analyst

for the Congressional Research Service; Mr. Isenberg is an independent analyst and writer specializing in issues involving wartime

contingency operations; Mr. Nick Schwellenbach is the chief investigator of the Project for Government Oversight; and Mr. Sam

McCahon is an attorney in private practice and founder of the

McCahon Law firm.

Pursuant to committee rules, all witnesses will be sworn in before they testify. Would you please rise and raise your right hands?

[Witnesses sworn.]

Mr. LANKFORD. Let the record reflect the witnesses have answered in the affirmative. Thank you. Please be seated.

In order to allow time for discussion, please limit your testimony

to 5 minutes. Your entire written statement, of course, will be

made part of the record.

Ms. Wyler, you are first up. We would be honored to be able to

receive your testimony at this time.
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STATEMENTS OF LIANA WYLER, SENIOR ANALYST, CONGRESSIONAL RESEARCH SERVICE; DAVID ISENBERG, INDEPENDENT ANALYST AND WRITER; NICK SCHWELLENBACH,

DIRECTOR OF INVESTIGATIONS, PROJECT ON GOVERNMENT

OVERSIGHT; AND SAM W. MCCAHON, FOUNDER, MCCAHON

LAW

STATEMENT OF LIANA WYLER

Ms. WYLER. Thank you. Chairman Lankford, Ranking Member

Connolly, and distinguished members of the subcommittee, thank

you for the opportunity to appear today before you on behalf of the

Congressional Research Service. My testimony will discuss U.S.

policies and efforts to combat international human trafficking

among contractors working overseas and representing the U.S.

Government.

Trafficking in persons has been an issue of concern to the United

States and international policy community for its human rights implications and as a prolific form of transnational criminal activity.

Despite international commitments to eradicate human trafficking,

recent reports suggest that the United States continues to face

challenges in preventing it and related violations in the performance of Federal contracts overseas.

These challenges are not new. Since at least the late 1990’s, U.S.

contractors have been implicated in allegations of human trafficking and related violations in Bosnia, South Korea, Iraq, Afghanistan, and other countries around the world. These allegations have

been of concern to policymakers because they risk tarnishing the

reputation of the United States as a country that stands for freedom and human rights principles. They may also undermine U.S.

diplomatic efforts to galvanize international support to combat

human trafficking.

In response to many of the allegations that have surfaced over

the years, the U.S. Government has sought to prevent human trafficking in the context of a multi-tiered policy framework. This

framework consists of international treaties, Federal statutes, policy directives, implementing regulations, agency-specific policy

guidance, and voluntary best practices. In their current form, U.S.

anti-trafficking policies provide for a common definition of severe

forms of human trafficking and related offenses. As of December

2002, the U.S. Government also established a zero tolerance policy

against such trafficking which applies to contractors.

The centerpiece legislation for the U.S. efforts to combat human

trafficking is the Trafficking Victims Protection Act [TVPA] of

2000, as well as its three reauthorizations. The TVPA emphasizes

a three-pronged policy approach to anti-trafficking that focuses on

preventing human trafficking, protecting trafficking victims, and

prosecuting traffickers. The TVPA, as amended, also contains provisions designed to prevent human trafficking in Federal contracts.

Specifically, the TVPA’s 2003 reauthorization allows contracts and

subcontracts to be terminated without penalty under certain conditions. These include situations in which a contractor engages in severe forms of human trafficking, procures a commercial sex act

during the contract period, or uses forced labor in the performance

of the contract.
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Implementing regulations require that contractors insert an antihuman trafficking clause into all solicitations and contracts. This

clause covers, among other provisions, how to address violations,

including the application of suitable remedies such as termination,

suspension, and debarment. Additional executive branch regulations apply to certain contracts in Afghanistan and Iraq. For example, the U.S. Central Command’s Joint Theater Support Contracting Command mandates additional provisions related to employee passports, recruiting fees, and living conditions, among others.

Yet, despite this multi-tiered policy and implementation framework, allegations of trafficking violations and contracting practices

that heighten the risk of trafficking appear to continue to take

place. The U.S. Commission on Wartime Contracting has highlighted possible incidents related to human trafficking involving

labor brokers, contractors, and subcontractors in U.S. contingency

operations overseas. Several reports by U.S. Inspectors General Offices have also, in recent years, identified problematic contracting

practices overseas that raise the risk of human trafficking and related violations.

Some observers have begun to wonder why, after decades of

strengthening United States and international policy against

human trafficking, do such violations continue to occur. Is the existing legal and regulatory framework sufficient? Are there gaps in

the oversight and enforcement of existing laws and regulations

among overseas contractors? Do contractors and subcontractors, as

well as those responsible for monitoring them, understand what actions are prohibited and how such contracts should be monitored?

And to what extent are continued trafficking violations in contracts

overseas a manifestation of broader challenges associated with

managing and relying on a large contractor force to support overseas missions?

These questions may warrant further exploration by policymakers and implementing agencies.

This concludes my testimony. Thank you again for the opportunity to be here today. I look forward to your questions.

[The prepared statement of Ms. Wyler follows:]
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Mr. LANKFORD. Thank you, Ms. Wyler.

Mr. Isenberg.

STATEMENT OF DAVID ISENBERG

Mr. ISENBERG. Chairman Lankford, Ranking Member Connolly,

other distinguished members of the subcommittee, thank you for

the opportunity to testify here today.

I commend you for examining the issue of whether Government

contractors exploit workers overseas. It is unquestionably a problem. Though it has come up elsewhere, it has not yet received the

sustained attention it merits. The Commission on Wartime Contracting in Iraq and Afghanistan noted in its final report: U.S. contingency contractors, opportunistic labor brokers, and international

criminal organizations have taken advantage of the easy flow of

people, money, goods, and services to capitalize on the sources of

revenue and profit. Their actions bring discredit to the United

States and act as a barrier to building good diplomatic relations.

This subject also means you have to look at the relationship between prime contractors and their subcontractors, which is another

linked problem. ‘‘It is often,’’ to cite Winston Churchill, ‘‘a riddle,

wrapped in a mystery, inside an enigma.’’ As proof of this, you

don’t have to look any further than last week, when the International Stability Operations Association, a major trade association

for an industry, held their annual summit. One of their workshops

was entitled Performance and Pitfalls of Subcontract Management.

I am pleased to be here to discuss The Najlaa Episode Revisited

report that I coauthored with my colleague, Nick Schwellenbach of

POGO, which came out earlier this year. In the interest of full disclosure, I should mention, though I fully commend POGO for allowing me to come to them with the information and publishing the

report, I don’t speak for POGO.

First, let me address why is this important. For years, industry

advocates have been claiming that thanks to private military and

security contractors, U.S. military forces have the best supplied

military in any military operation in history. It is true that PMCs

are now so intertwined and critical that the U.S. military simply

can’t operate without them. But it is not an unmitigated benefit.

Many PMCs have problems implementing contracts. Some have

committed outright fraud, as you know, thus wasting U.S. taxpayers’ moneys and indirectly negatively affecting U.S. military operations.

Second, our report documented various violations of the law and

irregularities with regard to third country nationals. Some people

may say this is unfortunate, but since nobody was wounded or

killed, what is the big deal? The answer is twofold.

First, as any competent military commander will tell you, wars

are not fought and won by machine and tools; they are fought and

won by people. Given how tightly integrated private military contractors are with regular military forces, treating people badly on

the private side can adversely impact people on the public side.

Second, there is a cost when contractors are improperly used and

treated, and I am not talking about money. Although it is not widely recognized, the use of private contractors among the complex of

national defense, security and foreign policy departments and agen-
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cies is so widespread and so wide in scope that their impact can

be strategic, as opposed to merely operational and tactical.

If you think I am exaggerating, consider the recent news that the

United States is withdrawing its military forces from Iraq by the

end of the year. This was not done because the Obama administration wanted to do so; it was done because it could not work out a

deal regarding immunity for U.S. military forces. But given the

events of September 2007, when Blackwater security contractors

shot and killed 17 Iraqi civilians, no Iraqi government was ever

going to be able to grant an immunity deal. Now, like it or not,

that is strategic impact. In other words, there is a reputational cost

when contractors do bad things or are treated badly.

Third, while industry officials and advocates say they often welcome regulation, it often comes with the caveat that it should not

be intrusive or burdensome. They note they already comply with

existing law laws. While it is true that existing regulation could

interfere with the proper functioning of the private sector, it is

equally true that the unconstrained activities of the marketplace,

especially in the chaos of battlefields and war zones, is a recipe for

problems. In truth, free market and regulation can go together.

Finally, contractor advocates also point to their own efforts to ensure ethical conduct, notably through codes of conduct. While this

is commendable, and perhaps some day even useful, it is hardly

sufficient. At the present time, their mechanisms for enforcement

are largely theoretical and not resourced, and there are no people

or money put behind them. Right now they operate on the Joe

Isuzu principle, which is to trust us. My response is that we should

heed the words of Ronald Reagan and trust, but verify.

Finally, even if a company does have high standards for ensuring

ethical conduct, it all falls apart when it comes to subcontractors.

KBR has an extensive code of conduct, has a lot of resources it puts

into implementing behavior for its employees, but when it came to

dealing with its own subcontractor, it failed miserably.

Thank you.

[The prepared statement of Mr. Isenberg follows:]
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Mr. LANKFORD. Thank you, Mr. Isenberg. Look forward to receiving questions as well.

Mr. Schwellenbach.

STATEMENT OF NICK SCHWELLENBACH

Mr. SCHWELLENBACH. Chairman Lankford, Ranking Member

Connolly, and other distinguished members of the subcommittee,

thank you for inviting me to testify today.

The United States has been a global leader in combating trafficking in persons, yet our tax dollars are inadvertently fueling this

human rights tragedy through our overseas contract labor supply

chain. Not only is trafficking and exploitation of laborers a moral

wrong, but it can spark a backlash from the laborers and their

home countries, and could undermine the U.S. mission abroad.

There have been some oversight improvements over the last several years, but there is a lack of enforcement. For example, to date,

there have been no prosecutions for contractor-driven war zone

trafficking.

First, I will recount some stories of laborers in Iraq; then I will

summarize public reporting of U.S. investigative and enforcement

activity; third, I will recommend some ways to strengthen enforcement.

In June, The New Yorker’s Sarah Stillman reported on labor

rights abuses against third country nationals on U.S. contracts in

Iraq and Afghanistan, and she focused on the stories of two Fijian

women, Vinnie Tuivaga and Lydia Qeraniu, who worked for the

Army Air Force Exchange Service subcontractors in Iraq.

Vinnie and Lydia were, like many others, lured by promises of

good pay. They were told by a local recruitment firm in Fiji that

they could each make between $1,500 and $3,800 a month in

Dubai, in the UAE. After arriving in Dubai, they and other women

discovered their true destination, which was Iraq. They could have

quit, but they had gone into massive debt to pay the recruitment

fees to be there. Quitting would mean no income to pay off this

debt.

But when they got to Iraq, Vinnie and Lydia and the other

women further discovered that instead of making between $1,500

and $3,800 a month, as they were promised, they would only make

$700 a month, which was later further reduced to $350 a month.

The contract they signed specified that they would work 12 hours

a day for 7 days a week, and that their vacation was a return ticket home.

In addition, an AAFES subcontractor supervisor had been repeatedly sexually assaulting Lydia according to The New Yorker article.

The allegations eventually ended up in the hands of both AAFES

officials and the Army Criminal Investigation Command. Army

CID told me last year, when I was working on another article, that

they did not substantiate the allegations of trafficking and sexual

assault. They would not tell me if they had actually interviewed

the women. According to The New Yorker, Lydia and Vinnie both

say that no one from the military or AAFES spoke to them about

their sexual assault claims.

In another case from 2004, several Nepali laborers believed that

they would be working in a five-star hotel in Jordan. Cementing
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that belief was paperwork filed with Nepal’s Labor Ministry for

several laborers to work at that hotel. The recruiting fee charged

each laborer meant that they and their families were deeply in

debt. But the promises of lucrative pay made the debt seem like

a good deal.

