Fraud delays K-Town mall opening

  • Published
  • By Dr. Deborah Kidwell
  • OSI Command Historian

With the closure of Rhein-Main Air Base, Germany, in late 2005, Ramstein AB, Germany, became the new “Gateway to Europe” for thousands of travelers transiting the European theater.

And conveniently located just across from the (Ramstein) Air Mobility Command Passenger Terminal, the Kaiserslautern Military Community Center was to provide shopping, 350 rooms of temporary housing, several dining options, a four-plex movie theater and other amenities under one roof in an American mall style layout.

Construction began with a site clearing in 2003, followed by a groundbreaking in the summer of 2004. The Center was planned as a facility that would add value and convenience to the lives of people transiting the Kaiserslautern (a.k.a. K-Town) area.

In 2005, an anonymous letter alerted German authorities to possible wrongdoings at the Kaiserslautern Military Community Center complex. German authorities quietly began looking into the allegations and notified OSI, which reviewed documents from the United States Air Forces in Europe Office of Installations and Mission Support.

The $150M project was to open in 2006 with a shopping mall and housing towers complex spanning 844,000 square feet. When the project didn’t open as scheduled and ran into cost overruns, it came under the scrutiny of a Congressional oversight committee, prompting one Congressman to refer to the complex as a “white elephant.”  A Government Accountability Office Report from 2006 noted that a senior Air Force civilian in charge of the project had resigned while under criminal investigation.

The GAO study from 2007 concluded the major contractor, LBB-Kaiserslautern, did not effectively perform required duties and the Air Force did not appropriately minimize the risks of overseas construction projects. They determined that the project was flawed in its design and implementation, and had not been managed effectively. The study noted the Air Force lacked the necessary staffing and expertise to adequately supervise the project, and that policies and procedures were inadequate for such a large and varied project.

The roof leaked, and would need to be replaced at the cost of millions. As invoices bulged to their contract cost ceilings, the Air Force delayed payments, resulting in workforce reductions that further slowed progress. The project was beset, the study noted, with “design flaws, ineffective construction management and substandard workmanship.”

By 2008, the Joint Investigation by OSI and German authorities was in full swing and cost overruns had run the project up towards a final $200M price tag. German authorities reviewed more than 2,000 seized documents in the investigation of some 20 individuals suspected of bilking the government out of millions of dollars. 

There were many challenges to investigating the poor management and allegations of fraud that beset the construction of the Kaiserslautern Military Community Center. Agents had to work with German authorities to sift through the laws and authorities relevant to both countries, as well as military agreements, and to share gathered evidence for prosecutions.

A former OSI squadron commander at Ramstein AB noted that, “We ran several fraud investigations, which were briefed in front of Congress. They talked about product substitution. You had some German contractors colluding with Air Force active duty members to cut corners and get the job done faster, but they were also doing it for financial gain for themselves. Our investigations halted some of the work being done, but it was [stopped] for the right reasons.”

The center opened in 2009, but many of the fraud cases took years to resolve.