Wall Street Journal at Pittsburgh Post Gazette May 17, 2012
On Jan. 3, 2005, Jerry Cullen signed an unusual document at the Baghdad headquarters of his employer, Custer Battles LLC, which the U.S. military had accused of fraud and barred from receiving any new Iraq contracts.
The document was a single-page “bill of sale.” Attached were several pages detailing assets such as cars, trucks, prefabricated housing and communications gear that Custer Battles was selling. The buyer was a little-known company in Bucharest, Romania, called Danubia Global Inc. The document said Danubia would pay Custer Battles “U.S. One Dollar” upfront, and an unspecified amount of money in the future. The company never gave Custer Battles any additional money, Danubia executives say.
While the U.S. sanctions technically put Custer Battles out of business, it never actually shut down. After paying its dollar, Danubia took on most of Custer Battles’s employees, who continued to work out of Custer Battles trailers on the grounds of Baghdad’s airport. They were paid, for a time, from Custer Battles bank accounts. Danubia’s owner, Richard Levinson, was a former Custer Battles senior executive. After signing the sale document, Mr. Cullen left Custer Battles to work for Danubia as a consultant.
Now, the Custer Battles-Danubia link is the focus of a federal criminal investigation. Law-enforcement authorities are exploring whether Danubia was an artificial entity created to evade the government ban on Custer Battles, according to investigators involved in the probe. They’re examining whether Danubia executives defrauded the federal government by obtaining millions of dollars of contracts they weren’t entitled to receive.
Mr. Levinson says in a phone interview that Danubia has no continuing ties to Custer Battles or that company’s two founders. He stresses that neither he nor any of the employees who went with him were linked to the wrongdoing at their former firm. “I can say simply, honestly, and without reservation that Danubia is not a shell company,” he says
Project on Government Oversight May 7, 2012
For Vinnie Tuivaga, the offer was the answer to a prayer: A job in a luxury hotel in Dubai–the so-called Las Vegas of the Persian Gulf–making five times what she was earning as a hair stylist in her native Fiji.
She jumped at the chance, even if it meant paying an upfront commission to the recruiter.
You probably know how this story is going to end. There was no high-paying job, luxury location or easy work.
Tuivaga and other Fijians ended up in Iraq where they lived in shipping containers and existed in what amounted to indentured servitude.
Journalist Sarah Stillman told Tuivaga’s story and that of tens of thousands of other foreign workers in acute detail almost a year ago in her New Yorker piece, “The Invisible Army.”
In some cases, Stillman found more severe abuses and more squalid living conditions than what Tuivaga and her fellow Fijians experienced.
But like Tuivaga, thousands of foreign nationals in the U.S. government’s invisible army ended up in Iraq and Afghanistan war zones because they fell victim to human traffickers.
Let that sink in.
This human trafficking pipeline wasn’t benefitting some shadowy war lord or oppressive regime. No, these are workers who were feeding, cleaning up after, and providing logistical support for U.S. troops—the standard-bearers of the free and democratic world.
In its final report to Congress last year, the Commission on Wartime Contracting said it had uncovered evidence of human trafficking in Iraq and Afghanistan by labor brokers and subcontractors. Commissioner Dov Zakheim later told a Senate panel that the Commission had only scratched the surface of the problem. He called it the “tip of the iceberg.”
In essence, despite a 2002 presidential directive that set a “zero tolerance” on human trafficking, modern-day slavers have been operating with impunity under the aegis of the U.S. government.
Nick Schwellenbach, who until last month was the director of investigations at the Project On Government Oversight (POGO), and author David Isenberg also wrote about the conditions some of these foreign workers endured in Iraq.
Nick and David uncovered documents that showed how one U.S. contractor—in this case KBR—was well aware that one of its subcontractors, Najlaa International Catering Services, was involved in trafficking abuses.
David Isenberg Huffington Post April 30, 2012
Today the office of the Special Inspector General for Iraq Reconstruction (SIGIR) has released its latest quarterly report. Here is what happening with private contractors in Iraq.
As of April 3, 2012, the Department of State (DoS) reported that 12,755 personnel supported the U.S. Mission in Iraq, down about 8 percent from the previous quarter. Current staffing comprises 1,369 civilian government employees and 11,386 (U.S., local national, and third country national) contractors. (89 percent of the total).
Of these contractors, DoS estimated that about 2,950 provided security-related services for DoS sites, down more than 22 percent from last quarter (3,800).
In February, Deputy Secretary of State Thomas Nides said that DoS will continue to reduce the number of contractors over the coming months in an attempt to “right size” Embassy operations.