Furthermore, the manager of the recruitment firm told the Chicago Tribune that he didn’t mention anything about Iraq to the applicants. They believed they were going to Jordan. But after they

arrived, the Jordanian brokers demanded that the Nepalis surrender 2 months’ pay as a fee, in addition to their recruitment fee,

and accept less than half the salaries promised them in Nepal, and

that they go to Iraq. According to the Tribune, their families told

them that they must go to Iraq to cover the loans used to pay a

Nepalese broker $3,500 for each man, more than a decade of earnings for the average Nepali laborer.

The Amman to Baghdad Highway, which runs through Iraq’s

Anbar Province, is dangerous even for convoys guarded by security

details. But 12 Nepali laborers did not have the advantages of having a security detail; they traveled this route, were kidnaped by insurgents, held for weeks, and killed.

I will skip an example.

Looking at overall enforcement activity over the last several

years, there have been a few investigations, but there were no

DOD investigations into trafficking in both 2006 and 2007, according to the DOJ. This section detailing DOD investigations is missing in 2008 and 2009 reports. In 2009, according to the DOD IG,

there was one report of a preliminary investigative activity of a

contractor in Iraq for labor trafficking, but prosecutors determined

the facts and circumstances did not warrant further action.

Over at the State Department, two investigations were opened in

2009 and closed in 2010, a State Department IG spokesman told

me last year. He said both cases were unsubstantiated.

So there have been a few investigations, but so far none of them

have led to prosecutions.

There was also a civil action where the DOJ joined a whistleblower lawsuit earlier this year and the company settled to ‘‘end

the litigation.’’

But what can be done to improve enforcement? Investigators

clearly need the resources that they require. The SIGOCO, or Special Inspector General for Overseas Contingency Operations, may

be one way to do this. They also need to be trained in investigating

trafficking in persons violations, and jurisdictional ambiguities

should be closed with Civilian Extraterritorial Jurisdiction Act.

Thank you for this opportunity. I am open to questioning.

[The prepared statement of Mr. Schwellenbach follows:]
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Mr. LANKFORD. Thank you, Mr. Schwellenbach.

Mr. McCahon.

STATEMENT OF SAM W. MCCAHON

Mr. MCCAHON. Chairman Lankford, Ranking Member Connolly,

members of the committee, thank you for inviting me to testify before you today and thank you for taking an interest in the practice

of modern day slavery on government contractors, and thank you

for your commitment to take decisive action in this area.

I lived approximately 91⁄2 years in the Gulf region, Kuwait, Iraq,

Saudi Arabia. Trafficking in persons is not a unique phenomena to

government contracts; it is par for the course in these countries,

which is why the Department of State ranks them on tier 2 and

tier 3 for trafficking countries. In support of our trafficking countermeasures, my colleague, Sindhu P.K., and I have collectively

spoken with several thousand victims of trafficking on government

contracts both in Iraq and back in South India.

As an attorney who has spent a significant portion of my career

investigating allegations of procurement fraud on behalf of the U.S.

Government and corporations, I look forward to talking to you

today about the dynamics of trafficking in persons on government

contractors performed in contingency areas.

I would like to focus and summarize three areas. The first I will

describe the common schemes used by contractors and recruiters to

exploit workers and reduce them to the status of indentured servants. Second, briefly describe the scope of trafficking on U.S. Government contractors and the inadequacy of Government efforts to

date; and, finally, touch upon some mitigation measure that can be

taken by the Government to abolish this practice.

Although there are many companies engaged in trafficking on

U.S. Government contracts in Afghanistan and Iraq, they use a

tried and tested business model to perpetrate the fraud. The following steps are standard operating procedure for the traffickers

and also the subcontractors and prime contractors to take kickbacks from the traffickers.

First, subcontractor-prime contractor establishes direct contact

with the recruiting company in the developing nation. The purpose

of the personal contact by the subcontractor or prime is to solidify

the kickback scheme.

Second, arrangements are made for the contractor company to

pay the recruiter for the services of recruiting, such as air fare,

visas, cost of medical examinations.

Third, the contractor and the recruiter agree to the amount of

the kickback paid to the contractor for giving the recruiting firm

the business. The kickback is typically 50 percent of the money

charged by the recruiter to the prospective employee. This is where

the violation of the Anti-Kickback Act of 1986 occurs.

Fourth, the recruiter retains the services of subagents to solicit

victims. This process facilitates the layering or onion skin effect in

order to provide plausible deniability up the trafficking chain.

Fifth, the recruiter will solicit victims from farming villages who

are typically without resources. This category of victim is also less

sophisticated concerning the fraudulent techniques used by recruiters.
73

Sixth, the recruiter deceives the victim into believing that he will

receive money far beyond which he will actually earn. Oftentimes,

but not always, the location of the work site is misrepresented.

The seventh step, the recruiter’s agent informs the victim he will need to pay a fee between $2,500 and $5,000 in order to get the

well-paying job and good working conditions servicing the U.S.

Government. This action induces the victim to pay the high recruiting fee and will help ensure future compliance with the contractor’s

dictates because the victim will become indebted in order to pay

the commission to the recruiter.

Eight, victims will typically obtain the money from a loan shark

or use their house or their dowry gold as collateral. The interest

on the loan is between 35 and 45 percent. The money paid the loan

shark must be provided to the recruiter or subagent prior to departure for the work site.

Workers are not provided a written contract prior to the departure from their host nation. If they do receive an agreement once

they arrive at the work site, it will not be written in a language

they can understand.

The 10th phase, once the victim arrives in the combat zone, he

is typically housed for several months without pay and not permitted to call his family. When he does receive his first work and

pay, it is typically 50 percent of what he was promised by the recruiter. He tells his employer what was promised by the recruiter,

but the subcontractor or prime informs him that is a matter between the worker and the recruiter.

By this time, the worker has missed monthly payments to the

loan shark. He now pays approximately 50 to 75 percent of his

monthly wages just to service the interest on the loan. Even though

he knows he was deceived, he is helpless. If he speaks to anyone

with the Government, he is terminated immediately and sent

home. Often we found that the prime contractor instructs the employees that they are not allowed to inquire or report trafficking

conditions of subcontractors, thereby completing the conspiracy of

silence and mitigating detection of the crime.

In response to the focal question of this committee about the effectiveness of the Tafficking in Persons Act on the process on contingency contracts, it is not had any deterrent effect.

Several mitigation measures can be taken. I would be glad to address those in the questions.

Thank you for the time to speak.

[The prepared statement of Mr. McCahon follows:]
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Mr. LANKFORD. Thank you for your testimony.

I now recognize myself. I am going to do 6 minute question

rounds. Are you okay with that?

Mr. CONNOLLY. Fine.

Mr. LANKFORD. There you go, we just settled it.

This is one of those moments where you think, okay, where do

we start? All right, let me begin here. Do you feel like, anyone can

answer this, that we have the right policies and regulations in

place? Because this is not some new feature that we have never

heard of; this has gone on now 20 years. All the way back to Bosnia

they were very aware that this has flipped into our subcontracting

and contracting process for overseas contingencies.

At this point we have added new laws, added new regulations,

added new policies, added new procedures over and over again,

added new officers and lead in it; yet, we still have stories of this

occurring. Do we have the right policies and procedures and regulations in place, in your perspective? And anyone can answer that at

this point.

Mr. MCCAHON. Chairman Lankford, members of the committee,

I do believe we have the right regulations in place. The problem

is transparency and reporting. There are not enough agents on the

ground to report this conduct. It has to be the responsibility of the

prime contractor. But now the prime contractor has no incentive

and all the disincentive in the world to report the conduct. It

makes the prime contractor look bad if they do report it, and they

get no incentive for engaging in reporting.

Mr. LANKFORD. Okay. I am going to come back to that. Anyone

else have another comment to add to that? Mr. Isenberg.

Mr. ISENBERG. Mr. Chairman, I believe that the right policies are

in place, but I believe that some of those policies and regulations

are rarely used, in part due to opposition from the industry. For

example, major trade associations, I have in mind the Professional

Services Council and the International Stability Operations Association to name two, have been quite voluble in their opposition to

the Government using its powers of suspension and debarment

against contractors who do wrong things.

Mr. LANKFORD. But do we have suspension and debarment being

applied to people that are doing human trafficking? If we are

aware that is happening on the ground, do we know of a case that

a contractor has been suspended or debarred?

Mr. SCHWELLENBACH. There was one State Department embassy

subcontractor, I believe in Jordan or somewhere else in the Lavant,

that was terminated earlier this year, according to a State Department Office of Inspector General report, after the contracting officer discovered that there was a violation of the FAR for prostitution. Apparently one of the employees was being solicited by a

manager of the subcontractor.

Mr. LANKFORD. Okay, so one?

Mr. SCHWELLENBACH. That’s all I know of.

Mr. LANKFORD. As far as we know at this point? I mean, for a

policy that, as Ms. Wyler referenced earlier, has come up again and

again and again, these zero tolerance policy for this, why is it that

I talk to soldiers coming back and ask them what it was like in

the wire, and they tell me stories about TCNs over and over again
79

in their abusive living conditions, in the way that they are treated

on the ground, the recruiter fees, how they are trying to get out,

they can’t get home. I mean, those are the stories that I hear from

soldiers when they begin to tell me about what was happening on

the ground while they are in Afghanistan. Those are the reports

that continue to come back.

So if we have the right regulations in place, we have a zero tolerance policy, we have the options in the toolbox, suspension and debarment, what is holding us back to actually enforcing this on contractors and subcontractors so we can make this stop?

Mr. SCHWELLENBACH. I will weigh in here. I completely agree

with my co-panelists here. And while I think there are some

tweaks to law and regulation that would be beneficial, such as

clearing up any ambiguity about U.S. jurisdiction over non-DOD

contractors in overseas contingency operations. I think the biggest

problem is commitment to enforcement of the laws and regulations

on the books.

I didn’t get to it in my oral, but in my written testimony I recount the example of the Nepali laborers who were killed in Iraq

on the Amman to Baghdad Highway. Attorney Martina Vandenberg, several years ago before a Senate subcommittee, remarked

that the DOD IG, and this was several years ago, keep in mind,

seemed to confuse the principles of civil and criminal law, and the

IG said, well, we couldn’t go after the subcontractor because there

was no privity of contract between the U.S. Government and the

subcontractor. But this was a criminal matter and, according to the

Military Extraterritorial Jurisdiction Act, criminal jurisdiction extends to all tiers of subcontracting. So if the remarks by the thenacting DOD IG were correct, they were totally confused.

Mr. LANKFORD. Well, let me clarify this as well. Do you have a

perspective on what is an appropriate recruiting fee or these broker

fees at this point? For someone to pay a $2,500 to $5,000 broker

fee to someone in a very poor country, and then they go and they

work and they receive less than that, than what they paid, that is

difficult not to define that as slavery. That is very difficult not to

say this is not some sort of debt bondage, that we put you in $5,000

worth of debt, and if you work for us in a year you will get your

$5,000 back, maybe, unless you mess up or report what is going on,

and then you will get way less than that and we will send you

home.

Is there an appropriate level you would say that is a recruiter

fee?

Mr. MCCAHON. Chairman Lankford, I believe that there is an appropriate recruiting fee; it is defined by the host nations. All of

these nations that produce foreign labor have their own laws. Some

say a specific amount, like Kenya, maybe $275; others will limit it

to 1 month of the salary as a maximum recruiting fee for foreign

laborers; which also creates a conflict within the U.S. Government

contracts, which say that the contractors are abiding by all the

laws of the host nation, wherever they are performing.

Mr. LANKFORD. But not having to pay for their travel, their

flight, all that stuff in transitioning, that is not an appropriate

level? Obviously, that should be paid for in the contract.
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Mr. MCCAHON. And in many of the countries, Mr. Chairman, for

instance, Kuwait mandates that the employer pay for those fees,

and the housing and transportation over.

Mr. LANKFORD. Someone, when we are going through the contract, we are aware of what it costs to move people into the country, what it costs for travel, what it costs for a laborer. So at some

point we can say this is out there. We are not tracking it, but

someone signed off on this contract with the details within it of

what that money would pay for, so either that money is being

skimmed off completely by an unscrupulous contractor or we are

aware this is going on. But it can’t be none of the above on that.

With that, I would like to yield to Mr. Connolly.

Mr. CONNOLLY. Thank you, Mr. Chairman.

