Memorial Builder’s Owner Defrauded U.S. (The Washington Times)

By Daniel F. Drummond, The Washington Times

Philipp Holzmann AG, a German conglomerate that owns one of the companies awarded part of a $56 million contract to construct the World War II Memorial on the National Mall, pleaded guilty last year to defrauding the American government as part of an international bid-rigging conspiracy.

Tompkins Builders, which is owned by Holzmann, two weeks ago won part of the contract to build the memorial between the Lincoln Memorial and the Washington Monument at the Rainbow Pool.

Holzmann was ordered in August to pay a criminal fine of $30 million after it pleaded guilty to one felony count of conspiring with a group of “unnamed conspirators … participating in a conspiracy to suppress and eliminate competition” on a contract for the U.S. Agency for International Development, Justice Department officials said.

Officials said Holzmann had used Tompkins’ parent company, North Carolina-based J.A. Jones Construction Co., in efforts to rig bids to inflate the cost of contracts on a wastewater treatment project in the Middle East as part of the Camp David peace accords.

Justice officials said J.A. Jones was cleared of wrongdoing because evidence showed the German conglomerate used the smaller company as a pawn in its antitrust activities.

The conspiracy, which involved several other internationally known companies, lasted for more than seven years. The bid-rigging took place in the 1980s and early 1990s, said officials familiar with the case.

More than a dozen contracts worth roughly $1 billion were issued to the group of international construction companies as a result of the bid-rigging and contracting irregularities.

The Tompkins construction company, with offices in the District, Baltimore and Richmond, was awarded more than half of the $56 million contract for construction of the World War II Memorial, along with Grunley-Walsh of Rockville.

Justice spokeswoman Gina Talamona said Holzmann’s guilty plea can’t bar it or its subsidiaries from being awarded contracts by the GSA as long it is not engaging in any other criminal activity.

The revelation that Holzmann was part of an effort to defraud the U.S. government is the latest controversy to dog the World War II Memorial planned for the Mall. Several news organizations reported last week that Holzmann, which bought J.A. Jones in 1979, participated in the Nazi war machine. Holzmann paid part of a $4.5 billion settlement to Jewish survivors of concentration camps, where Jews were forced to do slave labor for the company.

Sources close to J.A. Jones said Holzmann has “been nothing but a nightmare” and caused myriad problems for both the 112-year-old J.A. Jones and Tompkins, which it bought in 1969.

In an interview with the trade publication Engineering News-Record, J.A. Jones President John Bond said Holzmann’s actions reflected negatively upon his company.

“This has been devastating to us to be associated with this sort of illegal conduct,” Mr. Bond said.

Elizabeth Maybach, a spokeswoman for J.A. Jones, said her company was separated from the Justice Department action but was originally part of the suit. Another spokesman for J.A. Jones said the North Carolina company was labeled as a “passive participant” in the criminal actions of Holzmann.

Both the Senate and House last month pushed through legislation speeding up construction of the monument. President Bush signed the bill on Memorial Day.

In a statement issued to The Washington Times yesterday, the General Services Administration said there was nothing improper about the contract it awarded to Grunley-Walsh and Tompkins, which has been in the local construction business since 1911. The statement said the federal agency was “aware of the issues associated with the Philipp Holzmann Co.”

The statement also said the GSA judged Tompkins and Grunley-Walsh “to be a responsible contractor and awarded the contract to the joint venture, which submitted the highest quality proposal and offered the lowest price, thus providing the best overall value to the government.”

Mike Conley, spokesman for the $160 million World War II Memorial project and the American Battle Monument Commission, said it’s not fair to link the actions of Holzmann with the contract to Tompkins, which has worked on major construction projects in the District, including at the U.S. Capitol and the National Gallery of Art.

“None of this stuff that has to do with Holzmann has anything to do with Tompkins,” Mr. Conley said. “You don’t visit the sins of the great-grandparents on the grandchildren.”

But some on Capitol Hill are grumbling. After reports last week of the Nazi-Holzmann connection, Sen. Jon Corzine, New Jersey Democrat, said he wanted to look into the matter. And Sen. John W. Warner, Virginia Republican and ranking member of the Armed Services Committee, said he is concerned because $6 million in taxpayers’ money is earmarked for the monument.

Holzmann’s actions raise “serious concerns,” said D.J. O’Brien, spokesman for Sen. Tim Hutchinson, Arkansas Republican and a leading advocate of speeding construction of the memorial.

“We hope that any roadblocks will get resolved,” Mr. O’Brien said.

Copyright (c) 2001 News World Communications, Inc.