The Office of Security Cooperation-Iraq (OSC-I) manages U.S. security assistance to the Government of Iraq. OSC-I is staffed by 145 U.S. military personnel, nine Department of Defense (DoD) civilians, and 4,912 contractors.
But according to SIGIR, DoS tends to undercount the number of contractors working in Iraq. It found that:
In early April, DoS asserted that only 6 U.S. government employees and 48 contractors work on what it considers reconstruction programs. This total does not include any of the several hundred personnel working under the auspices of the PDP, [Police Development Program] which remains the single-most expensive ongoing initiative financed by DoS for the benefit of Iraq. Nor does it include any of the hundreds of employees and contractors supporting the missions of OSC-I and the U.S. Agency for International Development (USAID), though both agencies oversee projects paid for with U.S. reconstruction funds.
According to the Defense Department, if you include the OSC-I contractors, the total for private security contractors rises to 3,577.
The takeaway is that after all these years the U.S. government still has problems tracking the number of contractors working in Iraq. The SIGIR report found that:
While SPOT [Synchronized Predeployment and Operational Tracker database, administered by DoD] data provides SIGIR with a comprehensive view of contractor and grantee personnel in Iraq, significant apparent differences exist between agency-reported contractor numbers and SPOT data. For example, DoS reported to SIGIR that there were almost 11,400 contractors supporting Mission Iraq as of April 3, 2012, while SPOT data shows 5,172 working for DoS.276 In addition, USAID reported that 1,854 contractors are currently working on USAID projects in Iraq.277 However, SPOT data shows only 110 USAID contractor and grantee personnel in Iraq as of April 1, 2012. SIGIR intends to investigate these discrepancies and provide an update in the July 2012 Quarterly Report.
With regard to security contractors the Government of Iraq (GOI) announced in February that 124 private security firms were registered to work for foreign government entities and private firms engaged in activities in Iraq, but the GOI has taken steps to minimize the presence and scope of these firms. According to the GOI, the Security and Defense Committee of the Council of Representatives has drafted legislation to reduce the number of PSC firms working in Iraq from 124 to 63. Of the remaining firms, 15 to 20 would be foreign firms and the rest would be Iraqi.
On the fraud front, some of SIGIR’s noteworthy investigations were:
Three former officers of a U.S. defense contractor, the wife of one of the officers, and four foreign nationals were indicted for their alleged roles in a fraud and moneylaundering scheme involving contracts for reconstruction projects in Iraq. The defendants were also are charged with an aggregate of 74 wire-fraud offenses.A British citizen and his company were charged with conspiracy to defraud the United States and pay kickbacks in exchange for receiving more than $23 million in DoD subcontracts from April 2006 to August 2008. The British contractor allegedly paid more than $947,500 in unlawful kickbacks to two employees of a prime contractor to the U.S. government in order to obtain these subcontracts for work performed in support of the Coalition Munitions Clearance Program (CMCP).
David Welch, a former U.S. civilian contract employee, pled guilty to conspiring to steal 38 U.S. military generators and sell them on the Iraqi black market.
As of April 10, SIGIR is continuing to work on 110 open investigations.
There are a number of PSC firms working on the Police Development Program; especially in providing security at the Baghdad Police College Annex (BPAX). At BPAX, Triple Canopy, Inc., contractors provide protective details and escort PDP convoys. Torres Advanced Enterprise Solutions, LLC, provides perimeter security, with Iraqi Security Forces guarding the outer perimeter. EOD Technology, Inc., operates the counter-mortar and counterrocket system, and three U.S. military personnel are attached to the RSO explosive ordnance disposal unit. Another U.S. contractor provides a computer technician who manages the classified email system used by PDP personnel.
Special Investigator General for Iraq Reconstruction
Quarterly Report to US Congress
Dan Froomkin Huffington Post April 30, 2012
WASHINGTON — Afghan reconstruction efforts remain severely hampered even after nearly $100 billion in spending over the last 10 years, according to a new watchdog report. The most immediate challenge seems to stem from the insistence by Afghanistan’s government that the private army of hired guns providing security for ongoing projects be replaced with Afghan locals, who do not appear to be up to the job, the report noted.
The report’s most urgent warning concerns the “imminent transition” from private security contractors (PSC) to the state-owned Afghan Public Protection Force.
Steven J. Trent, the acting special inspector general, expressed concerns that as many as 29 major USAID projects costing nearly $1.5 billion are at risk of full or partial termination “if the APPF cannot provide the needed security.” About half that amount has already been spent.