As I said in my opening statement, taking away human autonomy is perhaps the most abhorrent crime imaginable, and it occurs

with murder and it occurs with human trafficking. What you have

described is a process of, the most charitable phrase, indentured

servitude. And that is being charitable.

Ms. Wyler, you noted that the 2003 TVPA directed agencies to

cease contracting with firms that engage in human trafficking or

which sexually abuse their employees. Is it correct that not a single

case of trafficking or sexual assault has been prosecuted under this

statute or the 19 other laws, executive orders, and DOD memos

banning such trafficking and abuses?

Ms. WYLER. Representative Connolly, thank you for your question. Unfortunately, issues related to the U.S. criminal justice system and the status of prosecutions in U.S. courts are beyond the

scope of my expertise, but I am happy to share your question with

my colleagues in the American——

Mr. CONNOLLY. Are you aware, Ms. Wyler, of a single prosecution?

Ms. WYLER. As far as I know, according to the State Department’s last two reports, there have not been prosecutions.

Mr. CONNOLLY. Right.

Mr. McCahon, why? One thing I gleaned from your testimony, if

I can interrupt, we have created a system of disincentive for reporting. The prime contractor gets dinged if he is diligent and says, you

know, I have encountered a case here; I think we need to pursue

it. He actually loses if he does that, if I understood your testimony.

Mr. MCCAHON. I believe that is correct, sir. I do believe that is

correct. Right now there is no mandate to report it, and if they do

report the misconduct, it has a negative reflection upon them. To

date, the only thing we have seen reported is when there has been

such overwhelming attention to a given issue, as identified in The

New Yorker and by POGO, that the prime contractor will take action.

And if I might respond to the chairman’s question, I think one

of the problems why there is no suspension and debarment is people don’t understand suspension and debarment. I was a trial attorney for the Army’s Procurement and Fraud Division, Suspension

and Debarment Branch. Suspension and Debarment Branch is not

a criminal or civil matter, it is a business decision by a preponderance of the evidence, whereby the official makes the determination
81

we don’t want to do business with this company; and it is more

likely than not——

Mr. CONNOLLY. Again, a disincentive. If I am a private contractor, debarment and suspension are not desirable goals.

Mr. MCCAHON. That is correct.

Mr. CONNOLLY. So why would I want to risk that? And it seems

to me we have the wrong set of incentives and disincentives in

place if we want to really deal with this.

Now, I asked Ms. Wyler, and maybe she is the wrong person to

ask, but I am not aware of a single case being prosecuted. Are you,

Mr. McCahon?

Mr. MCCAHON. I am not of a single case, nor am I aware of any

suspension or debarment.

Mr. CONNOLLY. So that must mean that our zero tolerance policy

is working, is that correct?

Mr. MCCAHON. I believe it is a zero tolerance policy on reporting

the conduct.

Mr. CONNOLLY. Well, Mr. Schwellenbach and Mr. McCahon, we

are talking about some very isolated examples, then, right? This is

not a widespread practice. We are not talking about a lot of people,

are we?

Mr. SCHWELLENBACH. My understanding is this could potentially

impact thousands of laborers. I mean, the exact percentage of the

third country national work force that is subjected to these kind of

labor practices is quite large, although I am not sure if it is the

majority or not. Sam might be more prepared to answer that.

Mr. CONNOLLY. Time is limited. Would you concur it is thousands?

Mr. MCCAHON. I would say tens to hundreds of thousands.

Mr. CONNOLLY. Dear Lord. Okay, my goodness. So it is not some

isolated, random practice. We are aware of it. We have a zero tolerance policy. We have 19 laws, executive orders, and DOD memos

making it very clear we frown on this practice, we won’t tolerate

it if it is ever uncovered, but fortunately it has never been uncovered, at least not rising to the level of a single prosecution. Is that

correct?

Mr. MCCAHON. That is correct.

Mr. CONNOLLY. Well, then I guess I would ask, these are all contractors or subcontractors serving the U.S. Government we are

talking about?

Mr. MCCAHON. Yes.

Mr. CONNOLLY. So to what do you ascribe the apparent indifference of the U.S. Government and its prime and subprime contractors with respect to this abhorrent practice?

Mr. SCHWELLENBACH. Well, with regards to suspensions and

debarments, Government agencies are often loathed to suspend or

debar a contractor or subcontractor unless there is some sort of

successful civil action or criminal prosecution, so it becomes this

kind of Catch–22 situation: well, there is no prosecution or conviction or civil action, so we can’t suspend or debar; and that is a misunderstanding of the suspension and debarment practice. As Sam

mentioned, they can do what are called fact-based debarments to

protect the interests of the U.S. Government if they can success-
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fully document noncompliance with U.S. Federal acquisition regulations.

Mr. CONNOLLY. But we are in this system that protects itself.

Mr. SCHWELLENBACH. Exactly.

Mr. CONNOLLY. Not the victims.

Mr. SCHWELLENBACH. Absolutely.

Mr. CONNOLLY. Not human beings whose autonomy is being lost

or compromised. Because I guess it is inconvenient or—other than,

bureaucratically, debarments and suspensions are messy and complicated and people don’t like them, but, I mean, your testimony is

it could be tens of thousands, maybe even hundreds of thousands

of individuals we are talking about in this victim pool serving the

U.S. Government and its prime contractors, and we have not had,

to our knowledge, this panel, not a single prosecution. The laws are

all in place, the policies are all in place. We have zero tolerance.

And what that system has produced is zero reporting.

Mr. SCHWELLENBACH. Zero prosecutions.

Mr. CONNOLLY. Zero prosecution.

Mr. SCHWELLENBACH. And there have been cases that have been

presented to prosecutors, but they have declined to prosecute, at

least two that I know of.

Mr. MCCAHON. Yes, I believe Nick is correct, Representative

Connolly. There was one case in 2009, one case in 2010 when the

DOD IG surveyed all the four Federal law enforcement agencies on

the ground, and they reported one case in each year.

Mr. CONNOLLY. A final question because I have 3 seconds. Does

DOD take this issue seriously, in your view, given what you just

described?

Mr. MCCAHON. I believe that there are some elements in DOD

that take it very seriously, Representative Connolly, but I think

that the people that can make a difference don’t give it enough attention.

Mr. CONNOLLY. Thank you, Mr. Chairman.

Mr. LANKFORD. Recognize Mr. Walberg for 6 minutes.

Mr. WALBERG. Thank you, Mr. Chairman, and I thank the panel

for being here.

Mr. Schwellenbach, you cut short your descriptions or stories. I

want to give you a little further opportunity to tell us some of those

stories. I mean, you talked about the Nepalis who were captured

and ultimately murdered. I guess we use that term. But also the

fact that one of them was decapitated and the rest were murdered

later on.

Tell us a few more stories, because a panel like this, its purpose

is to get the answers and problems, but I think it is also to give

voice to those who have no voice.

Mr. SCHWELLENBACH. The third example that I wasn’t able to recount in my oral testimony earlier was a case of alleged labor contracting or labor trafficking in Iraq with a DOD subcontractor or

a State Department subcontractor that was involved in building

the new embassy compound in Baghdad. The Multinational Force

Iraq Inspector General did look into these allegations that First

Kuwaiti was doing this, and according to an Inspector General

memorandum from 2007, they stated that several laborers reported

that fraudulent hiring practices were used during the recruitment;
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they stated that promises made and terms of the original contracts

presented to them in their country of origin were inconsistent with

the actual conditions regarding lower pay, longer hours, no days off

of their employment in Iraq.

The memo also details debt bondage that some of these laborers

faced. A large majority of the workers from the Indian subcontinent

incurred recruiting fees of up to 1 year’s salary, which far exceeded

the legal limits of the countries where the recruitment took place;

and in some extreme examples third country national workers relinquished all pay, all pay, for between 9 to 12 months of labor.

And if that isn’t indentured servitude, I don’t know what is.

But that was the third example.

Mr. WALBERG. And that was in violation of the country of origin.

Mr. SCHWELLENBACH. Yes. They could not charge recruitment

fees, but the labor brokers did anyway, and the laborers signed up

with the belief that they would be making more pay when they

eventually got to the country where they were going to do the

work, and they often believed they were not going to Iraq; they

were going to Dubai or some other non-war zone country.

Mr. WALBERG. How difficult is it to investigate human trafficking

allegations?

Mr. SCHWELLENBACH. Well, if you don’t talk to the victims, it can

be very difficult, and that is one problem I have seen in a few of

these investigations, is the victims say they were not interviewed

by U.S. Government investigators. So that is a basic principle of

criminal investigation, is you want to talk to the victim. I mean,

they are a key witness.

Mr. WALBERG. So it is not difficult if you can talk to the witness,

but if you choose not to talk to the witness——

Mr. SCHWELLENBACH. I don’t want to minimize the difficulty of

these investigations; they span continents, there is often a complex

chain of subcontractors and labor brokers and recruitment companies. And sometimes I also think the investigators sometimes use

a narrow lens when they look at a potential crime. They don’t look

at the procurement fraud elements of trafficking violations, and I

think they would be wise to do so.

Mr. MCCAHON. If I might, Representative Walberg, I also say

that it isn’t that difficult if you really take an interest in it. My colleague, Sindhu P.K., and I recently interviewed a dozen victims in

the south of Indian Chunai and we interviewed many, many victims on the ground in Iraq. The problem is, and one of the problems with the DOD IG report, when you read about the people they

interviewed, they never spoke to a victim; they spoke to Government personnel, they said they even spoke to some of the management of the contractors.

Mr. WALBERG. But not the victims.

Mr. MCCAHON. But never the victims. And the victims also need

to be protected, because we have had situations when we would

speak to a victim and the next day they are on a plane home. In

fact, we interviewed these dozen men in Chunai this summer, that

is exactly what all of them said, they knew they couldn’t speak to

an American because, if they did, they would be put on a plane

home, which meant no job, they still owned the loan shark, and

some very serious consequences for them.
84

Mr. WALBERG. And they don’t perceive that the DOD would be

of any help or protection for them?

Mr. MCCAHON. One of the things that we found was echoed in

Sarah Stone’s comments in The New Yorker, that please tell the

American people, because if the American people know what is

going on here, they will help us. And we heard that several times

in our interviews. They believe that if the American people know

how they are being treated, that we would help them.

Mr. WALBERG. Mr. Isenberg, what needs to happen to increase

oversight and enforcement?

Mr. ISENBERG. Well, I would say that somebody within the hierarchy of the various executive departments needs to emphasize

that this is a real problem. As an example, the person responsible

for bringing to my attention, at considerable cost to themselves,

what happened with Najlaa had originally tried contacting the U.S.

Government directly. That person had sent letters and emails to

Department of Justice, Department of Defense, USAID, Department of State.

Mr. WALBERG. With no results?

Mr. ISENBERG. No results except that earlier this year that person finally got contacted initially via email, more than 10 months

later, after that person had originally contacted that agency, to say

we are in receipt of your email and would like to talk to you more

about it. Since then there has been an interview of that person and

phone calls, and presumably they are now looking at it. Where the

status of that is, I don’t know, but clearly there is no excuse, in

my mind, for a 10 month delay between receiving information and

getting back to that person.

Mr. WALBERG. I thank you. Thank you for bringing light. Yield

back.

Mr. LANKFORD. Thank you, Mr. Walberg.

Let me do a quick question as well. On the investigation side, I

can fully appreciate this becomes quickly a he said-she said, where

an investigator goes in, talks to a third country national who is terrified and says, I paid $5,000. There is a language barrier, there

is all kinds of difficulty in investigation there. Then the subcontractor or the prime, either one, says, no, we didn’t do that; no, our

recruiters don’t. Can you find that recruiter? No, they are just

some firm we used overseas. So validating these things, I would assume, would be incredibly difficult to do. The problem is just the

frequency of the number of stories, you would assume someone

would rise up and say we have to start tracking this in some way.

Right or wrong on that?

Mr. SCHWELLENBACH. You are absolutely correct, Chairman.

Building an airtight criminal case can be quite difficult, especially

when you have that kind of he said-she said situation. But I think

if there was—there is certainly, I think, plenty of opportunities to

build criminal cases, and I think a high profile criminal case that

leads to successful conviction could have some sort of deterrent effect. And I do think, given the plethora of allegations out there, I

think something could be made of at least some of those.

Mr. LANKFORD. Right. But you go back again to suspension and

debarment does not have the same threshold.

