[Mb-civic] Democrats: MIA
Michael Butler
michael at michaelbutler.com
Mon Mar 28 21:23:48 PST 2005
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Newsweek Monday 04 April 2005 Issue Watchdogs are warning that
corruption in Iraq is out of control. But will the United States join
efforts to clamp down on it? By many accounts,
Custer Battles was a
nightmare contractor in Iraq. The company's two principals,
Mike Battles
and Scott Custer, overcharged occupation authorities by millions of
dollars, according to a complaint from two former employees. The firm
double-billed for salaries and repainted the Iraqi Airways forklifts
they found at Baghdad airport-which Custer Battles was contracted to
secure-then leased them back to the U.S. government,
the complaint says. In the fall of 2004,
Deputy General Counsel Steven Shaw of the Air Force
asked that the firm be banned from future U.S. contracts,
saying Custer
Battles had also "created sham companies, whereby [it] fraudulently
increased profits by inflating its claimed costs." An Army inspector
general, Col. Richard Ballard,
concluded as early as November 2003 that
the security outfit was incompetent and refused to obey Joint Task
Force 7 orders: "What we saw horrified us,
" Ballard wrote to his superiors in an
e-mail obtained by NEWSWEEK. Yet when the two whistle-blowers sued
Custer Battles on behalf of the U.S. government-under a U.S. law
intended
to punish war profiteering and fraud-the Bush administration declined
to
take part. "The government has not lifted a finger to get back the
$50 million Custer Battles defrauded it of, " says Alan Grayson,
a lawyer for the two whistle-blowers,
Pete Baldwin and Robert Isakson. In recent months
the judge in the case, T. S. Ellis III of the U.S. District Court in
Virginia, has twice invited the Justice Department to join the lawsuit
without response. Even an administration ally, Sen. Charles Grassley,
demanded to know in a Feb. 17 letter to Attorney General Alberto
Gonzales
why the government wasn't backing up the lawsuit. Because this is a
"seminal" case-the first to be unsealed against an Iraq
contractor-"billions of taxpayer dollars are at stake" based on the
precedent it could set, the Iowa Republican said. Why hasn't the
administration joined the case? It has argued privately that the
occupation government, known as the Coalition Provisional Authority,
was a multinational institution,
not an arm of the U.S. government. So the U.S.
government was not technically defrauded. Lawyers for the
whistle-blowers
point out, however, that President George W. Bush signed a 2003 law
authorizing $18.7 billion to go to U.S. authorities in Iraq,
including the CPA,
"as an entity of the United States government." And several contracts
with Custer Battles refer to the other party as "the United States of
America." Pressure has been building on the administration to join
the case-or at least to file a brief saying publicly if it believes
defrauding
the CPA is the same as defrauding the United States. The judge's
latest
deadline for that brief is this Friday. But a Justice Department
spokesman
said last week the government "could" still refuse to take part.
"I'll bet you $50 they will not show up, " says Richard Sauber,
a lawyer for Custer Battles,
which is still operating in Iraq. (He also rejects the charges of
fraud and incompetence.) The administration's reluctance to prosecute
has turned the Iraq occupation into a "free-fraud zone,
" says former CPA
senior adviser Franklin Willis. After the fall of Baghdad,
there was no
Iraqi law because Saddam Hussein's regime was dead. But if no U.S.
law applied either, then everything was permissible,
says Willis. The former
CPA official compares Iraq to the "Wild West,
" saying he delivered one $2
million payment to Custer Battles in bricks of cash. ("We called Mike
Battles in and said, 'Bring a bag',
" Willis told Congress in February.)
Willis and other critics worry that with just $4.1 billion of the
$18.7
billion spent so far, the U.S. legal stance will open the door to much
more fraud in the future. "If urgent steps are not taken,
Iraq ... will
become the biggest corruption scandal in history," warned the
anti-corruption group Transparency International in a recent report.
Grassley adds that if the government decides the False Claims Act
doesn't
apply to Iraq, "any recovery for fraud, waste and abuse of taxpayer
dollars ... would be prohibited." More than U.S. money is at stake.
The administration has harshly criticized the United Nations over
hundreds
of millions stolen from the Oil-for-Food Program under Saddam. But
the
successor to Oil-for-Food created under the occupation, called the
Development Fund for Iraq,
could involve billions of potentially misused
dollars. On Jan. 30, the former CPA's own inspector general,
Stuart Bowen,
concluded that occupation authorities accounted poorly for $8.8
billion in
these Iraqi funds. "The CPA did not implement adequate financial
controls, " Bowen said. U.S. officials argue that it was impossible,
in a war environment,
to have such controls. Yet now the Bush administration is
either ignoring or stalling inquiries into the use of these Iraqi oil
funds, according to reports by Democratic Rep. Henry Waxman,
and others.
