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Fraud probe launched on Iraq deals

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October 26, 2007

A team of specially trained investigators will hunker down in an Army office north of Detroit on Monday to begin poring over hundreds of Iraq war contracts in search for rigged awards.

This team of 10 auditors, criminal investigators and acquisition experts are starting with a sampling of the roughly 6,000 contracts worth $2.8 billion issued by an Army office in Kuwait that service officials have identified as a hub of corruption.

The office, located at Camp Arifjan, buys gear and supplies to support U.S. troops as they move in and out of Iraq. The pace of that operation has exploded since the beginning of the Iraq war in March 2003.

Based on what the team finds, the probe may expand and the number of Army military and civilian employees accused of accepting bribes and kickbacks could grow, U.S. officials told The Associated Press. Nearly two dozen have been charged so far.

Signs of trouble include contracts continually awarded to vendors without the usual competition and awards that were competed but went to the bidder with the highest price rather than the lowest. A mismatch between the original product to be purchased and what was actually delivered is another red flag.

“Is there anything in there that might indicate to us that there might be some potential fraudulent activity?” Jeffrey Parsons, director of contracting at Army Materiel Command, said in an AP interview. “If there are patterns that we start to identify, then we’re going to do further review.”

Contracts with significant problems will be forwarded to the Army Audit Agency and the Army Criminal Investigation Command. If there’s credible evidence of wrongdoing, the FBI and prosecutors from the U.S. Justice Department are called in.

In Warren, Mich., home to a large Army acquisition center, the contracting review team will examine 314 of the Kuwait contracts, each worth more than $25,000 and issued between 2003 and 2006.

In Kuwait, a separate team of 10 at Camp Arifjan is already going through 339 contracts of lesser value and awarded during the same time period, according to Army Materiel Command at Fort Belvoir, Va.

Both reviews are to be finished before the end of the year.

A probe of 2007 contracts out of Kuwait has been completed; investigators found numerous problems with the office, including inadequate staffing and oversight, high staff turnover, and poor record-keeping.

In the midst of those shortcomings came billions of dollars in war funding, creating an environment ripe for misconduct and malfeasance.

The teams in Michigan and Kuwait will go through paper records and also use data-mining tools to electronically search data stored on computers.

“Do we have contractors with different names but the same address?” Parsons said. “That would cause some suspicion.”

Tips from individuals familiar with the contracts are another tool for finding flawed awards, he said.

The contract review process isn’t foolproof, however.

If a contracting officer and a vendor are determined to break the rules for personal gain, it can be difficult to pinpoint corruption, according to Parsons, who also is serving as senior adviser to a contracting task force recently established by Army Secretary Pete Geren.

“You can have a contract file that is pristine — all the documentation is there,” Parsons said. “Just going through the contract files doesn’t necessarily give you 100 percent assurance that something else might not have been going on.”

The efforts in Michigan and at Camp Arifjan are parts of a broader inquiry being conducted by the task force, which was formed by Geren following a spike in the number of criminal cases related to the acquisition of gear and supplies for U.S. troops.

Many of the cases stemmed from fraudulent or mismanaged contracts issued by the Kuwait office, prompting Geren to call for a detailed probe of the work done there.

The Army Criminal Investigation Command has 83 ongoing criminal investigations related to contract fraud in Iraq, Kuwait and Afghanistan, according to spokesman Chris Grey.

Grey said 23 individuals have been charged with contract fraud and more than $15 million in bribes has changed hands.

One of the largest cases involves Army Maj. John Cockerham, who is accused of bribery, conspiracy, money laundering and obstruction. Prosecutors allege Cockerham, along with his wife and sister, took at least $9.6 million in bribes in 2004 and 2005 while Cockerham was a contract officer stationed in Kuwait

From the 6,000 Kuwait contracts flowed 18,000 transactions – numerous orders could be placed on a single contract – for items such as bottled water, laundry services, barracks, food, transportation, and warehouse services.

In 2005, Lt. Gens. Steven Whitcomb and John Vines, then both top Army commanders in Iraq, became so concerned over allegations of corrupt contracting that the Criminal Investigation Command established field offices in Iraq and Kuwait.

Deceiving the checks and balances in the federal procurement system takes careful planning, Frank Anderson, president of the Defense Acquisition University at Fort Belvoir, said in a separate interview.

“You had some smart bad apples,” said Anderson, who leads the organization that trains the military’s acquisition officials. “It had to be someone who understood the business well enough to figure out how to get around the system.”

10 Responses to Fraud probe launched on Iraq deals

  1. Stratocaster

    October 28, 2007 at 7:16 pm

    The voters need more of a choice than a Republican criminal or a Democratic criminal. My vote is for Pablo on that one. The Religous Right, hypocrits and bigots aren’t the only people left on the planet. There are actually a few rational people left out there.

  2. Stratocaster

    October 27, 2007 at 12:38 am

    Golly… Gee whiz… Ya mean there could be a high ranking government official that used to work for Halliburton or something… Man, that is hard to belive.