Mr. SCHWELLENBACH. Exactly. You have a lower——
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Mr. LANKFORD. At a minimum. So the tools and the options are

out there to do something. The question is are we doing anything

other than saying it has to be included in the contract, which even

then, through the statistics, even the basic statement of the FAR

and that we don’t do trafficking in persons, that is not always included in contracts.

Mr. SCHWELLENBACH. Yes. As the DOD IG has found in some of

its audits, all the contracts need to have this clause; sometimes the

clause is just missing. But you are absolutely right, suspension and

debarment could be a tool used to protect the Government’s interest, and it is not used enough.

Mr. MCCAHON. Chairman Lankford, I would also mention it is

not as difficult as it might appear at first. What the subcontractor

usually does is deny the representations made by the recruiter.

One need only see who entered into the agreement with that recruiter to start their investigation. That is the person who has the

responsibility.

What we have found is oftentimes there is no paper trail. The

contractors say, well, we don’t really have a written agreement

with the recruiter. We will say, well, how do you flow down the

clauses, then, that are mandatory; which goes to the whole suspension and debarment. I think that it is difficult to prosecute these

cases because of the jurisdictional issues and also the distance and

language barriers. It isn’t difficult to do a fact-based debarment.

Mr. LANKFORD. Okay.

Mr. Connolly, would you like to ask some questions?

Mr. CONNOLLY. It is exactly that area I wanted to ask you about,

Mr. McCahon, because in listening again to your testimony, it

seems to me that—well, first of all, this is all about money, so,

frankly, going after criminal prosecution may be ideally a good

thing to do down the road. But what we need to do is change the

incentive-disincentive system, and it is all about money; for recruiters, for the workers, the lure of that money, and for the subcontractors who are getting paid by the U.S. Government through the

prime.

It seems to me that the system you described in your 10-point

sort of list, the weak link is the recruiting, potentially. If we really

want to go after this practice, requiring documentation, working

with the host government getting at deceptive practices, laying out

in more contractual terms exactly what is expected and exactly

what it is going to cost, and how we document that those payments

are made or not made, or they are exorbitant or they are not.

Could you talk just a little bit about that and what is the U.S.

Government doing back in the host country with those recruiters?

Mr. MCCAHON. I would be glad to address that, Representative

Connolly. One of the things that the U.S. Government can do is

mandate in the contract that every worker receive a copy of their

contract prior to departing their host nation in a language that

they understand, in their host language. Doesn’t cost anyone anything. Because you hit it upon the head, the crux of this is deceptive recruiting. It is all deceptive recruiting about where they are

going to work, how much money they are going to make paying the

commission.
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Another thing that they could do is make the subcontractor required to compensate that individual 1 day after they depart their

host nation. The men we talked to languished for months in warehouses until they can be pulled off the shelf like a widget and then

supplied and put into the supply system. They get no money, only

subsistence food. They are not making payments to their loan

sharks or anything like that. So you could make the subcontractor

require to be responsible and also make sure that these recruiting

agreements are in writing. Very few of the people we talked to ever

had a contract. So those few simple steps would mitigate this significantly.

Mr. CONNOLLY. And, to your knowledge, has there been such discussion with DOD in imposing such requirements so that we can

try to get our arms around deceptive recruiting practices?

Mr. MCCAHON. My colleague and I have forwarded a summary,

a four-page memorandum on solicitation strategies and contract

provisions that can be used. We forwarded it to DOD and Department of State for consideration.

Mr. CONNOLLY. When?

Mr. MCCAHON. To Department of State about 15 months ago,

and to the Department of Defense maybe 6 or 8 months ago.

Mr. CONNOLLY. And the reaction?

Mr. MCCAHON. We have worked with the chief of the CTIPS operation at DOD and I believe they are committed to this, and we

recently spoke at a conference, a CTIPS conference in August on

the topic.

Mr. CONNOLLY. You have spoken about it at a conference.

Mr. MCCAHON. Yes, sir.

Mr. CONNOLLY. But there has been no formal response in 15

months to your State Department memo or in 6 months to your

DOD memo.

Mr. MCCAHON. Not to the State Department at all, sir.

Mr. CONNOLLY. Let me ask this question, again on the recruiting

side. Obviously, when a recruiter—it is one thing to engage in deceptive practices on the financial end, but the purpose of your labor

is a different matter. If I am recruiting and I tell you you are going

to go to a five-star hotel and you are going to serve fancy dancy

clientele, and you are going to be rich from the tips alone, and, instead, I am actually luring you into a prostitution ring where you

are serving whoever in Iraq or some other war zone, presumably

somebody at the receiving end knows full well what I am doing,

and so do I. The only person deceived is the poor victim.

Mr. MCCAHON. Yes.

Mr. CONNOLLY. What has been done to try to crack down on that

practice, that aspect of human trafficking?

Mr. MCCAHON. To my knowledge, Representative Connolly, nothing has been done. I spoke at a conference in 2007 specifically entitled Things That Government Contractors Can Do to Mitigate Trafficking, and there was a major contractor who spoke ahead of me

who was vice president of contracting, currently one of the

LOGCAP contractors. His response, when he was asked what they

were doing to mitigate trafficking, he said we have no privity of

contract with the employees of the subcontractor, therefore we are

taking no action; it is not our responsibility.
87

So I think what we see is all the way down the trafficking chain

people disavow the responsibility for it.

Mr. CONNOLLY. I have to say, Mr. Chairman, I am just stunned

at this testimony, I mean, stunned, that in the name of the American people these practices have been allowed and we have turned

a blind eye to them for either bureaucratic reasons or because we

have what we consider to be more important parts of the mission.

And it seems to me that whatever it is we are fighting for in Iraq

and Afghanistan under the banner of our flag, allowing these practices compromises it all. It couldn’t be more antithetical to American values what you are describing.

I look forward to the testimony of the next panel.

Mr. LANKFORD. As do I.

Thank you, ladies and gentlemen, for being here as part of this

first panel.

With that, we will take a short recess to reset for panel number

two.

[Recess.]

Mr. LANKFORD. We will return from recess.

Thank you for resetting and for waiting. I assume most of you

all were in the earlier panel as well and got a chance to enjoy some

of the conversation that was occurring. I would like to go ahead

and, pursuant to all committee rules, swear in the witnesses before

they testify.

Would you please stand and raise your right hand? Thank you.

[Witnesses sworn.]

Mr. LANKFORD. Thank you. You may be seated.

Let the record reflect the witnesses all answered in the affirmative.

In the second panel we have Ms. Evelyn Klemstine, the Assistant

Inspector General for the Department of State. Thank you for being

here. Ambassador Kenneth Moorefield, the Deputy Inspector General for the Department of Defense; Ms. Linda Dixon, the Program

Manager for Combating Trafficking in Persons Office for the Department of Defense; and Mr. Mike Howard is the Chief Operations

Officer for the Army and Air Force Exchange Service.

I am grateful that you are here and looking forward to being able

to receive your testimony and be able to hear what is going on. Obviously, your written testimony has already been submitted. That

will be part of the record. Be honored to be able to receive oral testimony at this point.

Ms. Klemstine.
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STATEMENTS OF EVELYN R. KLEMSTINE, ASSISTANT INSPECTOR GENERAL FOR AUDITS, U.S. DEPARTMENT OF STATE;

KENNETH P. MOOREFIELD, DEPUTY INSPECTOR GENERAL

FOR SPECIAL PLANS & OPERATIONS, U.S. DEPARTMENT OF

DEFENSE; LINDA DIXON, COMBATING TRAFFICKING IN PERSONS PROGRAM MANAGER, U.S. DEPARTMENT OF DEFENSE;

AND MICHAEL P. HOWARD, CHIEF OPERATING OFFICER,

ARMY AND AIR FORCE EXCHANGE SERVICE

STATEMENT OF EVELYN R. KLEMSTINE

Ms. KLEMSTINE. Thank you, Chairman Lankford, Ranking Member Connolly, and members of the subcommittee, for the opportunity to discuss our Office’s oversight of the Department’s compliance with the Federal Acquisition Regulations, FAR Trafficking in

Persons clause.

OIG has actively conducted TIP oversight to include making it an

area of emphasis for audits, inspections, and evaluations. Specifically, the objective of our October 2011 audit on the Bureau of East

Asian and Pacific Affairs, EAP, was to measure the extent to which

Department personnel and contractors were complying with laws,

regulations, and policies established to prevent and detect TIP activities on Department-awarded contracts.

While the audit did not find evidence of any form of TIP involving contractor employees or contractors, the Department must

strengthen implementation of its zero tolerance policy regarding

TIP. We found that Department employees in the Asia Pacific Region were not uniformly aware of what constitutes TIP activity, the

penalties for TIP violations, where to report suspected violations,

and whether the TIP policy applies to Department contractors.

A general awareness survey was distributed to employees in the

Asia Pacific Region to assess whether the employees were aware of

TIP issues. One thousand, seven hundred two Department employees responded to the survey, which disclosed—that 46 percent of

the Department employees either were somewhat aware or not at

all aware of the zero tolerance. Forty-three percent of the employees did not know where to report suspected violations and 79 percent of the employees had not received training about TIP.

We also found that contractors in the region were not always

aware of or complied with their obligations under the FAR clause.

We visited 24 contractors whose contracts included the FAR clause

and found that 83 percent had not notified their employees of the

TIP policy and 92 had not informed the employees of the consequences of violating that policy. Additionally, six contractors

hired subcontractors to perform services; however, no contractors

had included the required FAR clause in their subcontracting

agreement.

We found that Department contracting officials did not consistently include the FAR clauses in contracts. Of 41 contracts reviewed in the region, we found that 27 percent of them did not contain the clause and 8 contracts did not contain the correct version

of the clause. Further, even when the clause was contained in contracts, Department contracting officials did not monitor contractor

compliance with the clause.
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Inspectors also found that an embassy contract did not always

include the FAR clause. In fiscal year 2010, inspectors reviewed

contracts at 20 posts and found that 25 percent of them had contracts without the required clause. In fiscal year 2011, teams addressed the same issue at 16 posts and found that 19 percent of

them had contracts without the required clause. When inspectors

found contracts that did not include the FAR clause, embassy staff

immediately began the process of modifying the contract.

During the October 2011 audit, the Department issued a Procurement Information Bulletin [PIB], on Combating Trafficking in

Persons, which requires contracting officers to ensure that all solicitations and contracts over the micro-purchase threshold of

$3,000 contain the TIP clause. The PIB also provides guidance to

contracting officer representatives [CORs], on how to monitor TIP

compliance. We expect the new guidance will enhance the Department process for monitoring contractors for TIP compliance.

We recommended that the Department implement a policy in the

Foreign Affairs Manual on TIP, expand the Department’s code of

conduct to prohibit TIP activities, and designate an office to which

employees and contractors should report suspected violations. In

addition, the Department should expand its TIP training to all Department employees.

In response to the audit, the Ambassador-at-Large for the Office

to Monitor in Combat Trafficking in Persons stated that his office

found the report helpful if somewhat troubling, and there was undoubtedly a need for increased awareness and understanding of

human trafficking in the State Department. The Ambassador generally agreed with all the report’s recommendations and stated he

was taking corrective actions.

OIG also released an evaluation in January 2011 of six contracts

in Arab states in the Gulf which assessed the risk of TIP-related

activities. Although we found no direct evidence that contractors

violated provisions of the FAR clause, we found indicators that increased the likelihood that a TIP violation could occur. Specifically,

our team found that 77 percent of contract employees interviewed

had to pay fees up front during recruitment, which could indicate

an increased risk of debt bondage, and that every contractor reviewed confiscated workers’ passports. In addition, contract workers at all posts expressed frustration with inconsistent payments,

confusing pay stubs, and withheld wages. More than 70 percent of

the workers interviewed also reported that they lived in overcrowded, unsafe, or unsanitary conditions.

TIP monitoring was ineffective because CORs did not have standard procedures to monitor the implementation of FAR. We recommended that posts strengthen TIP monitoring procedures and

the Department provide detailed guidance on how to monitor contractors’ practices.