In one case, the Pentagon's own Defense Contract Audit Agency found
that the leading U.S. contractor in Iraq, Halliburton subsidiary KBR,
overcharged Iraq occupation authorities by $108 million for a task
order
to deliver fuel. Yet the Pentagon permitted KBR to redact-or black
out-almost all negative references to the company in this Oct. 8, 2004,
audit. These included any mention of the $108 million in alleged
overcharges and the audit's clear conclusion that KBR's
price-supporting
data were "not adequate." The Defense Department then forwarded this
censored version to a U.N. monitoring board that Washington had
agreed to
under U.N. Resolution 1483. Normally, an audited company is allowed to
censor its proprietary or personal information,
but "these redactions went
beyond anything U.S. law would allow, " says Tom Susman, a Washington
expert. Halliburton spokeswoman Wendy Hall insists that the company
had the right to make such redactions because the audit was
"predecisional"
and "represented only one side of the case." Hall also denies the
company overcharged. The U.N. audit team,
called the International Advisory
and Monitoring Board, is angry over these heavily censored reports,
officials tell NEWSWEEK. The board last fall asked that a special
auditor
be hired. But the Pentagon has yet to award that contract after six
months
of delays. A Pentagon spokeswoman says the U.N. audit team "agreed
that
the [KBR] information provided was responsive to their request." A
U.N.
spokesman says this is untrue. The administration's seemingly
detached approach to these cases could have other implications.
NEWSWEEK
has learned that federal prosecutors plan to indict several U.S.
contractors in Iraq on criminal charges but that these could be
undercut
if the court rules in the Custer Battles case that the CPA was not a
U.S. government arm. "If you make the CPA a U.S. entity,
you open the door to
all sorts of liability claims. But if it's not a U.S. entity, then you
can't parade these people through the court,
" says Jim Mitchell of the CPA
inspector general's office. And that could mean Custer Battles and
other companies will ultimately answer to no one.
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Democrats: MIA
The Nation | Editorial
11 April 2005 Issue
After giving George W. Bush far too easy a ride in his first term, the
Democratic leadership in Congress promised that the second term was going to
be different. "This is not a dictatorship," announced Senate minority leader
Harry Reid. The new head of the Democratic Congressional Campaign Committee,
Illinois Representative Rahm Emanuel, declared, "The President neither has
the mandate he thinks he has nor a majority to make policy." But three
months of watching the Democrats' stumbling, often incoherent responses to
Administration appointments and initiatives shows clearly that the party is
making the same mistakes that cost it so dearly in the 2002 and 2004
elections.
It's easy simply to blame the GOP majorities in the Senate and House
when bad legislation passes those chambers. But too frequently it has been
Democratic disorder rather than Republican treachery that has made possible
the Bush White House's legislative victories. That's what happened with the
mid-March Senate vote on a budget amendment that would have protected the
Arctic National Wildlife Refuge. Seven Republican senators voted to protect
ANWR from oil drilling. Had the Democratic caucus simply held firm in
support of the amendment, it would have won by a 52-to-48 margin. But three
Democrats--Daniel Akaka and Daniel Inouye of Hawaii and Mary Landrieu of
Louisiana--broke ranks to back the Administration. All three had their
excuses, and if this had been the only bill on which Democrats failed to
hold together, it might not be a cause for serious concern. But this is
hardly an isolated example of Democrats doing the bidding of the President
and the special interests that support him.
Consider the February Senate vote on tort "reform," another issue on
which Democrats are supposed to be the defenders of the common good against
the rapacious Republicans. The battle lines could not have been clearer:
Bush and his allies wanted to limit sharply the ability of citizens to file
class-action lawsuits against corporations that injure or defraud them. A
united Democratic opposition in the Senate could have mounted a populist
challenge that might well have won GOP allies for a fight to preserve the
sovereignty of state courts, which will be lost under the legislation.
Instead, Democrats helped give Bush the first major legislative victory of
his second term. Only twenty-six Senate Democrats opposed the proposal,
while eighteen--including serial compromisers Joe Lieberman and Evan Bayh
and some who ought to know better, like Charles Schumer and Jay
Rockefeller--sided with the GOP. It was just as bad in the House, where
fifty Democrats--including Rahm ("no mandate") Emanuel--backed the bill,
handing Bush an easy win that provides momentum for an agenda that includes
proposals to restrict asbestos litigation and curb medical malpractice
suits.
Even more disappointing was the mid-March vote on legislation designed
to make it harder for middle-class and poor Americans to declare personal
bankruptcy, leaving crooked companies like Enron free to declare bankruptcy
themselves and thus be protected from claims like those by employees who
lost their pensions. The vote on the measure, which had been blocked for
years by such progressive Democrats as the late Paul Wellstone and a timely
veto from then-President Bill Clinton, passed by an overwhelming 74-to-25
vote. Eighteen Democrats--including Reid and key players like Joseph Biden
of Delaware and Jeff Bingaman of New Mexico--aligned themselves with the
President and the credit card companies that wrote and promoted the bill.
