Iraq is a sewer. No, I’m not referring to the fact that Baghdad [is literally] 'drowning in sewage' -- that’s a whole ‘nuther story. What I’m talking about is the caustic cesspool of graft, crime and corruption now endemic wherever you find military contractors war-profiteers like KBR working.
A common thread runs through all these cases and other KBR scandals in Iraq, from allegations the firm failed to protect employees sexually assaulted by co-workers to findings that it charged $45 per can of soda: The Pentagon has outsourced crucial troop support jobs while drastically cutting the number of government contract watchdogs – much like the Justice Department has slashed the number of corporate fraud investigators back here in the states. The breadth and depth of the international crime syndicate currently run by this White House is stunning in its scope.
Federal prosecutors in Rock Island, Illinois have indicted four former supervisors from KBR, the giant defense firm, along with a decorated Army officer and five executives from KBR subcontractors based in the U.S. or the Middle East. Those defendants, along with two other KBR employees who have pleaded guilty in Virginia, account for a third of the 36 people indicted to date on Iraq war-contract crimes, Justice Department records show.
And, the dirty little secrets are in free-flow mode
Saturday’s Chicago Tribune tells the sordid tale:
Hundreds of pages of recently unsealed court records detail how kickbacks shaped the war's largest troop support contract months before the first wave of U.S. soldiers plunged their boots into Iraqi sand.
The graft continued well beyond the 2004 congressional hearings that first called attention to it. And the massive fraud endangered the health of American soldiers even as it lined contractors' pockets, records show.
(snip)
On Wednesday, a federal judge in Rock Island sentenced the Army official, Chief Warrant Officer Peleti "Pete" Peleti Jr., to 28 months in prison for taking bribes. One Middle Eastern subcontractor treated him to a trip to the 2006 Super Bowl, a defense investigator said.
Prosecutors would not confirm or deny ongoing grand jury activity. But court records identify a dozen FBI, IRS and military investigative agents who have been assigned to the case. Interviews as well as testimony at the sentencing for Peleti, who has cooperated with authorities, suggest an active probe.
The home to the U.S. Army Installation Management Command (IMCOM), Rock Island, Illinois serves as the epicenter for the ongoing FBI probe into war-profiteering committed by KBR, because it’s here that the Army top brass at the arsenal act as administrators for all contracts awarded to KBR’s so-called LOGCAP III -- which calls for the company to feed, shelter and support U.S. troops – while helping to restore Iraq’s oil infrastructure.
The dollar value of Army contracts quadrupled from $23.3 billion in 1992 to $100.6 billion in 2006, according to a recent report by a Pentagon panel. But the number of Army contract supervisors was cut from 10,000 in 1990 to 5,500 currently. The Army pledged to add 1,400 positions to its contracting command structure last week, but Bush administration budget cuts along with the impact of war privatization has taken a grave toll on fraud oversight of overseas contracts. That could be why Bush decided to "reform" contractor fraud but with one essential stipulation: the reforms don’t apply to overseas contractors.
My diary on the subject of Bush’s contractor fraud reform free for all is here, Bush's Plan to Cut Contractor Fraud Doesn't Apply Overseas.
Here’s a portion:
The proposed rules, which are in the final approval stages, specifically exempt "contracts to be performed outside the United States," according to a notice published last month in the Federal Register.
Critics including the watchdog group Taxpayers Against Fraud said the overseas exemption raises suspicions.
"I hate to sound cynical, but what lobbyist working for a contractor in Iraq wanted this get-out-of-jail card?" asked Patrick Burns, spokesman for the government watchdog group. "I'm not saying that's the way it went — I'm just suggesting that's the most logical line to draw. I think somebody's got some explaining to do."
The Justice Department, which pushed for the self-reporting requirement, called the overseas exemption a mistake that should be fixed before the plan becomes final.
"We do not agree with also excluding contracts performed entirely outside the United States," Assistant Attorney General Alice Fisher wrote Jan. 14 in a letter otherwise supporting the new rules.
"These types of contracts, which in many cases support our efforts to fight the global war on terror, need greater contractor vigilance because they are performed overseas where U.S. government resources and remedies are more limited," Fisher wrote.
In response to the proposed exemption for overseas contracts, the statement from the White House Office of Management and Budget was both compendious and circumvented.
"This is a proposed rule," OMB spokeswoman Jane Lee said. "We are currently reviewing the public comments that were submitted."