Negative contracting practices can affect foreign workers and reflect poorly on the United States. We believe that adopting a strong

TIP program which includes mechanisms to increase employee

awareness, report suspected TIP violations, and provide for a

strong monitoring program of contractors will help TIP and ensure

that foreign workers are treated fairly and within the law.
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Once again, thank you for the opportunity to present our work

on this important topic. I am pleased to answer any questions you

may have.

[The prepared statement of Ms. Klemstine follows:]
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Mr. LANKFORD. Thank you.

Ambassador Moorefield.

STATEMENT OF KENNETH P. MOOREFIELD

Ambassador MOOREFIELD. Good morning, members of the committee. Chairman Lankford and Ranking Member Connolly and

distinguished members of this committee, I want to thank you for

the opportunity today to discuss our oversight reporting at the Department of Defense Inspector General’s Office with respect to trafficking in persons. I have also presented a written statement which

I ask be submitted for the record.

The DOD IG previously presented testimony on oversight efforts

concerning the topic of human trafficking in 2004 and again in

2006. Our first assessment was initiated in response to a request

from Members of the Congress to the Secretary of Defense, asking

for an investigation into allegations concerning the U.S. military

leadership in South Korea and whether or not they had been implicitly condoning sex slavery in that country. In addition to that

project, DOD IG initiated another parallel assessment into allegations that the European Command activities in Bosnia-Herzegovina

and Kosovo also had similar problems.

In addition to the Command actions taken in response to our reports to prohibit and prevent sex slavery in these two environments, both assessments recommended strongly that the Secretary

of Defense issue a policy statement that clearly and unambiguously

set forth DOD opposition to any activities promoting, supporting,

or sanctioning human trafficking, and the Department subsequently did that. Further, DOD established annual CTIP awareness training in 2004 for all service members and DOD civilians,

which continues until today.

In a followup initiative, the DOD IG Initiated an evaluation of

CTIP efforts across all of DOD in 2005. The resulting report recommended that the Office of the Secretary of Defense develop CTIP

policy and program guidance. In a response, the Department issued

DOD instruction, Combating Trafficking in Persons, that assigned

CTIP program responsibilities across the Department.

Our most recent efforts were conducted as a result of the William

Wilberforce Trafficking Victims Protection Reauthorization Act of

2008. This act, as you know, requires State Department, USAID,

and DOD IGs to each report each year, in January, for three consecutive years beginning in January 2010, on a sample of contracts

or subcontracts under which there is a heightened risk that a contractor may engage knowingly or unknowingly in acts related to

trafficking in persons.

To accomplish this, the DOD IG has consulted each year with the

State Department’s Office to monitor and combat trafficking in persons, as well as the DOD CTIP Program Office. We selected four

combatant commands to conduct these reviews: the U.S. Pacific,

Central, European, and Africa Commands. To date, we have issued

two of these reports, covering the Pacific and Central Commands,

and the report on European and Africa Commands will be issued

in January 2012.

In the U.S. Pacific Command overview, we found the Federal Acquisition Regulation, the FAR clause, Combating Trafficking in
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Persons, present in 93 percent of the contracts. The DOD IG recommended in its final report that the Director, Defense Procurement, and Acquisition Policy modify contract writing software to

ensure that the FAR CTIP clause was automatically included in all

contracts, and this was accomplished.

In the U.S. Central Command, we found the CTIP clause present

in 79 percent of the contracts reviewed. The team did identify good

practices had been taken by several U.S. contracting commands in

Kuwait who had incorporated CTIP compliance items in their quality assurance reviews. The team found, however, that contracting

officers in none of the commands had ready access to TIP violation

information from DOD criminal investigative organizations. Providing timely communication of TIP-related indictment and conviction information to DOD contracting organizations remains a systemic challenge.

For each reporting year of our investigations in the last two-plus

years, the teams have received DOD criminal investigative data on

possible TIP violations. Two TIP incidents have been reported so

far. In both cases the contractor had dismissed the offending employees and there was no further judicial investigation taken or

certainly judicial action.

During our DOD field work, we have noted that nonappropriated

funds were not required to include the FAR CTIP clause in their

contracts. As a consequence, the Army and Air Force Exchange

Service and Navy Exchange were included in assessments of our

U.S. Central Command, European and Africa Commands, and in

December 2010 the Navy Exchange Command Headquarters recommended changes inserted in DOD Instruction Nonappropriated

Fund Procurement Procedure, which required inclusion of a CTIP

clause in all nonappropriated fund contracts, and as of October, as

of this month, that instruction revision process is still ongoing.

I also want to report that the DOD IG has self-initiated an assessment of CTIP program compliance and performance among

DOD components. So far, over 70 DOD organizations have been reviewed, and this report will also be issued in January 2012.

Finally, let me emphasize that the DOD Inspector General remains committed to providing oversight support of the U.S. Government’s zero tolerance policy against trafficking in persons. We

will continue to evaluate DOD CTIP performance and compliance.

On behalf of DOD IG, I thank you again for this opportunity to

testify.

[The prepared statement of Ambassador Moorefield follows:]
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Mr. LANKFORD. Thank you.

Ms. Dixon.

STATEMENT OF LINDA DIXON

Ms. DIXON. Mr. Chairman, Ranking Member Connolly, and members of the subcommittee, thank you for this opportunity to discuss

past and ongoing DOD efforts to combat trafficking in persons.

The Department of Defense Trafficking in Persons, TIP, Program

was designed to ensure that our military services, combatant commands, and Defense agencies have the necessary tools to stop it.

Training is mandatory for all employees and is mandated by DOD

instruction first published in February 2007 and revised September

15, 2010. The instruction is directive in nature and established

policies and assigns responsibilities for combating trafficking. The

policy recognizes DOD’s opposition to trafficking in persons, prostitution, forced labor, and any related activities that may contribute to the phenomenon of TIP. Engaging in trafficking in persons is incompatible with DOD core values.

To help enforce the policy, heads of DOD components must designate a component Combating Trafficking in Persons, CTIP, Office

of Primary Responsibility and they must assign a program officer.

We maintain a list of all the components points of contacts within

our office. We maintain this list and we also provide this information to our DOD IG when they conduct their periodic evaluations

of the DOD CTIP program.

DOD started training on TIP using a multimedia Combat Trafficking in Persons Program in January 2005. Our training consists

of general awareness training, law enforcement training, and training for our leadership. As well, we also have PowerPoint presentations for our training. Our general awareness training is now

available on mobile devices.

An annual DOD CTIP conference has been held ever since 2007.

A CTIP workshop was held in August 2011. Best practices among

our components are shared and we receive information from the

U.S. Government agencies, as well as from non-governmental organizations at our conferences and workshops. Our DOD CTIP Web

site, ctip.defense.gov, displays information regarding our trafficking

in persons training, events, and links to other agencies’ TIP Web

sites.

In response to early concerns about possible labor trafficking in

subcontracts in Iraq, DOD took swift action. The first TIP clause

was in the Defense Federal Acquisition Regulation supplement,

DFAR, as an interim rule and was published in the Federal Register in October 2006. The clause required contractors to establish

an awareness program to inform employees regarding trafficking in

persons.

The Federal Acquisition Regulation published a TIP clause in

2009 that required the contractor to notify its employees of U.S.

Government’s zero tolerance policy and to take appropriate action

against employees of subcontractors that violated the policy. It did

not require contractors to establish an awareness program for their

employees.

When the FAR rule was published, the DFAR rule clause moved

to become program guidance for our contractors regarding DOD’s
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zero tolerance policy and CTIP training program. A new DFAR requirement soon to be published in the Federal Register adds additional contract administration duties to maintain surveillance over

contractor compliance with trafficking in persons for all DOD contracts.

In December 2010, the Defense Incident Base Reporting System,

DIBRS, was updated with the new FBI TIP offense codes, commercial sex acts, involuntary servitude, and prostitution offense, allowing the reporting of TIP offenses by our DOD law enforcement

agencies. Human trafficking public service announcements [PSAs],

two 30-seconds and two 15-seconds, aired on our Armed Forces

Network from October 2009 to October 2010. DOD released four

new PSAs in September 2011 that will air for 5 years.

Trafficking in persons is a form of modern day slavery, and DOD

will do our part to strive for its total abolition.

Thank you again for scheduling this hearing, and I look forward

to your questions.

[The prepared statement of Ms. Dixon follows:]
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Mr. LANKFORD. Thank you.

Mr. Howard.

STATEMENT OF MICHAEL P. HOWARD

Mr. HOWARD. Mr. Chairman and members of the subcommittee,

again, thank you for the opportunity to testify today. I am looking

forward to sharing the measures taken by the Army Air Force Exchange Service to prevent human trafficking in Southwest Asia.

AAFES is a joint military activity providing merchandise and

services to active duty, reserve, National Guard, and their families

worldwide. AAFES is responsible for 3,100 facilities worldwide in

30 countries, 5 U.S. territories, and 50 United States. We have

43,000 employees. Thirty percent of those are family members of

the military active duty. Another 1 percent are military members

on their part-time working after-duty hours. We take great pride

in our employee relations, no matter where they serve.

Combating human trafficking is a complex and challenging mission. The responsibility is substantial, but our policy is clear: zero

tolerance. My report today will confirm that AAFES has implemented and is enforcing a comprehensive Combating Human Trafficking program throughout our contingency area of operations.

AAFES runs exchange facilities in eight countries, spread over

71 locations in combat zones in the United Central Command area

responsibility. The core of the AAFES team consists of 300 direct

hire associates; however, we have over 3,100 individuals that are

third country nationals that are hired to provide additional services

to the military. These manpower agencies and concessionaires are

often third country nationals and they are an integral part of our

team. In fact, without third country nationals we would not be able

to provide world class support to our deployed troops and customers.

Today I would like to highlight three essential elements in

AAFES’s fight against human trafficking: an enforceable bill of

rights for third country national associates, consistent inspection in

reporting to ensure compliance, and effective communication to increase awareness of command and the workers and planning for

the future also.

AAFES has an inherent responsibility and contractual right to

ensure humane treatment of third country nationals working in

our facilities. The first element in deterring human trafficking

among the third country national population is an enforceable bill

of rights. In 2008, AAFES developed the bill of rights, which contains non-negotiable aspects of working for the Exchange. The right

to elevate complaints without fear of reprisal, to have a copy of the

contract under which they are employed, to receive pay in a timely

fashion, to leave their deployed location at any time. These are

among the inalienable rights that each of the third country national workers working with the MPA agency has to have.

One of the most important of these rights is the freedom to retain possession of their passport. The bill of rights is very clear: at

no time will any official, either contractor or AAFES, will withhold

a passport of a third country national worker. This bill of rights is

part of every manpower agency and concession contract we have,

which ensures AAFES has legal authority to enforce it.
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The second component of the AAFES program is frequent inspection and mandatory reporting to enforce the bill of rights, especially the right to maintain passports. AAFES leaders ensure manpower agencies and concessionaire contractors do not withhold

passports of third country nationals working in our facilities. As a

part of the policy, AAFES team leaders, our service business managers, food business managers, and other direct hire AAFES associates in leadership positions are required to conduct 100 percent inspections every month to ensure that the third country nationals

of manpower agencies and concession contracts are in possession of

their own passports.

Leaders report results of the monthly passport verification inspections through the chain of command to the AAFES Regional

Operations Center and the Contracting Officer Representative, documenting any contractor employees that do not or cannot present

their passports. AAFES has a zero tolerance of violation of this policy. Corrective action to contractors may include a warning letter

or a cure notice, as we call it, which gives the contractor the opportunity to address and rectify the issue; termination for default and/

or referral to criminal or civil authorities for enforcement.

Finally, effective communication and command level oversight is

the heart of the AAFES Combating Human Trafficking program.

To make certain AAFES managers and third country nationals understand Combating Human Trafficking policies and procedures,

the AAFES bill of rights, posted in prominent areas in their workplaces, have been translated into 11 languages. The AAFES Inspector General conducts sensing sessions with third country nationals

to collect independent feedback about the program and our education efforts.

Metrics from the Combating Human Trafficking program are incorporated into AAFES’ Balanced Scorecard Management program.

The scorecard information regarding passport inspections, proper

living conditions, communication efforts, and fair pay are measured

and provided to AAFES leadership to ensure the program is implemented and enforced throughout the contingency area and to identify areas for improvement.

