[Mb-civic] Don't make me do it ..
Gerald Gerald
dekuyper at sbcglobal.net
Mon Mar 28 22:34:11 PST 2005
- Previous 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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- Previous 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.
- Next message: [Mb-civic] A washingtonpost.com article from: swiggard@comcast.net
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