As Sunday was the 10th anniversary of the earthquake that devastated Haiti in 2010, and as Puerto Rico continues to suffer from a two-week-long series of temblors, a contractor in Mobile, Alabama, this week faces a key court hearing as he seeks justice for relief work done after a disaster 22 years ago.
The contractor seeks damages for nonpayment of what originally was $51 million of disaster relief work his company did after Hurricane Mitch ravaged Honduras in 1998. The U.S. government shamefully opposes the contractor’s efforts to be repaid. Its position makes it less likely other American contractors will risk major time and money to help the government provide effective relief even when directed by law.
In a bit of almost morbid irony, this case of the U.S. government refusing to protect a contractor from perfidy in Honduras runs converse to the case I wrote about here 12 years ago in which the U.S. government imprisoned a businessman for violating a Honduran law that even Honduras said had been repealed. So, the U.S. government will harshly enforce a Honduran law that no longer exists but will not honor a U.S. government contract for a citizen rooked by Honduran subterfuge.
The lawsuit being heard Thursday, which now is a qui tam, or a whistleblower, case, involves a situation in which the U.S. Agency for International Development oversaw the contract for post-hurricane water and sewer reconstruction that enlisted a company now known as MBS. USAID eventually gave MBS a certificate of appreciation for excellent work on the projects. Although done under USAID auspices, the work was performed through something called a Host Country Contract whereby the USAID money goes to the foreign government, which in turn is responsible for paying the contractor.
Yet, even though the president of Honduras himself signed the USAID agreement, and even though a Honduran court itself ruled that the $51 million payment was due to MBS, Honduras did not pay the contractor when the work was done.
Despite all this, USAID declined to help MBS recover its due payments, and MBS’s losses forced it out of business. Now, MBS employee Murray Farmer and two others have filed a qui tam lawsuit alleging that Honduras committed fraud via a U.S. government program. If the suit is successful, the United States would be obliged to collect the money from Honduras, perhaps by withholding duly appropriated foreign aid.
Here’s the infuriating twist: USAID not only is not helping MBS but is actively opposing the qui tam suit. On Jan. 16, a federal judge will consider USAID’s motion to dismiss the suit without full consideration of the merits.
Why? The primary reason appears somewhat buried in USAID’s legal brief.
“Dismissal is further warranted,” it says, “in the interest of international comity. The relators have sued another sovereign nation, its agencies, and a number of its current and former high officials. When such an action is prosecuted in the name of the U.S., there is ineluctably a possibility that the litigation could be perceived as an instrument of U.S. foreign policy and could have negative effects upon the diplomatic relationship.”
There you have it: Honduras may be dependent on U.S. assistance, but the U.S. doesn’t want to bother Honduras even on behalf of a U.S. company that got rooked.
President Trump famously promised to put “America First” and to enforce the best deals with foreign entities. This is not the best deal, but a raw deal, one that could dissuade other U.S. companies from answering USAID’s future calls for help.
It is beyond dispute that MBS earned the money. Still, qui tam law is complicated, and it is possible this suit may not succeed under qui tam standards. The least Trump’s administration should do, though, is to intervene and withdraw USAID’s motion to dismiss, while the White House reviews the case. Eventually, the best policy probably would be to let a court decide the case on the merits, rather than to dismiss it prematurely in furtherance of what can only be described as “America Last” foreign policy.