I am pleased to say that the AAFES efforts to condemn and combat this serious crime has been successful. Now completing our

third year of the program, AAFES has achieved these following results: Because of our efforts, third country national workers are

now in possession of their own passports, several have been liberated from involuntary servitude and been able to return to their

own home country as a direct result of this program.

AAFES’s Contracting Officer Representative in Kuwait and

Qatar and UAE was cited in January 2011 by the DOD Inspector

General for outstanding work in combating human trafficking.

In the January 2011 report, the DOD IG inspection cited AAFES

as an excellent example of Combating Trafficking in Persons

awareness and contract quality assurance that merits being considered for replication.

Regardless of our significant achievements, human trafficking

still exists, and AAFES must and will remain vigilant in these efforts to combat it.
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We recognize the threat to basic human rights and the zero tolerance for it. AAFES does not have the power to eradicate this

scourge throughout Southwest Asia. We do have the power to fight

it to our best abilities so that our contract workers are not victimized. We make it clear to our contractors: if you want to do business with AAFES, then you will not engage in human trafficking

AAFES does not have police powers; we cannot enforce contractors

to do anything. What AAFES does have is power of contracting,

which in many ways is more powerful than police authorities. The

ability to take the contract away for violations of our policy is very

persuasive; our contractors respond quickly.

We might not be able to change the world, but we can and we

do combat human trafficking. I look forward to your questions.

[The prepared statement of Mr. Howard follows:]
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Mr. LANKFORD. Thank you. Thank you for all your testimony.

Let me say, first, you will find in Members of Congress and those

that are included, they can all speak for themselves as well, we

have tremendous honor and respect for the work that is done by

DOD and the State Department. We are Federal employees as well.

We get it. You are also, I am sure, when you got out of bed today,

said I can’t wait to go do a congressional hearing on this. You also

understand you are getting the full heat for what is really happening beyond you. We understand that as well. My goal with this

hearing today, though, is to find ways to get this to stop.

Are any of you ready to go on record right now and to say there

is no one in State Department or in DOD, that says there is currently no one that is being trafficked right now?

[No response.]

Mr. LANKFORD. We know this reality is out there. Whether it be

one or whether it be 10,000. And it is working through the process

to try to work through. We have 19 or 20, as Mr. Connolly mentioned before, policies and procedures that are major pieces that

are there. You have all kinds of process pieces that are in place.

The issue in our conversation today is how do we move from these

things that are in place to this has gone away. We now have the

things in line on that.

So I want this to be a dialog today as we go through these questions, so let me just field some questions and go through some

things.

Mr. Howard, you mentioned you have the power of contracting

and of making those decisions of, if a contractor is out of bounds,

not doing contracts with him anymore. How often does that occur?

Mr. HOWARD. Chairman Lankford, we have done six cure letters.

The majority of these were for withholding passports, and the contracting management agency did the corrective action; there was no

more disciplinary action after that. But it does, when we do that

cure letter, it is the first step toward termination. If they did not

adhere to that, the second one would be——

Mr. LANKFORD. Okay, any others beyond just the passport issue

on that?

Mr. HOWARD. No, it is just the passport, the withholding the

passport.

Mr. LANKFORD. The reason I say that is I have talked to some

military personnel coming back as well and saying that is a standard. If you work inside the wire, you have to have your paperwork

with you; you have to have the designation on you. They need to

know who is walking around.

Mr. HOWARD. Yes.

Mr. LANKFORD. So that is not only just, obviously, your requirement, that is if you are going to be on that base especially, that

is their requirement as well.

What about the next step of the issue of the recruiting fees and

the brokers fees? Because that is where this begins. If someone is

recruited and they are going to work for the State Department or

the Department of Defense even secondarily, through AAFES or

whatever it may be, and they are coming through the process, do

we have verification from them or anyone holding a conversation
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with that person that is now working on one of our bases or one

of our embassies how much did you pay to get this job?

Mr. HOWARD. I cannot say that for the record. The discussion is

there. We do ensure they have the contract, we do ensure that

their fair pay is documented in the contract. But as far as prior to

that, the fees and so forth, I am not aware. I could check back on

that, take it for the record.

Mr. LANKFORD. Okay. Because that is where, obviously, this begins.

Mr. HOWARD. Right.

Mr. LANKFORD. Do we have any kind of tracking in place that a

subcontractor that has the recruiting responsibilities, that they are

doing a contract with them that we can see is coming from their

home country that shows how much they paid in recruiter fees? Is

any of that in the chain at all?

Mr. HOWARD. I would have to check with our procurement to

make sure, and we can take that for the record.

Mr. LANKFORD. Okay. The effective communication part of that,

obviously, that becomes a big issue. Posting something and translating it into languages, that is a good start, but if they are fired

for talking to American leadership, or an investigation begins and

suddenly that person disappears, or as I have had conversations

with military personnel that have said some of these bosses will

just release a person for the slightest thing in their encounters

with American personnel. This person, let’s say, paid a $5,000 fee to be able to come, which

they took out a loan for. They get there, they work for 3 months,

they find out it is terrible, talk to an American and say that this

is a problem, then they are gone. Now they have lost their $5,000,

they worked 3 months as a slave in horrible conditions, and they

are out before the reporting occurs.

It is the tracking of all of that. Do you have a sense that any

of that may be occurring?

Mr. HOWARD. Well, we ensure that they get their monthly pay.

We also ensure that they are aware of the contract. Our contracting officers representative in country visits sites regularly and

talks to the associates and has a real good working relationship

with the third country nationals, and I believe has a very good

back and forth flow of information. So if one had seen any issues

of that, it would have been brought to our attention, and she had

no recollection of that.

Mr. LANKFORD. Okay. It is a struggle when we hear so many stories that we have a zero tolerance policy, yet these stories continue

to rise up still, and we are still seeing this as a practice of whatever scale that that may be. And I know that we can all have different numbers of what scale this may occur, but it is difficult for

me to say we have had these letters that have gone out dealing

with passports, but we are not dealing with recruiter fees, we are

not dealing with housing issues, for instance, and are they in the

50 square feet required housing; just the basics of how we care for

people that are caring for us.

Mr. HOWARD. Chairman Lankford, we stress also the living conditions. If our own AAFES associates are in trailers, our third

country nationals will be in trailers. If we are in tents, then the
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same thing. Whatever the military is in, we have that same living

standard for our own associates, as well as our third country nationals.

Mr. LANKFORD. Okay.

Ms. Dixon, let me ask who is responsible for assuring that these

contracts are fulfilled? Let me just give you an example. Someone

that is on the ground, begins to get reports that they have recruiter

fees, that their living conditions are not good, they are being mistreated, whether it is sexual abuse or whatever it may be. Who begins to follow through the process of assuring that the contractor

is identified, that we don’t have a continuing pattern of this occurring? Does that make sense?

Ms. DIXON. I don’t want to step out on I am not sure, but I believe it should be the contracting officer and contracting officer representative that monitor the contract. Those people should be the

ones responsible.

Mr. LANKFORD. Do they have adequate conversation time with

the people that are on the ground, these third country nationals?

Ms. DIXON. I can’t really speak to that. I will definitely take that

for the record.

Mr. LANKFORD. That becomes the challenge. If the person that is

responsible for overseeing is not interacting with the third country

nationals to see if that is actually being fulfilled as promised, then

we have a breakdown in that as well. And I am confident in the

AAFES area and other areas these American companies that are

there represented, whether they be fast food or product or whatever it may be, I am sure they would be mortified to know that

some of the employees of their company in other countries working

for American soldiers have the possibility of being in indentured

servitude. I am confident none of those American companies want

that to be able to get out or would want to be able to see it, nor

would we, as American citizens and taxpayers, want to know that

any of our tax dollars or our process of dealing with our own soldiers and the folks that are service members on that.

There will be plenty of questions, we will have several rounds,

get a chance to talk through, and we will have this ongoing conversation on that. I would like to be able to recognize Mr. Connolly

for 6 minutes.

Mr. CONNOLLY. Thank you, Mr. Chairman. If I could just pick up

on that last point.

Ms. Dixon, I am not sure I understood your answer to the chairman’s question. You said you would have to get back to us on the

record. Your title is Combating Trafficking in Persons Program

Manager. Do you get out in the field? Do you meet with contractors

and subcontractors to satisfy yourself that this practice is not as

widespread as testimony indicated?

Ms. DIXON. Yes, sir, I do go out and talk to contracting officers.

I have been invited to come and do—I try to do outreach training

to——

Mr. CONNOLLY. Have you been to Iraq?

Ms. DIXON. No, I have not. I have not been to Iraq.

Mr. CONNOLLY. And you are the program manager for Combating

Trafficking in Persons.
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Ms. DIXON. Correct. I rely on our Inspector Generals in-country,

as well as——

Mr. CONNOLLY. Ms. Dixon, we just heard testimony that this is

a widespread problem. We are talking about human beings who are

being forcibly recruited and lured into employment on our behalf,

and you have not made it your business to go and kick the tires

and check the dipstick to ascertain to your own satisfaction that

these reports are accurate?

Ms. DIXON. No, I have not.

Mr. CONNOLLY. Do you think it might be your responsibility to

do that?

Ms. DIXON. Definitely.

Mr. CONNOLLY. Thank you.

Ambassador Moorefield, I placed in the record this statistic, that

not a single prosecution with respect to this kind of human trafficking has yet been brought by the Department of Defense against

any contractor or subcontractor. And, again, you heard the testimony in the first panel. Unless you wish to contradict it, it is widespread. We are not talking about isolated examples, we are talking

about tens of thousands, if not multiples of that. Help me understand, help this committee understand why not a single prosecution has been brought on this subject.

Ambassador MOOREFIELD. It is a fair question, Congressman

Connolly. I only know of one case that was referred to the Department of Justice, and they disinclined to pursue it for lack of substantiating evidence.

Mr. CONNOLLY. I have limited time, I am sorry, Mr. Ambassador,

but do you have any reason to dispute the testimony we heard from

the previous panel that this is a widespread problem involving tens

of thousands, if not as many as hundreds of thousands of individuals?

Ambassador MOOREFIELD. I can’t verify or deny the number of

persons that may be affected.

Mr. CONNOLLY. Okay. If we posit that that is even remotely accurate, the fact that we have five cure letters, no prosecutions, and

one reference to the Justice Department, they declined to prosecute, might suggest to a layman, if not a Member of Congress,

that we are not taking this subject seriously at all.

Ambassador MOOREFIELD. Well, I can only say that with respect

to the justice process and the criminal investigative process that,

and I am not trying to avoid your question, we are not directly responsible. I can consult with our investigative agency to find out

what their belief is and get back to you as to why more cases have

not been investigated to the point of being referred to the Justice

Department for prosecution.

Mr. CONNOLLY. Like none.

Ambassador MOOREFIELD. One referred, none prosecuted, that I

know of.

Mr. CONNOLLY. One.

Ambassador MOOREFIELD. Yes.

Mr. CONNOLLY. How many subcontractors are there, just to pick

one country, Iraq? How many would you guess?

Ambassador MOOREFIELD. I am sure there are dozens and dozens.
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Mr. CONNOLLY. Dozens? Perhaps many more than that.

Ambassador MOOREFIELD. Well, we have been scaling down, so

I can’t really say what it is today. It was one point, no doubt, hundreds.

Mr. CONNOLLY. Okay.

Ms. Klemstine, you heard Mr. McCahon, in the previous panel,

indicate that he had written with some suggestions about how the

State Department might help deter this phenomenon with its contractors and subcontractors, and he wrote that letter 15 months

ago and has yet to receive a reply. Can you explain why?

Ms. KLEMSTINE. No.

Mr. CONNOLLY. Are you aware of the letter?

Ms. KLEMSTINE. No, I am not aware of the letter.

Mr. CONNOLLY. May I ask you, Mr. Chairman, with your indulgence, that we would like you to get back to the committee with

an explanation and with a response to Mr. McCahon that is cc’d

this committee?

Mr. LANKFORD. Without objection.

Ms. KLEMSTINE. Would be glad to do.

Mr. CONNOLLY. I thank the Chair.

In your testimony, Ms. Klemstine, if I understood you correctly,

you said that human trafficking among State Department subcontractors apparently is fairly commonplace, particularly the fact

that 77 percent of contract employees paid a recruitment fee, which

ought to be a red flag. Doesn’t necessarily prove there is human

trafficking, but it is one red flag out there. And that passports confiscated and wages were stolen. And you also testified to the fact

that the awareness level, even among State Department employees,

was, frankly, not where we want it to be, nowhere near where we

want it to be.

