Firm in Hanford nuclear waste project settles fraud case

A key contractor involved in the troubled cleanup at the former Hanford, Wash., nuclear weapons complex admitted Tuesday that it had engaged in criminal time card fraud and agreed to pay $18.5 million to settle the allegations.

The project, which involves construction of a $13.4-billion treatment plant to process highly radioactive bomb waste, is years behind schedule, has exceeded its original cost estimate and is paralyzed by technical issues that have halted the work.

The problems, however, have not dimmed political support for the project, given the threat that about 56 million gallons of radioactive sludge at the site could eventually leak and reach the nearby Columbia River.

“Even with all the money rupturing out of the Treasury on this project, Congress doesn’t care,” said Tom Carpenter, executive director of the Hanford Challenge, a watchdog group that has helped expose many of the technical and management problems at the project.

The time card fraud was announced one day after the Energy Department said it was considering shipping 3.1 million gallons of the radioactive sludge to the Waste Isolation Pilot Plant in New Mexico. This represents a sharp turn from the department’s earlier plan to process all of the sludge into a form of glass at the Hanford site and send it to a future high-level radioactive waste repository.

Energy Department officials said the New Mexico proposal could require the construction of an additional treatment plant at Hanford. This plan would ultimately save money and allow some of the waste to be removed in as little as two to three years, officials said. But the proposal is likely to be controversial, require changes to the New Mexico license for the dump and face potential law suits.

“I am confident that if they try to do this, it will face multiple challenges,” said Don Hancock, director of the nuclear waste program at the Southwest Research and Information Center in Albuquerque. “It is not only grasping at straws, but it diverts attention from the bigger problem at Hanford.”

The time card fraud was carried out by the Colorado-based environmental firm CH2M Hill, which billed the government for employee overtime that was not performed, a scheme that involved the company’s upper management, direct supervisors and hourly workers, the Justice Department said Thursday.

The company acknowledged that it had recruited workers for overtime by offering eight-hour blocks of extra pay, but then allowed employees to leave the job site early. The company’s inability to recruit workers without this scheme was threatening its profit, according to the announcement.

CH2M Hill agreed to refund $2 million in profit it earned from the government under the scheme, as well as pay $16.5 million to resolve its civil liabilities in the matter.

The amount of the civil damages suggests that potentially thousands of employees were involved, and the Justice Department called the practice systemic and widespread.

Upper management knew about the “conspiracy” but elected to not stop it or discipline the employees, the Justice Department alleged. Eight individuals have pleaded guilty in the time card fraud, but until the announcement Thursday the company itself had not been implicated. The company declined to say whether it had removed or disciplined any members of management.

“CH2M Hill is satisfied with the amicable resolution that we have reached with the Government with respect to this matter,” a company statement said. “It goes without saying that we are very disappointed by the conduct that made the settlement necessary.”

The only person identified as having participated in the practice is Carl Schroeder, who had filed a False Claims Act case against his employer. But after the case was filed, the Justice Department determined that he had participated in the scheme, indicted him and moved to bar him from sharing in any recovery. He pleaded guilty to the charges and is awaiting sentencing.

ralph.vartabedian@latimes.com