And whether it can is very much an open question, Trent wrote. The U.S. embassy, the Afghan government and the U.S.-led military forces agreed a year ago to check the progress of the Afghan Public Protection Force at the 6-, 9-, and 12-month marks.
“The 6-month assessment, completed in September 2011, found that the APPF was not ready to assume any of the essential PSC responsibilities to meet contract requirements — such as training, equipping, and deploying guard forces,” the report pointed out. “[T]he December assessment, which would have been at the 9-month mark, has not yet been made public” and “the deadline for the 12-month assessment has passed.”
Quarterly Report to the US Congress
April 30, 2012
The Times Picayune Nola.com April 17, 2012
Robert Isakson was once the fair-haired boy of the FBI in New Orleans. Thirty years later, the public corruption squad he once ran is investigating him.
Sources close to the investigation say the FBI is looking at payments and gratuities former Plaquemines Parish Sheriff Jiff Hingle, his driver, and companies affiliated with the two allegedly received from Isakson’s Mobile, Ala.-based disaster-recovery firm, DRC Inc. Shortly after that, DRC got two contracts from Hingle’s office worth about $3 million.
It’s a staggering revelation because Isakson has carefully cultivated an image as a justice-seeking government contractor, blowing the whistle on the most brazen war profiteer in post-Saddam Iraq and refusing to pay bribes in Honduras to help that country recover from Hurricane Mitch. His former colleagues looked up to him and thought of him as a straight arrow.
Courthouse News Service April 10, 2012
An Army major pleaded guilty to taking $20,000 in “gratuities” from an Iraqi contractor he helped circumvent security near a military base, federal prosecutors said.
Christopher Grant Bradley, 42, of El Paso, pleaded guilty Monday in El Paso Federal Court to two counts of illegally accepting gratuities. He faces up to 1 year in prison and agreed to pay $20,000 in restitution.
Bradley admitted that on two occasions he accepted $10,000 in cash from the unnamed contractor. He admitted he was paid after escorting the contractor around the Forward Operating Base Diamondback in Mosul, Iraq, after the contractor was unable to hire a properly credentialed employee.
He also helped the contractor get around security that required offloading and reloading of trucks before entering the base.
Bradley was stationed at the base from January to November 2008.
His sentencing date is pending
Civilian Contractor Former Flour Employee David John Welch pleads guilty to stealing, selling military equipment
Associated Press at The Times News April 2, 2012
RALEIGH — A civilian contractor from Hope Mills has pleaded guilty to his role in a scheme that involved the black market sale of equipment stolen from a U.S. military base in Iraq.
The U.S. Justice Department says David John Welch entered the plea Monday in Raleigh federal court.
The 36-year-old was the operations manager for a U.S. government contractor at Victory Base Complex in Baghdad.
Prosecutors say Welch and another person hatched a plan to steal and sell 38 military generators on the black market in Iraq last year. Investigators say Welch made nearly $39,000 from the scheme.
Welch’s sentencing is scheduled for July 9. He faces up to five years in prison and a fine of $250,000. He also has to pay the government $160,000 in restitution
For more on this see
Courthouse News March 7, 2012
HOUSTON (CN) – A contractor accused of trafficking Nepali laborers into Iraq to staff Al Asad Air Base cannot seek an interim appeal, a federal judge ruled.
In a 2008 federal RICO complaint, Nepali families claimed that U.S. military contractors duped 13 men into indentured servitude in Iraq.
With promises of a $500 monthly salary, many of the men believed they would be working at a luxury hotel in Jordan. But they later learned that they were actually on their way to Al Asad Air Base in Iraq, according to the complaint. At that point, the large brokerage fees they owed allegedly kept the men from turning back for home.
Insurgents from the Ansar al-Sunna Army captured 12 of the men in August 2004 as they traveled in the front of an unsecured 17-car caravan along the Amman-to-Baghdad highway in Iraq’s Anbar province, the families say. The 13th man, Buddi Prasad Gurung, was in a separate car and evaded capture, according to the complaint.
When the insurgents executed the captives, international news stations aired the footage of their deaths, reaching the men’s families in Nepal, according to the complaint.
The lawsuit against the military contractors, Daoud & Partners and Kellogg Brown & Root (KBR), was removed from the Central District of California to the Southern District of Texas.
On Dec. 12, 2011, U.S. District Judge Keith Ellison dismissed some of the claims against Daoud from the families, as well as some of the cross-claims that the company faced from KBR.
The 48-page order upheld personal jurisdiction over Daoud, but dismissed negligence and false-imprisonment claims by Gurung, the lone survivor
Government Executive March 1, 2012
Citing massive problems with waste and fraud, lawmakers on Thursday introduced legislation to improve oversight of wartime contract spending.