Is State Department taking this issue seriously?

Ms. KLEMSTINE. I believe so, in reference to the response that we

just received on our October report. I would say that prior to the

October report, although our Department had, on several instances,

disclosed potential TIP violations, the seriousness wasn’t taken.

However, recently, and I think a lot of it had to do with the survey

that was actually sent out to employees that substantiated the fact

that there was an awareness problem, really did bring the GTIP

office to say, yes, we have a problem, now we have to do something.

Mr. CONNOLLY. My time is up, Mr. Chairman, and I do have a

series of questions for Mr. Howard that I will revisit in the other

round. Thank you.

Mr. LANKFORD. Thank you.

Mr. Walberg is recognized.

Mr. WALBERG. Thank you, Mr. Chairman.

Mr. Howard, in your testimony you stated that, because of your

efforts, several third country national workers have been liberated

from involuntary servitude. In these cases, what actions were

taken against the contractors?

Mr. HOWARD. That is where the cure letters went into play and

the third country nationals were returned to their country and the

cure letters, to ensure that did not occur again, was done with the

contractors.
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Mr. WALBERG. There was no termination for defaults or suspension or debarment in the cases of these contractors?

Mr. HOWARD. No.

Mr. WALBERG. How many contractors are you aware of that have

engaged in these types of abuses?

Mr. HOWARD. I don’t have the exact figures. I would have to take

one for the record and get back to the committee.

Mr. WALBERG. Appreciate that. You were here with the last

panel and it was indicated that while there were hundreds and

hundreds of allegations and incidences of contract or alleged contractor abuse, there were nationals that were sent back, that there

were allegations made; yet, it was indicated that generally speaking, overwhelmingly speaking, Department of Defense, other governmental entities did not question the victims. Do you agree with

that or do you reject that as being hyperbole?

Mr. HOWARD. If we have the opportunity to question the individuals before they leave country, we do. But once they are out of

country, we don’t have the capability to.

Mr. WALBERG. So what you are indicating is that, generally

speaking, they are out of country before you find out any of the

abuse has taken place.

Mr. HOWARD. Well, again, if there would be abuses, our contracting officer representative, who is talking to them all the time,

our store managers, our general managers that are at each location

every day, if they are aware of anything, they would take the appropriate action and contact our Inspector General also. So I am

not aware of any.

Mr. WALBERG. Ms. Dixon, what is your policy on that? I mean,

do you agree with the statements made earlier by the panel that

very few, if any, of the victims were interviewed by the Department

of Defense?

Ms. DIXON. I can’t speak to whether victims were interviewed or

not. I know that attempts were made to interview victims; they

tried to get in touch with victims to interview them.

Mr. WALBERG. Ambassador Moorefield, how do you respond?

Ambassador MOOREFIELD. Frankly, I am not aware from any of

our oversight initiatives so far that we have determined whether

or not they are systematically the prime contractor or is determining whether or not people were—their CTIP rights were violated before they left the country. We have been accompanying Defense Contract Management Agency and contracting officers on visits to camps where the laborers are kept or in their places of employment where interviews were conducted asking these sorts of

questions. So far we have not determined that there was an identifiable CTIP violation.

Mr. WALBERG. I certainly would appreciate hearing subsequent

information that Department of Defense and others are interviewing more of the alleged victims, that we are seeing some aggressive action taken there, because it seems like the evidence is

leaving the scene and we are not gaining the opportunity to find

ways of achieving success in this area.

I would like to give my remaining time to the chairman.

Mr. LANKFORD. Thank you. I receive that.
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Let me just ask a quick question, then we are going to continue

to move on.

State Department report that came out, the OIG report, January

2011, this year. Here’s the statement that comes out of it: 77 percent of the interviewed workers stated they obtained their jobs by

paying a recruitment agency in their country of origin. Of the 77

percent, approximately 50 percent of those workers said they paid

a recruitment fee that totaled more than 6 months contracted salary; 27 percent reported paying fees of more than 1 year’s salary;

and 11 of those 75 workers paid a recruitment fee that would take

2 years to pay off.

They paid a recruiter fee 2 years. That is the length of their typical contract. When it listed out and broke out of those that were

interviewed, the minimum and maximum, the average payment

here, an average person coming in from Bangladesh, $2,383 for a

recruiting fee.

Here’s my struggle. We have to move passed they have their

passport; they could leave if they want to. They don’t have the

money to leave; they are in indentured servitude, in debt bondage

to a recruiter that came, and I am not sure we are verifying that.

We have to be able to move passed that.

With that, I would like to be able to yield to Ms. Speier for 6

minutes for questioning time.

Ms. SPEIER. Thank you, Mr. Chairman.

And thank you all for participating.

Let me ask this simple question. Is there a problem, in your

mind? Ms. Klemstine.

Ms. KLEMSTINE. Yes.

Ms. SPEIER. Ambassador Moorefield.

Ambassador MOOREFIELD. Yes.

Ms. SPEIER. Ms. Dixon.

Ms. DIXON. Yes.

Ms. SPEIER. Mr. Howard.

Mr. HOWARD. Yes.

Ms. SPEIER. What tools do you not have that you need in order

to make this problem go away?

Ms. KLEMSTINE. Well, I think in the State Department there are

really three answers to that question. I think, first of all, there

needs to be better awareness within the Department. Secondary of

all, the contracting officer representatives need to be far more

proactive in this area than they have in the past. And as you probably know, the State Department has suffered in the area of CORs

on many of its contracts, and that is one of the reasons why our

office, the IG Office, has been actively working with the State Department to increase CORs within the whole region. That has been

a huge issue.

The third area that I think would definitely help in this arena

is to establish some type of hotline, a place where people can call

if they feel that they are victims of human trafficking. Right now

something like that doesn’t exist, and I think that we need to, just

like we have in the OIGs a hotline for people to call in things

throughout the Department, I think we need one also on the contractor level so that people that are working in these conditions can

actually report it; and it would give us on the investigative side
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some mechanism by which to go back and to really dig into these

issues.

Ms. SPEIER. All right.

Ambassador Moorefield, what tools do you need?

Excuse me. Ms. Klemstine, how many people do you have working specifically on this issue?

Ms. KLEMSTINE. On this issue? I have had two teams working on

it. I am divided into two sections.

Ms. SPEIER. Just give me a number.

Ms. KLEMSTINE. Probably about 10 people.

Ms. SPEIER. Ten people?

How about you, Ambassador, how many people are working on

this issue?

Ambassador MOOREFIELD. I would say on the various teams we

have sent out or are sending out, about 10.

Ms. SPEIER. Ms. Dixon, how many in your office?

Ms. DIXON. It is only two people in my office; however, we

work——

Ms. SPEIER. Is that including you?

Ms. DIXON. Yes, it is.

Ms. SPEIER. All right.

Mr. Howard.

Mr. HOWARD. We have 300 because all of our AAFES associates

are directly involved in monitoring and being aware of what is

going on, in addition to our oversight from our European headquarters and our headquarters in Dallas, Texas.

Ms. SPEIER. Have you all read The New Yorker piece?

Mr. HOWARD. Yes.

Ms. DIXON. Yes.

Ambassador MOOREFIELD. Yes.

Ms. KLEMSTINE. Yes.

Ms. SPEIER. Have you taken any action based on The New Yorker piece?

Ms. DIXON. Yes.

Ms. SPEIER. What action have you taken? You sent a cure letter?

Ms. DIXON. I answered yes.

Ms. SPEIER. Oh, Ms. Dixon. What have you done?

Ms. DIXON. Contacted the DOD IG about further inquiries into

the matter, looked at the previous inspection that was done, the

evaluation that was done, and looked at the issues that were sent

down on that previous inquiry, which was different from what was

put out in The New Yorker.

Ms. SPEIER. Okay. I have to tell you I am as frustrated as my

colleagues on this panel. First of all, Ms. Klemstine, I have just

been informed that there is a hotline; no one answers it, and that

third country nationals don’t speak English.

Ms. KLEMSTINE. I am not sure what hotline they are referring to

because, as far as I know and based on the audit work that we

have done, there has not been a hotline dedicated to TIP.

Ms. SPEIER. All right, so here is this New Yorker reporter, Sarah

Stillman, who spent a year investigating this. Retired General

Stanley McCrystal says that the unregulated rise of the Pentagon’s

Third World logistics army is undermining America’s military objective. So you have that issue. You have former Congressman
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Christopher Shays saying it is a human rights abuse that cannot

be tolerated.

There are references made that these workers, primarily from

South Asia and Africa, often live in barbed wire compounds on U.S.

bases, eat at meager chow halls, and host dance parties featuring

Nepalese romance ballads and Ugandan church songs, a larger

number employed by fly by-night, some contractors who are financed by the American taxpayer but who are often operating outside the law.

Now, this is not like it is not happening under our noses. That

is what is most offensive to me. These are on bases in these countries. We know that, moving forward, in Iraq, State Department is

going to be employing more of these third country nationals.

So are we just going to compound this problem or are we going

to do something about it? I feel like our focus is on dotting Is and

crossing Ts and making sure that people have their passports or

have been informed about the responsibilities to inform, but we are

not doing anything about the underlying problem, which is people

are being enslaved, providing services, being told one thing and yet

being offered something very different.

And we are allowing these subcontractors to continue to operate.

A cure letter is a slap on the hand. They should be booted out of

there. They should lose the privilege to work for the U.S. Government forever. And we send them a cure letter, Mr. Howard? That

is the extent of the penalty that is going to be imposed on anyone

who is trafficking?

Mr. HOWARD. These, again, were for holding on to passports. And

we give a cure letter and if they don’t abide by that, we would

debar them and never do business with them again.

Ms. SPEIER. Except that you did say that you believe there is a

problem. And your response so far has been to send out cure letters.

Mr. HOWARD. No. It is also working on a daily basis to ensure

that the problems don’t occur in our areas of responsibility.

Ms. SPEIER. My time has expired.

Mr. LANKFORD. Let me tell you a quick story. Then we are going

to a different round, if you all have additional questions as well.

Part of my own preparation and my own research on this, I sat

down with an MP coming back from Afghanistan who handles internal security for one of the bases, and I am going to leave their

name out of it. When I asked about the questions of third country

nationals on that base in Afghanistan right now, there was a long

hesitation and the response was, what would you like to know? We

started talking about human trafficking and trafficking in persons.

Their response was, I don’t even know where to report it, but I

know it is going on. This is an MP doing internal security on one

of our bases. When I asked about living conditions, their response

was we would never ever want to live where they live on base,

never.

They said that they had some of the companies that they work

for, they would lose their position and would immediately be kicked

out, which terrifies them because they have this massive loan back

home they have to pay for; they have to stay and keep that job.

If they don’t stay and keep that job, they will never be able to pay
135

off the loan, so they are terrified they are going to lose it at any

point. If they ever interact with Americans in any way that their

boss considers in any way questionable, that they are pushing toward that, they are just kicked out, which obviously they have now

lost everything and have no chance of even gaining back what they

paid into the system.

This MP could identify this in the areas where prostitution was

happening in sex trafficking.

This is the reality that is on the ground right now, and my frustration is we know it. We have to find some way to stop this. A

zero tolerance policy is not working. Failing to prosecute is not

working. Cure letters are not working. Not doing debarments and

suspensions of contractors, that is not working. What needs to be

done? And I think Ms. Speier’s question is a great question: What

tool do you need in your toolbox to make sure that this stops happening?

This violates everything in the American value; that we value

the individual person. It is a person created in God’s image and has

inalienable rights no matter what country they are from. They are

to be honored as an individual in the middle of all that. And to

know that our State Department, which stands up for human

rights around the world, has indentured servitude happening in

our embassies is deplorable to me. This is the group that is standing up for American values worldwide. Yet, when these individuals

return back to their home countries, all they can speak of is I

worked for a year for nothing and lived in these deplorable conditions. This violates everything about who we are and what we do.

