Overseas Civilian Contractors

News and issues relating to Civilian Contractors working Overseas

U.S. office urges halt in funds for Iraq security institute

by Walter Pincus at The Washington Post

A top U.S. oversight office has recommended that the United States halt further funding for a $26 million education academy for senior Iraqi security officials after discovering that the Iraqi government had never agreed to operate or maintain the facility.

The United States has spent more than $13 million on the project.

“At this point, it is unclear if the GOI [Government of Iraq] will budget for the operations and maintenance of the IIA [Iraqi International Academy] upon completion,” said Stuart W. Bowen, Jr., the special inspector general for Iraq reconstruction, in a report sent to the Central Command’s Gen. James N. Mattis and released Tuesday. “Without such an agreement, U.S. funds spent on construction are at risk of being wasted, as are the funds planned to equip and furnish the facility,” Bowen added.

Please read the entire article here

January 26, 2011 Posted by | Civilian Contractors, Government Contractor, Iraq, SIGIR | , , , | Leave a comment

Following The Reconstruction Money In Iraq

NPR’s Robert Siegel talks to Stuart Bowen, the special inspector general for Iraq reconstruction, about the billions of American dollars wasted on reconstruction projects in Iraq.

President Obama will officially declare an end to combat operations in Iraq tomorrow. Also winding down is the massive reconstruction effort there. The U.S. has spent more than $53 billion on projects ranging from new schools and hospitals to Iraq’s energy grid.

There have been some successes, but Stuart Bowen, the special inspector for Iraq reconstruction, says there’s also been tremendous waste: between four and five billion dollars have been spent on hundreds of unfinished or ineffective projects. That’s about 10 percent of the total spent on Iraqi reconstruction. I asked Stuart Bowen what was the most notorious example of waste in the Iraqi reconstruction.

Read or listen to the interview here

August 31, 2010 Posted by | Civilian Contractors, Contractor Oversight, Iraq | , , , | Leave a comment

Iraq rebuilding fund thefts investigated

By Joe Gould – Staff writer Army Times April 12

A special task force is analyzing every transaction and person connected to Iraq reconstruction funding in order to hold people accountable for “hundreds of millions of dollars” lost to fraud, bribery and theft.

Stuart Bowen Jr., special inspector general for Iraq reconstruction, is part of a multi-agency task force that is using automated data mining to sift through the $50 billion spent on reconstruction by various military and civilian agencies.

SIGIR is working with federal law enforcement agencies and the U.S. Treasury Department’s Financial Crimes Enforcement Network, or FinCEN.

“It’s a coordinated, concerted interagency forensic review that has been ongoing for over a year and is now yielding significant fruit,” Bowen told Army Times. “We will continue to implement the program until we have reviewed all of the money used for Iraq reconstruction and all of the personnel that had access to it.”

The task force is required to report its findings to Congress.

As of its January report, SIGIR has examined 73,000 records that represent $28 billion and identified $340 million in suspicious transactions involving 800 vendors. These include duplicate payments, and payments to possibly fictitious contractors or vendors listed simply as “vendor” or “cash.”

SIGIR has launched 500 investigations since it opened shop in Iraq in 2004, resulting in 27 convictions and the court-ordered forfeiture of $69.5 million. Bowen said cases tend to involve contracting officers in Iraq and Camp Arifjan in Kuwait who funneled contracts to specific contractors in return for kickbacks and bribes, or the simple pilfering of cash, mainly from the Commander’s Emergency Response Program, or CERP.

The guilty have been found to have smuggled cash home in their boots and mailed it home in boxes; they sold truckloads of stolen fuel in downtown Baghdad and took payola in the form of watches, cars and airplane tickets.

“Kickbacks and contractor collusion characterize most of these criminal investigations,” Bowen said. “It’s contracting officers and paymasters and individuals who had control over large sums of money or access to it.”

Many of the cases stem from activity in 2003 to 2006. In the early days of the war, reconstruction funding oversight was granted to only a few people with limited power with the Coalition Provisional Authority, which Bowen said was “not a deterrent.”

Meanwhile, billions of dollars in American cash meant to fuel the interim Iraqi government received little scrutiny, said Bowen.

“When you have uncontrolled money in an unstable environment, inevitably you’re going to see crimes committed,” he said.