Co-authored by Sens. Claire McCaskill, D-Mo., and Jim Webb, D-Va., the Comprehensive Contingency Contracting Reform Act would overhaul the federal government’s planning, management and oversight of contract spending in areas of conflict.
In August 2011, the independent, bipartisan Wartime Contracting Commission reported that as a result of poor procurement oversight, federal agencies wasted as much as $60 billion of the more than $205 billion spent on private contractors in Iraq and Afghanistan. McCaskill and Webb first introduced the legislation to create the commission in 2007, using as their model the Truman Committee, which investigated waste and fraud during World War II.
Thursday’s legislation focuses on four areas of wartime contracting: elevating oversight responsibility, requiring the government to identify how it will pay for overseas military operations, increasing transparency and competition, and instituting additional provisions for contractor accountability. It specifically requires the Defense and State departments and the U.S. Agency for International Development to exercise more authority and responsibility over the contractors they work with.
“You can bet that contractors who’ve made billions off of U.S. taxpayers aren’t excited about a crackdown,” McCaskill said in a statement. “But with the roadmap provided by the commission report, we can change the way our government contracts during wartime and make sure these failures are never repeated.”
Webb, former secretary of the Navy, stated the bill recognizes the work of support contractors and the “necessity to improve government management and accountability in the contracting process that resulted in unacceptable costs, excessive waste and substandard performance in far too many areas.”
Scott Amey, general counsel to the Project on Government Oversight praised the bill saying, “No matter the policy or ideological reasons for hiring wartime contractors, this bill provides an improved set of checks and balances that will save taxpayers billions.”
DOJ U.S. Army Reserves Sergeant Pleads Guilty to Conspiracy to Defraud the United States Related to Contracting in Support of Iraq War
Department of Justice Office of Public Affairs February 14, 2012
WASHINGTON – A sergeant in the U.S. Army Reserves pleaded guilty today to one count of conspiracy to defraud the United States for receiving money from a local contractor in return for preferentially processing its invoices for payment outside of the proper procedures and protocols, announced Assistant Attorney General Lanny Breuer of the Justice Department’s Criminal Division.
Sergeant Amasha M. King, 33, of Forsyth, Ga., pleaded guilty before U.S. District Judge Marc T. Treadwell in Macon, Ga., to criminal information charging her with one count of conspiracy to defraud the U.S. Department of Defense (DoD).
According to the court documents filed in the Middle District of Georgia, Sergeant King served at Camp Arifjan, Kuwait, from November 2004 to February 2006, in support of Operation Iraqi Freedom as part of the 374th Finance Battalion. While in Kuwait, King was responsible for receiving and processing pay vouchers and invoices from military contractors for various contracts and blanket purchase agreements (BPAs), including BPAs for bottled potable water. A BPA is a type of contract by which the DoD agrees to pay a contractor a specified price for a particular good or service. With King’s approval, the contractors were paid from the finance battalion, and in some instances, King was responsible for the issuance of U.S. government checks to those contractors.
According to the court documents, King agreed to receive money from a military contractor in return for defrauding the United States by preferentially processing the contractor’s invoices outside of the proper procedures and protocols for payment. This allowed the contractor to be paid much faster than usual and ultimately to bid for more contracts than it otherwise could have financed.
Rueters Melbourne Australia February 13, 2012
Leighton Holdings , Australia’s top contractor, has alerted the Australian Federal Police to possible bribery by a subsidiary pressing for work to expand Iraq’s oil export facilities, the company said on Monday.
“We are cooperating fully with the AFP as they conduct an investigation into these matters,” said Mr Johns
Courthouse News January 10, 2012
(CN) – A former Army major was sentenced to 12 years in federal prison for bribery and money laundering in war contracts in Iraq.
Eddie Pressley, 41, was also ordered to forfeit $21 million, real estate and several automobiles. He was sentenced by U.S. District Judge Virginia Emerson Hopkins in Birmingham, Ala.
Pressley and his wife Eurica were convicted in March 2011 of conspiracy to commit bribery, eight counts of honest services fraud, one count of money laundering conspiracy and 11 counts of engaging in monetary transactions with criminal proceeds. No date has been set for his wife’s sentencing.
“Mr. Pressley participated in a wide-ranging scheme to steer U.S. Army contracts to particular providers in exchange for personal, illegal profit,” the Justice Department said in a statement.
“Taking in nearly $3 million, he enlisted his wife to help him conceal the nature of his bribes and created phony paperwork to keep the scheme going.”