- Associated Press - Thursday, October 30, 2014

CONCORD, N.H. (AP) - Republican gubernatorial candidate Walt Havenstein knew about 5 percent raises given to consultants associated with a massive fraud scandal involving a company he led, his campaign said Thursday. He did not stop the raises from going into effect because he did not want to jeopardize an ongoing federal investigation into the fraud, spokesman Henry Goodwin said.

Democratic Gov. Maggie Hassan brought up the pay raises for the first time during Wednesday’s gubernatorial debate. For months she has sought to discredit Havenstein’s business record by pointing to his time as CEO of defense contracting company Science Applications International Corporation. In 2010, federal prosecutors uncovered a fraud scandal involving several of the company’s top-level executives, who worked with a New York City employee and subcontracting company to defraud the city out of hundreds of millions of dollars by overcharging on the contract and kicking back money to themselves.

Havenstein has repeatedly said that he uncovered the fraud shortly after arriving at the company and began an internal investigation, which ran separately from the federal investigation. After the facts came out, Havenstein fired three top-level executives. He was never named or implicated in the lawsuits.

The pay raises for the subcontractor’s consultants - signed by an SAIC executive - took effect shortly before federal prosecutors made the first charges.

Hassan’s campaign said Havenstein’s statement that he took action doesn’t square with his decision to allow raises for the subcontractor involved. Documents provided by her campaign show the roughly 5 percent raises were approved in November 2010, about a month before the first federal charges came down.

“(It’s) beyond belief that he would allow his company to hand out raises to those responsible for a project going $500 million over budget on the taxpayers’ dime,” Hassan spokesman Aaron Jacobs said in a release.

Havenstein’s spokesman, Henry Goodwin, said Havenstein is “completely comfortable” with how he handled the fraud scandal. Havenstein’s internal investigation was running separately from the federal investigation, and he needed to be careful not to interfere, Goodwin said.

“Walt wanted the federal investigation to go as far as it could go,” Goodwin said.

After the investigation was completed, Havenstein helped negotiate a settlement that gave $500 million back to New York City.

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