The criminal convictions contain “an unfortunately high percentage of Army officers” because of the service’s greater role in the war and reconstruction, Bowen said.

He said the ongoing probe has uncovered 52 new cases in the last year.

What’s more, he said, the bulk of the agency’s criminal investigations are still to come.

‘A lot of work to do’

Alongside the ongoing financial forensic investigative review, SIGIR has detailed three prosecuting attorneys to the fraud section of the criminal division at the Justice Department to handle SIGIR-generated cases full time, Bowen said.

“We know that we can only catch a fraction of the wrongdoing that occurred because of the difficulty of operating in a conflict zone,” he said. “We’ve done as well as we could under the circumstances, and we’re by no means finished. An almost doubling of our caseload reveals we have a lot of work to do.”

The single largest case of corruption SIGIR has previously encountered may be the Bloom-Stein conspiracy, a bid-rigging scheme involving $8.6 million in contracts, which has resulted in at least seven convictions.

The scheme is named for contractor Philip H. Bloom and Robert Stein, a former contracting official with the Coalition Provisional Authority – South Central region who led other Army officials in the Hillah, Iraq, office as they illegally steered contracts toward Bloom.

Stein admitted that he and his co-conspirators smuggled $2 million out of Iraq on commercial airlines and took part in an illegal bid-rigging scheme.

Another significant case concerns CERP, a program that provides Army unit leaders with cash to fund reconstruction and security projects. Bowen said the program has improved, but suffered from “weak controls” in its early days.

Capt. Michael Nguyen, a West Point graduate and civil affairs officer for the headquarters company of the 2nd Battalion, 23rd Infantry Regiment, funneled $690,000 in CERP funds from his battalion safe and sent it home to himself. He pleaded guilty in the case after investigators spotted a pattern of large bank deposits and exorbitant purchases, such as a 2009 Hummer H3T and a 2008 BMW M3.

“It was all cash, and it wasn’t well-controlled, so therefore it was very easy for him to steal from that safe and put in the mail back to his house in the states,” Bowen said.

Although abuses persist, Bowen said that SIGIR’s presence has created a deterrent resulting in less wrongdoing and improved controls. He said the Defense Department has improved record-keeping practices, reduced cash concentrations in forward areas, improved coordination between civilian agencies on project selection, and now requires senior-level approval for projects greater than $1 million.

Bowen also credited the Army’s Money as a Weapon System manual and institutionalized training for Brigade Combat Team officers who oversee CERP projects.

Nevertheless, SIGIR’s audits still show “weakness” in CERP. For example, hand-off and coordination between commander’s tours “continues to be a challenge,” the system needs tighter controls on cash and CERP projects are not coordinated well-enough between the Defense and State departments to address needs in Iraq, audits state.

As SIGIR conducts its analyses, it is also soliciting tips from soldiers about wartime fraud, said Bowen, noting that the statute of limitations for such crimes does not expire for at least five years.

“Soldiers have an obligation to promote the integrity of the U.S. effort in Iraq, and that integrity is strengthened when violators are brought to justice,” Bowen said.

April 12, 2010 Posted by | Civilian Contractors, Contractor Corruption, Pentagon, State Department | , , , , , , , , , , , , | 1 Comment

New Fraud Cases Point to Lapses in Iraq Projects

By JAMES GLANZ Published: March 13, 2010 New York Times

Investigators looking into corruption involving reconstruction in Iraq say they have opened more than 50 new cases in six months by scrutinizing large cash transactions — involving banks, land deals, loan payments, casinos and even plastic surgery — made by some of the Americans involved in the nearly $150 billion program.

Some of the cases involve people who are suspected of having mailed tens of thousands of dollars to themselves from Iraq, or of having stuffed the money into duffel bags and suitcases when leaving the country, the federal investigators said. In other cases, millions of dollars were moved through wire transfers. Suspects then used cash to buy BMWs, Humvees and expensive jewelry, or to pay off enormous casino debts.

Some suspects also tried to conceal foreign bank accounts in Ghana, Switzerland, the Netherlands and Britain, the investigators said, while in other cases, cash was simply found stacked in home safes.

There have already been dozens of indictments and convictions for corruption since the 2003 invasion of Iraq. But the new cases seem to confirm what investigators have long speculated: that the chaos, weak oversight and wide use of cash payments in the reconstruction program in Iraq allowed many more Americans who took bribes or stole money to get off scot-free.