Apologists for these egregious compromises would have us believe that
Democrats, as a minority party, have little leverage. But the Social
Security debate belies such claims; with Democrats sticking together against
privatization, it is the Republicans who have found themselves under
pressure to compromise. The same goes for the Democratic refusal to give
ground on ethics issues, which has done so much to increase pressure on
scandal-plagued House majority leader Tom DeLay. Unfortunately, shows of
solidarity on Social Security and ethics issues represent the exception
rather than the rule when it comes to checking and balancing the White House
and its Congressional allies. Again and again Democrats have failed the
basic tests of an opposition party. They couldn't muster the forty votes
needed to mount a Senate filibuster against Alberto Gonzales's nomination
for Attorney General, only twelve Democrats opposed the nomination of
Condoleezza Rice for Secretary of State and none opposed the nomination of
Michael Chertoff to head the Department of Homeland Security, despite
concerns about Rice and Chertoff that were as troubling as those regarding
Gonzales's role in approving torture.
House Democrats have been even less effective in their opposition than
their Senate colleagues. Despite polls showing that the vast majority of
Americans opposed federal intervention in the Terri Schiavo right-to-die
case, only fifty-three Democrats opposed DeLay's move to override Florida
state law and judicial rulings in a rush to satisfy the demands of the GOP's
most extreme constituencies. Only thirty-six opposed the Broadcast Decency
Enforcement Act, which Representative Jan Schakowsky correctly identified as
a move to "put Big Brother in charge of deciding what is art and what is
free speech." And just thirty-nine rejected the Administration's demand for
another $81.4 billion to maintain the occupation of Iraq and related
military misadventures.
In 2002 and 2003 the Democrats tried the strategy of giving the
President blank checks for the invasion and occupation of Iraq and then
criticizing how the President spent them. That strategy cost the Democrats
any chance to frame the debate about the war and ultimately cost them at the
polls. But while some individual Democrats, like California Representative
Henry Waxman, have come to recognize the folly of such an approach, the
party as a whole continues to cede too much ground to the President--on Iraq
and on most other issues.
Perhaps being shamed publicly, and being pressured by the grassroots,
will help Congressional Democrats get their act together. Toward that end,
we've initiated a biweekly "Minority/Majority" feature that identifies--by
name--Democrats who give succor to the GOP. (It also praises those who've
helped the cause of Democrats becoming the majority party again.) If
Democrats don't define themselves as an effective opposition soon, they
could end up being an ineffective one for a long time to come.
- Previous message: [Mb-civic] Movement in the Pews Tries to Jolt Ohio
- Next message: [Mb-civic] Go to Original Follow the Money By Michael Hirsh
Newsweek Monday 04 April 2005 Issue Watchdogs are warning that
corruption in Iraq is out of control. But will the United States join
efforts to clamp down on it? By many accounts,
Custer Battles was a
nightmare contractor in Iraq. The company's two principals,
Mike Battles
and Scott Custer, overcharged occupation authorities by millions of
dollars, according to a complaint from two former employees. The firm
double-billed for salaries and repainted the Iraqi Airways forklifts
they found at Baghdad airport-which Custer Battles was contracted to
secure-then leased them back to the U.S. government,
the complaint says. In the fall of 2004,
Deputy General Counsel Steven Shaw of the Air Force
asked that the firm be banned from future U.S. contracts,
saying Custer
Battles had also "created sham companies, whereby [it] fraudulently
increased profits by inflating its claimed costs." An Army inspector
general, Col. Richard Ballard,
concluded as early as November 2003 that
the security outfit was incompetent and refused to obey Joint Task
Force 7 orders: "What we saw horrified us,
" Ballard wrote to his superiors in an
e-mail obtained by NEWSWEEK. Yet when the two whistle-blowers sued
Custer Battles on behalf of the U.S. government-under a U.S. law
intended
to punish war profiteering and fraud-the Bush administration declined
to
take part. "The government has not lifted a finger to get back the
$50 million Custer Battles defrauded it of, " says Alan Grayson,
a lawyer for the two whistle-blowers,
Pete Baldwin and Robert Isakson. In recent months
the judge in the case, T. S. Ellis III of the U.S. District Court in
Virginia, has twice invited the Justice Department to join the lawsuit
without response. Even an administration ally, Sen. Charles Grassley,
demanded to know in a Feb. 17 letter to Attorney General Alberto
Gonzales
why the government wasn't backing up the lawsuit. Because this is a
"seminal" case-the first to be unsealed against an Iraq
contractor-"billions of taxpayer dollars are at stake" based on the
precedent it could set, the Iowa Republican said. Why hasn't the
administration joined the case? It has argued privately that the
occupation government, known as the Coalition Provisional Authority,
was a multinational institution,
not an arm of the U.S. government. So the U.S.