But, I digress...
In one case, indictments centered around a freight-shipping subcontractor who confessed to bribing five unnamed KBR employees with $25,000 "to build relationships to get additional business," according to the man's December 2007 statement to a federal judge in the Rock Island court. In another case, Peleti named five of his military cohorts who allegedly approved grossly inflated bids.
"I think we downsized past the point of general competency," said subcontractor Christopher Cahill, who for a decade prepared military supply depots under LOGCAP. Now serving 30 months in federal prison for fraud, Cahill added: "The point of a standing army is to have them equipped."
Since 2003, LOGCAP III has netted KBR $28 billion. According to company execs, the firm quickly reports all instances of suspected fraud. They also point out that KBR has repaid the Defense Department a [whopping] $1 million for contestable invoices.
In a statement, KBR said its roughly 20,000 employees and 40,000 subcontractors have performed laudably in a war zone where Army demands shift rapidly and local suppliers don't always maintain ledger books. Spokeswoman Heather Browne wrote:
"Ethics and integrity are core values for KBR."
However, a recently released, FBI-obtained, wiretapped transcript from an October 2005 meeting between former KBR procurement manager, Stephen Seamans and two executives from the Saudi conglomerate Tamimi Global Co. seemingly belies that statement; In fact, it tends to accent the audacious nature of KBR employees when it comes to contracts. Over cognac and whiskey, the three discussed bribes that had greased contracts to supply U.S. troops in Iraq. Seamans wore a wire during the conversation in a quiet lounge in London’s posh Cumberland Hotel. He wondered aloud whether to return $65,000 in kickbacks he received from his companions. One of the men, Tamimi operations director Shabbir Khan, urged him to hide the money by concocting phony business records.
"Just do the paperwork," Khan said.
According to court papers written by Rock Island prosecutors, Khan threw a birthday party for Seamans in October 2002 at a Tamimi "party house" near the Kuwait base known as Camp Arifjan, in which Khan "provided Seamans with a prostitute as a gift. Khan also offered Seamans kickbacks totaling $130,000 on the drive back to his quarters. Five days later, with Seamans and Khan hammering out the fine print, KBR awarded Tamimi the war's first $14.4 million mess hall subcontract, court records show.
In April of the following year, with Operation Iraqi Freedom underway, Seamans slipped Khan inside information enabling Tamimi to secure a $2 million KBR subcontract establishing a mess hall at one of Saddam’s palaces in Baghdad. Seamans submitted subsequent change orders inflating that particular subcontract to $7.4 million. By June, Seamans and fellow KBR procurement manager Jeff Mazon, a Country Club Hills resident, had awarded subcontracts to Tamimi worth $321 million.
At least one deal put U.S. soldiers at risk.
At a court hearing in 2007, U.S. Attorney Jeffery Lang stated that the Army LOGCAP contract required KBR to medically screen thousands of kitchen workers imported by Tamimi from third-world villages in Nepal, Pakistan, India and Bangladesh. But when asked for medical records by the Pentagon, Khan instead turned in bogus files for 550 Tamimi workers. Lang also said that KBR retested the 550 workers at a Kuwait City clinic and found 172 of them tested positive for hepatitis-A. Khan subsequently attempted to suppress the KBR findings by warning the clinic director that Tamimi would do no more business with his clinic if he "... told KBR about these results."
The hepatitis-A virus can cause fatigue and other symptoms that arise weeks after contact.
Retesting of the 172 found that none had contagious hepatitis A, Lang said, and Khan's attorneys said in court that no soldiers caught diseases from the workers or from meals they prepared. It remains unclear if that is because the workers were treated or because they did not remain infectious after the onset of symptoms.
Still, the incident shows how even mundane meal contracts can put troops at risk. Similar disease-testing breaches cropped up at cafeterias outsourced to firms besides Tamimi, former KBR Area Supervisor Rene Robinson said in a Tribune interview.
"That was an ongoing problem," Robinson said. "When the military asked for paperwork, it was spotty." KBR was forced to begin vaccinating the employees at their work sites, he added.
Requests for comments were not addressed by Tamimi and its U.S. lawyers but they had said they’ve been cooperating with federal authorities.