“I’ve had a continuing sense that there is ongoing fraud that we have not been able to nail down,” said Stuart W. Bowen Jr., who leads the Office of the Special Inspector General for Iraq Reconstruction, an independent oversight agency. “This spate of new cases is evidence that that sense was reasonably well placed.”

The cases were uncovered during the first phase of a new, systematic inquiry into financial activities, which investigators said began in earnest last summer. A related investigation of rebuilding funds for Afghanistan began in February.

Mr. Bowen’s office agreed to answer general questions on the new inquiry but declined to divulge the names of the suspects, who include private contractors, military officers and civilian officials.

Developed in the Treasury Department, the financial monitoring effort goes by the generic name of the Financial Crimes Enforcement Network, or Fincen, which continually generates data on suspicious financial transactions in support of more than 275 federal and state law enforcement agencies, according to a December report by the Government Accountability Office.

Stephen Hudak, a spokesman at the Treasury Department for Fincen, said it generated 15 million to 16 million reports a year on suspicious financial activity or major currency transactions, including cash deposits of more than $10,000. He said that transactions in banks, check-cashing outlets, wire services, casinos, stockbrokers’ offices and insurance companies were covered.

“Basically, we follow dirty money,” Mr. Hudak said. “Authorized users can access Fincen’s databases to make connections in criminal investigations.”

Mr. Hudak confirmed that Fincen was being used to investigate reconstruction corruption in Iraq.

Because the investigation has covered only limited areas in the United States so far, Mr. Bowen said he estimated that dozens of additional cases would be opened by the end of the year. Mr. Bowen, who spoke by phone from Baghdad, described the effort as a “concerted, focused, forensic financial review involving all the Iraq reconstruction funds.”

Congress has appropriated about $53 billion for reconstruction projects, and the rest of the money has come from Iraqi assets and international pledges. According to testimony before the Wartime Contracting Commission last month by Arnold Fields, who leads the Office of the Special Inspector General for Afghanistan Reconstruction, Congress has appropriated $51 billion to rebuild that country since 2002.

John Brummet, the assistant inspector general for audits in that office, said that the office’s staff members had been studying the Iraq investigation for nearly a year and that they had started a related effort last month.

“What we’re trying to do is basically replicate what they’ve done without having to pay the price of the learning curve,” Mr. Brummet said.

Investigations involving the inspector general’s office for Iraq’s reconstruction have led to 35 indictments and 27 convictions for fraud in numerous forms; the number of convictions rises to 58 when cases pursued by other government agencies are included, according to figures compiled by the Justice Department.

Mr. Bowen would not comment on whether indictments had yet been written up for the new cases, which numbered 52 by last week. But he said that at least 45 of those had come directly from the forensic effort.

Wayne White, who until 2005 was a senior intelligence official with the State Department focused on Iraq and is now a scholar with the Middle East Institute in Washington, said he was not surprised that new cases were still turning up.

Since Iraq’s economy collapsed after the 1991 Persian Gulf war, the country’s dealings with foreign companies and contractors have been laced with bribery, kickbacks and other fraud, Mr. White said, adding that weak oversight of the reconstruction efforts almost guaranteed that those problems would not be rooted out.

“That’s been very disappointing, and we’ve seen it in Afghanistan as well,” Mr. White said.

A senior federal official said that some of the new cases appeared to be closely linked to known networks of conspiracy and fraud and were likely to extend investigators’ knowledge of cases that had already ended with convictions. Many other cases seem to be entirely new, the official said.

Mr. Bowen said that many of the new cases involved bribes and kickbacks for awarding lucrative work to contractors, and that in a number of cases, spouses or other relatives of the suspects are accused of setting up fraudulent companies to hide the illicit gains.

When people who turn up in the net are initially contacted by investigators, the reaction “runs the gamut,” Mr. Bowen said. Some deny wrongdoing and others admit to accepting small bribes, which on further investigation rise into hundreds of thousands of dollars.

One suspect, he said, made the job especially easy on investigators who arrived at his door. “I’ve been waiting for you,” the suspect said.

March 14, 2010 Posted by | Uncategorized | , , , , | Leave a comment