government was not technically defrauded. Lawyers for the
whistle-blowers
point out, however, that President George W. Bush signed a 2003 law
authorizing $18.7 billion to go to U.S. authorities in Iraq,
including the CPA,
"as an entity of the United States government." And several contracts
with Custer Battles refer to the other party as "the United States of
America." Pressure has been building on the administration to join
the case-or at least to file a brief saying publicly if it believes
defrauding
the CPA is the same as defrauding the United States. The judge's
latest
deadline for that brief is this Friday. But a Justice Department
spokesman
said last week the government "could" still refuse to take part.
"I'll bet you $50 they will not show up, " says Richard Sauber,
a lawyer for Custer Battles,
which is still operating in Iraq. (He also rejects the charges of
fraud and incompetence.) The administration's reluctance to prosecute
has turned the Iraq occupation into a "free-fraud zone,
" says former CPA
senior adviser Franklin Willis. After the fall of Baghdad,
there was no
Iraqi law because Saddam Hussein's regime was dead. But if no U.S.
law applied either, then everything was permissible,
says Willis. The former
CPA official compares Iraq to the "Wild West,
" saying he delivered one $2
million payment to Custer Battles in bricks of cash. ("We called Mike
Battles in and said, 'Bring a bag',
" Willis told Congress in February.)
Willis and other critics worry that with just $4.1 billion of the
$18.7
billion spent so far, the U.S. legal stance will open the door to much
more fraud in the future. "If urgent steps are not taken,
Iraq ... will
become the biggest corruption scandal in history," warned the
anti-corruption group Transparency International in a recent report.
Grassley adds that if the government decides the False Claims Act
doesn't
apply to Iraq, "any recovery for fraud, waste and abuse of taxpayer
dollars ... would be prohibited." More than U.S. money is at stake.
The administration has harshly criticized the United Nations over
hundreds
of millions stolen from the Oil-for-Food Program under Saddam. But
the
successor to Oil-for-Food created under the occupation, called the
Development Fund for Iraq,
could involve billions of potentially misused
dollars. On Jan. 30, the former CPA's own inspector general,
Stuart Bowen,
concluded that occupation authorities accounted poorly for $8.8
billion in
these Iraqi funds. "The CPA did not implement adequate financial
controls, " Bowen said. U.S. officials argue that it was impossible,
in a war environment,
to have such controls. Yet now the Bush administration is
either ignoring or stalling inquiries into the use of these Iraqi oil
funds, according to reports by Democratic Rep. Henry Waxman,
and others.
In one case, the Pentagon's own Defense Contract Audit Agency found
that the leading U.S. contractor in Iraq, Halliburton subsidiary KBR,
overcharged Iraq occupation authorities by $108 million for a task
order
to deliver fuel. Yet the Pentagon permitted KBR to redact-or black
out-almost all negative references to the company in this Oct. 8, 2004,
audit. These included any mention of the $108 million in alleged
overcharges and the audit's clear conclusion that KBR's
price-supporting
data were "not adequate." The Defense Department then forwarded this
censored version to a U.N. monitoring board that Washington had
agreed to
under U.N. Resolution 1483. Normally, an audited company is allowed to
censor its proprietary or personal information,
but "these redactions went
beyond anything U.S. law would allow, " says Tom Susman, a Washington
expert. Halliburton spokeswoman Wendy Hall insists that the company
had the right to make such redactions because the audit was
"predecisional"
and "represented only one side of the case." Hall also denies the
company overcharged. The U.N. audit team,
called the International Advisory
and Monitoring Board, is angry over these heavily censored reports,
officials tell NEWSWEEK. The board last fall asked that a special
auditor
be hired. But the Pentagon has yet to award that contract after six
months
of delays. A Pentagon spokeswoman says the U.N. audit team "agreed
that
the [KBR] information provided was responsive to their request." A
U.N.
spokesman says this is untrue. The administration's seemingly
detached approach to these cases could have other implications.
NEWSWEEK
has learned that federal prosecutors plan to indict several U.S.
contractors in Iraq on criminal charges but that these could be
undercut
if the court rules in the Custer Battles case that the CPA was not a
U.S. government arm. "If you make the CPA a U.S. entity,
you open the door to
all sorts of liability claims. But if it's not a U.S. entity, then you
can't parade these people through the court,
" says Jim Mitchell of the CPA
inspector general's office. And that could mean Custer Battles and
other companies will ultimately answer to no one.
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