And the challenge is we have to have back to this committee

some suggestions that extend beyond posting something in the cafeteria or a hotline to call into; some way that we shift from we

have talked about this, we put policies in place, to we suspend,

debar, to where contractors understand completely this is not acceptable. Some path of documentation that begins in their home

country, that if they don’t come in with documentation saying how

much they paid as a recruiter fee, and it is verified that is a legal

amount to pay as a recruiter fee in that; some kind of pathway.

I understand keeping their passport is a big deal, but if they

have a passport and no way to get home, or they have such a large

debt that they can’t leave for fear they will never be able to catch

up on it and pay it off, that doesn’t matter, their passport is meaningless to them at that point, because that would be the worst

thing for them to go home because now it is even worse; they have

to go home and face the loan shark with no money.

All these dynamics all wrap in the middle of this for us, and I

am sure it does for you as well. This can’t just be an issue that is

only passionate for us; obviously, you live and breathe in this all

the time. But it is simple, we have to move from the contracts that

we put out to primes and sub-primes and all these contractors are

out there has the right language into it. That is a good start, but

just checking to see if they have the right language is only the beginning point; the real issue is do we have trafficking in persons

that we are paying for with Federal tax dollars or that we are turning a blind eye to. That is the ending destination on this.
136

Now, I want to just throw it open for just a quick moment and

then we will go to Mr. Connolly for a comment.

What response do you have at this point? What do you see is

going to begin to make this shift? What will help us turn around?

Any suggestion that you have that you would say this is what we

are looking at, I think it will turn the corner on this?

Ambassador MOOREFIELD. Chairman, I am not sure I have a definitive answer; I think I have plenty of questions I have written

down here that obviously we need to examine more carefully in our

own inspection work.

The judicial side is, frankly, a bureaucratic set of hurdles that I

don’t presume to understand.

Mr. LANKFORD. But the suspension and debarment is a very low

threshold.

Ambassador MOOREFIELD. No, no. But suspension and debarment of prime contractors is certainly something accessible to contracting officers and commands in the field, and I don’t have a good

answer yet. I am going to get one on why we haven’t been more

proactive in using it.

Mr. LANKFORD. Can you give me a time on when you are going

to get that answer? Because we would like to have a copy of that

answer as well.

Ambassador MOOREFIELD. Sure. Well, we have a report that we

are working on right now that is due to you in January, two reports, and one of them is a broader perspective look at issues

across DOD; and that would be the obvious place to make sure we

have done sufficient research and can address this.

The other issue, as you know, is the subcontractor issue, which

is beyond the contracting purview of contracting officers, and that

is an extreme vulnerability, needless to say.

Mr. LANKFORD. But if a subcontractor violates the rules, we can

hold the prime accountable for it.

Ambassador MOOREFIELD. That is correct, and——

Mr. LANKFORD. But we are not currently holding the prime accountable for it.

Ambassador MOOREFIELD. Not to the best of my knowledge, and

not to the best of our oversight work yet. And I also don’t have a

good answer why that is not being used more aggressively.

Mr. LANKFORD. Okay.

Mr. Connolly.

Mr. CONNOLLY. Thank you, Mr. Chairman.

It seems to me that maybe we have some legislative refinements

required for this topic, but, frankly, it has to do with will and

moral outrage. Maybe if more of us thought of it as our sister or

our daughter there might be some reflection of moral outrage in

the practice, and then maybe we would be motivated to make sure

we are enforcing our own laws, regulations, memos, executive orders, and the like.

It is not okay to turn a blind eye to this practice. It is not okay

to treat it as a bureaucratic requirement that we can check off a

box because people have been trained or made more aware. The object here is to cease the practice. It is a violation not only of human

rights, but of everything America stands for. We fought a civil war

to end this kind of practice, and yet we are turning a blind eye to
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subcontractors serving our Government, who are in fact engaged in

involuntary servitude, and in some cases sexual trafficking.

And we know what the problem is. And I am deeply disturbed

that we don’t seem to be seized with a mission here, and until and

unless we are, we are never going to solve the problem. All the

laws and all the executive orders in the world aren’t going to solve

the problem.

Mr. Howard, I was intrigued by our bill of rights. It sounds like

a substantive contribution to helping us resolve a very complex

problem. When was that bill of rights promulgated?

Mr. HOWARD. It was developed in 2008 and started to apply to

our third country nationals in March, April 2009.

Mr. CONNOLLY. Okay. And how do we enforce it?

Mr. HOWARD. We have monthly checks where the managers on

the ground have to validate to us that all points of the bill of rights

are being adhered to for our associates.

Mr. CONNOLLY. Our managers.

Mr. HOWARD. Our associates, yes.

Mr. CONNOLLY. Gotcha. And that extends to subcontractors?

Mr. HOWARD. We hold the contractor liable for the subcontractor,

so we check all of the third country nationals on a monthly basis.

Mr. CONNOLLY. You heard the testimony of the first panel and

the dialog we had. And let’s assume, obviously inadvertently, but

the system of incentives and disincentives actually works against

us in the enforcement against human trafficking because all of the

disincentives encourage a prime or subcontractor, frankly, not to

report because he or she is at risk if they do.

Mr. HOWARD. Right.

Mr. CONNOLLY. How can we fix that so that we are actually rewarding people who ferret it out and report it so that we can deal

with it?

Mr. HOWARD. I am not sure how you can reward the subcontractors. I do know——

Mr. CONNOLLY. No, no, the prime, the prime.

Mr. HOWARD. I would have to take that back and think of how

we would reward them. I do know that our associates, the AAFES

employees, U.S. citizens, continually watch out for this and they

will let our—we have a hotline for the Exchange and they will let

the Inspector General for AAFES know if they see any violations

at all.

Mr. CONNOLLY. My colleague referenced the New Yorker story. It

documented the abuses of several beauticians from Fiji who were

falsely lured by recruiters back home, over whom, apparently we

have no jurisdiction or even interest, but ostensibly to go work in

a hotel in Dubai, but in fact they ended up working for subcontractors serving the U.S. Government in Iraq. Is that correct?

Mr. HOWARD. Yes, that is my recollection from reading the article.

Mr. CONNOLLY. They worked 12 hour days, 7 days a week; their

passports were in fact held for some period of time, presumably

against their will; and their wages, whatever they were promised,

which was substantially more than what in fact they received, according to this article, were only $350 a month. To your knowledge,

is that accurate?
138

Mr. HOWARD. It is accurate in fact that the contract said $350

plus tips. And when our Inspector General reviewed it, the tips

amounted to about $450, which took the pay on a monthly basis

up to about $800.

Mr. CONNOLLY. Did AAFES ever interview these women?

Mr. HOWARD. We attempted to, but they had already gone back

to Fiji and we could not interview them. But we did interview additional associates at that site.

Mr. CONNOLLY. And did you corroborate what you understood to

be their story?

Mr. HOWARD. Yes. Well, no. What we found is that the beauticians that were working there said they all had their passports,

that they enjoyed working there, and they had a few questions

about their pay, but nothing about holding on to the passports or

any sexual activity.

Mr. CONNOLLY. So you have reason, therefore, to doubt the narrative of The New Yorker with respect to these two women?

Mr. HOWARD. All I can do is based on what our Inspector General did find during their research.

Mr. CONNOLLY. You indicate that your writ is limited in terms

of sort of third countries from which these people are being recruited. But in your opening testimony I thought I heard you say

you have a presence in something like 30 countries?

Mr. HOWARD. We are in 30 countries——

Mr. CONNOLLY. Thirty countries. But you are not in, for example,

Fiji or Nepal, or places like that.

Mr. HOWARD. No. This is where the manpower agencies go out

and employ.

Mr. CONNOLLY. Would you agree, in light of the concerns we

have about human trafficking, that figuring out some methodology,

whether it is with AAFES or IG offices or maybe Ms. Dixon’s office,

if we can get passed two people staffing it, we ought to be addressing the place where people are recruiting because that is really the

weak link in the chain, as Mr. McCahon indicated in the first

panel?

Mr. HOWARD. Based on what I heard today, yes, the root cause

is right at the beginning.

Mr. CONNOLLY. All right. I would certainly, and I know the

chairman and members of the committee would, welcome any additional thoughts you might have as you think about that in terms

of how we might get at that, because I think if we don’t get at that,

we are never going to solve this problem. There are several links

in the chain we have to get at, but that is certainly one of them.

Thank you, Mr. Chairman.

Mr. LANKFORD. With that, let me make one quick request. I am

going to ask Ms. Speier if she would like an additional round of

questions.

Could the four of you independently put together a set of ideas

of how to be able to resolve this that we could have by February

1? That would give you 3 months to be able to pull together ideas

of how we move passed what we have in place to here are solutions

to fix this, so that a year from now we don’t have a hearing like

this other than to say well done and be able to move passed that.

Is that acceptable? By February 1st on that.
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With that, Ms. Speier, recognize you for 6 minutes.

Ms. SPEIER. Mr. Chairman, thank you, and thank you for giving

the direction you just did. One of my biggest concerns about the

hearings that we have here is that we show great outrage, the

hearing is over, and business as usual. And it is also a problem on

the issue of military rape in this country, where we have had 16

years and 18 hearings, and nothing has changed. And I fear that

we will be in a similar situation in this arena as well if we don’t

stay on it.

And I compliment you on making this request. I also would encourage you to have subsequent hearings. If we don’t stay on this

issue, it will continue without being addressed appropriately.

I guess I would just like to understand, to you, Mr. Howard,

when the Inspector General went and the beauticians had left,

there still was a company, a subcontractor that had hired them,

correct?

Mr. HOWARD. Correct.

Ms. SPEIER. And what happened to the subcontractor?

Mr. HOWARD. Due to the fact we could not validate the accusations, nothing.

Ms. SPEIER. Nothing. Did you show the subcontractor this article

and say what is your response to this?

Mr. HOWARD. I can’t specifically say what the IG did or didn’t

say. I could get back to the committee on this.

Ms. SPEIER. All right, I think, as you can tell, we are vitally interested in this issue. We expect that you are going to put metal

to the pedal.

Mr. HOWARD. Yes, pedal to the metal.

Ms. SPEIER. Pedal to the metal, and take this on as if it was your

own family member. I think that was a reference that my colleague

had referenced. Because this is not just incompatible. I think that

was the word Ms. Dixon used. This is offensive and violates every

principle in our Constitution. Every principle. And it is only going

to get worse because our use of third party nationals is increasing

as we wind down in both Iraq and Afghanistan. So if we don’t get

this right, the problems are just going to explode, in my view.

So, Mr. Chairman, I think at this point I will just yield back.

Mr. LANKFORD. I do appreciate you being here today. As I mentioned before, I am sure this wasn’t a fun day. It is not a fun day

for us as well. Some of this was both out of a prior hearing with

the Commission on Overseas Contingencies came and submitted

their report. A small aspect of that report, which is not relevant to

what they are doing, highlighted that this is an ongoing problem.

There will be more that will follow up from this as well, and both

your testimony and the previous panel as well.

The prime issue is now if we have a contract in place and we

know what the cost of the contract should be based on the travel

of the people coming, the cost of the labor, the cost of housing; either these primes and subs are skimming off dollars and taking

that dollar that is to be committed to workers or they are working

on an additional kickback, which is also illegal, from the recruiter

on the field, getting a cut back to the contractors, or were violating

the basics of what is a legal recruiter fee in the country. It is just

on and on and on. But they are all things that are discoverable.
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At this point it is moving from we have great rules and regulations to we are enforcing them and we are accomplishing that. We

are going and asking the questions that we are afraid to ask, knowing what the answer might be. My concern is—and it is only my

suspicion and concern. My concern is that we are not reporting it,

we are not pushing it, we are not following through on this for fear

that it gets out into the media and it becomes—it is easier to say

we have had no prosecutions, assuming that means it is not occurring, rather than we have had 25 prosecutions because it is occurring.

I think it is out. It is occurring, has been occurring. It has been

addressed for the past 20 years just a piece at a time. Now we have

to move it from it is being addressed in right policies, win contracts

and right language, those are all good first steps, to it is completely

eradicated from what we do. That is what we are looking forward

to being in the final step.

I appreciate your time and the effort you put into this. I look forward to getting a chance to read back the ideas that you are submitting back to us by February 1. And, with that, we are adjourned.

[Whereupon, at 12:16 p.m., the subcommittee was adjourned.]

[The prepared statement of Hon. Elijah E. Cummings follows:]
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