Records show that despite the discrepancies, Tamimi secured 30 KBR troop-feeding subcontracts in all worth $793.5 million, and Khan continued to negotiate for Tamimi until shortly before he was arrested in March 2006, by FBI agents in Rock Island. Lying about the kickbacks he had wired to Seamans got Khan a 51-month prison sentence. Seaman pleaded guilty and served a year and a day in prison.
A 46-year old Air Force veteran, Seamans once taught ethics to junior KBR employees. He expressed remorse for taking the kickbacks at his December 2006 sentencing hearing, telling the judge:
"It is not the way that Americans do business."
Last Wednesday found another repentant LOGCAP veteran before a Rock Island judge. Formerly the military’s top food service advisor for the Middle East region, Peleti wept as he recounted taking bribes from Tamimi and three other subcontractors between 2003 and early 2006.
"I stand here before you today to convey my remorse and sincere regret," he said, then broke down.
Peleti was arrested in 2006 while re-entering the U.S. at Dover Air Force Base with a duffel bag stuffed with watches and jewelry as well as about $40,000 concealed in his clothing. Prosecutors contend that Peleti taking the bribes set the tone for corrupting the system.
"Tamimi and Mr. Khan have their hooks into Mr. Seamans, they have their hooks into KBR," Lang said in court last year. "It is difficult to assess the kind of damage that did to the integrity of the subcontracting process when the first two subcontracts are corrupted."
Based at one of KBR’s Houston, Texas office buildings, a 25 member Defense Contract Audit Agency team had had "no communications" with "personnel on the ground," so they could not confirm whether goods and services actually were delivered, the search warrant application said.
Paul Morrell, whose firm The Event Source ran several mess halls as a KBR subcontractor said that on a number of occasions, KBR employees bragged about the fact that they were being showered with Rolex watches, leather jackets and prostitutes by Middle Eastern businessmen.
Even after rooting out procurement managers like Seamans, dubious relationships continued. Early subcontractors such as Tamimi became almost indispensable in part by outfitting Army cafeterias with expensive power generators and refrigeration systems, records and interviews show.
"If you ever gave Tamimi a hard time, you'd get a call," former KBR subcontract manager Harry DeWolf told the Tribune.
DeWolf added that when renegotiation time came around, companies like Tamimi would threaten to pull out all their people and equipment, placing both KBR and the U.S. government in a precarious position.
But, that’s not the only problem complicating investigations into war-contract crimes. The government of Kuwait has denied a request by the U.S. government to extradite two Middle East businessmen accused of LOGCAP fraud. Last year, Kuwait’s ambassador sent letters to the U.S. Justice Department asking them to drop its case against one of the businessmen arguing that international agreements forbid U.S. prosecution of Kuwaiti residents for crimes allegedly committed on Kuwaiti soil. Prosecutors disagree. A judge is currently considering Kuwait’s claim.
KBR has also made it difficult for investigators. According to court filings, the company continues to withhold some of the internal documents relating to Mazon, Seaman’s fellow KBR procurement manager. Responding to one subpoena, KBR gave agents 2, 760 of Mazon’s computer files while withholding 398 others, claiming those files continue to be covered by attorney-client privilege and other protections.
Mazon has pleaded not guilty to charges of inflating a fuel contract. His attorneys say the contract in question was accidentally inflated when figures were converted from U.S. dollars to Kuwaiti dinars and then back again. Mazon’s lawyer, J. Scott Arthur added that at least 22 KBR troop support subcontracts were inflated through similar errors. Attorneys for KBR said the company informed federal officials about three similar "double conversions" on other subcontracts.
But KBR said it "has not undertaken an exhaustive search of its millions of pages of procurement documents" to determine whether other such errors exist.
Speaking of "errors," the Bush regime continues to conduct "business" as usual. It'll take a new Democratic administration and probably the one following that, not to mention a half-dozen Democratically-led congress' elected back-to-back... to-back -- to dig up all the evidence of these crimes -- and then prosecute all the despicable felons responsible for this contemptible morass that the Bush regime will no doubt leave before it's all said and done.
The true scope of this culture of corruption aside, one reason why it'll take so long to clean it all up is because it's so unorganized. There's no structure. Every single level of government and business from the highest CEOs [of both] to every level down through rank & file employees and bureaucrats is involved. It's one massive pool of like-criminally-minded humanoids all grabbing whatever they can whenever they can as if anarchy ruled, and all the wealth and resources on Planet Earth were to disappear tomorrow.
And, here I thought fascists were the orderly type.
Peace