  3. Sandra Price

    October 27, 2007 at 9:20 am

    This is old news for our Government. We discovered this sometime between WW2 and Korea when it was discovered that our Federal Government was in the business of manufacturing women’s bras and panties.

    We all remember the exposure of having invoices showing $300 toilet seats and hammers added to the defense costs and now we found women’s undergarments at outrageous costs to the American tax payers. The Congress took a look at this and then it was forgotten. One brave Representative made the usual “we must not make profits on the backs of our soldiers” crap but it went on. Now we have Halliburton and Blackwater which obviously are pay backs to friends of the Administration so loaded down in corruption that it is impossible to uncover much more.

    It will not change even if we elect a Conservative Christian Minister or a Liberal criminal; money is money to pay back those who financed their campaigns. Asking the government to pay campaign costs will only be worse. The Industrial Military complex that Ike warned us about is running our Government. Our American values went the same way those pieces of silver disappeared.

    We must limit the size and authority of the Federal Government or end up as other nations. Get the government out of our daily lives and restrict their authority over issuing defense contracts to friends of the Administration. Remember bids?

  4. Stratocaster

    October 27, 2007 at 11:17 am

    If the decisions made in the war seem to have nothing to do with national security or the safety of our troops, just ask yourself what would make Hallibuton the most money and you will understand how the decisions are being made. The President’s Father owns a major interest in a lot of the military contracting firms. For them, war is profitable; war is good. The social security fund is being drained and money that could be used for health care is being squandered. Much poorer nations have done much better.

  5. Sandra Price

    October 27, 2007 at 2:30 pm

    Strato, can you tell me if any Democratic Candidate will not do the same? We have seen abuse and waste in every Administration since WW2. Just getting elected calls for pay backs to many major contributors who pay for the win. It is like the mess with lobbyists, it isn’t the lobbyists who break the law but the grubby Congress who accepts the money. Lobbyists are legal but allowing no bid contracts to pay back contributions is not legal.

    Under Truman we saw corporations using the government contracts and they made billions on the war effort. Even Ike allowed many suppliers of our government to be held to a list of government approved suppliers. I worked for a division of RAND in Santa Monica in the purchasing department and saw such waste that could not be questioned to our department head.

    This is a politican’s quick money maker and neither party is clean enough to change it. Integrity and honesty no longer is a quality we want anymore.

  6. Stratocaster

    October 27, 2007 at 4:10 pm

    Sandra, I wish I could. We will never have a decent political system until someone figures out a way to take money out of the equation. I am not looking forward to eight more years of Clintons than I am of eight more years of Bushs. Maybe there should be a nepotism law that applies to the two terms in office.

  7. Sandra Price

    October 27, 2007 at 8:15 pm

    Stratocaster. There is no win for anyone in 2008. Money is not the problem, a lack of ethics is! We sit through the debates listening to answers about who believes in evolution and never a question about anyone standing on their own agenda items. I do not want the government to control sins unless they are the sins of the Administrations.

    Maybe we should breed a new kind of American man. Teach him right from wrong and to understand the freedoms found in our Constitution. Instead we look for men of no integrity and we all know they will break the rules, sin to the extreme and be forgiven by prayers. No! This will not work anymore.

    Where are the American families who desire their child to be President? Are they simply teaching them to ask for forgiveness instead of acting ethically?

  8. Stratocaster

    October 28, 2007 at 2:13 am

    I am not sure if a moral man can exist in a corrupt world. Any money an elected official recieves above his given salary should be considered a bribe or a conflict of interest. War profitering should be considered an act of treason. A cap should be put on campaign spending to put everyone on equal ground. It isn’t going to do anygood to teach morality when the only place to work in town is a whorehouse.

  9. Pablo

    October 28, 2007 at 1:02 pm

    The solution to our government so out of control is quite simple.

    Campaign Finance Reform. First, lobbyists bribing politicians with cash and favors MUST be eliminated. This IS and should be treated as treason. Amazing we have allowed treason to occur right under our noses for so long. I guess it’s because we’re all so damned frightened of the crime syndicates we call corporations. Secondly, elections must become purely, without exception, taxpayer funded. Each politician with a threshold number of votes will get on the ballot and each will have equal space allotted in the printed press to make their stances clear. In addition, there will be publicly-funded debates where each candidate is allotted equal time. In these debates, sincere candidates like Kucinich or Gravel would be allowed to express their opinions just as much as “frontrunners” like insincere warmonger ‘bomb Iran’ Hillary.

    I say that the elimination of corporate and private campaign contributions is necessary because we all know that those with the most $ have the best chances of winning in this country full of sheep and zombies. A lot of that is because a high percentage of the voters are fools who vote for the criminal with the most yard signs or advertisements during mind-numbing sitcoms. Of course these people are a result of a sick education system underfunded by a greedy, ulterior-motivated government; the education system would improve drastically after campaign finance reform and a much higher percentage of people would vote as informed citizenry with decent critical thinking skills.

    Once these necessary changes occur, political positions will become attractive to a whole different group of people with positive motives, not the greedy and corrupt types our present dysfunctional system attracts. In the new system, a non-billionaire with a brain and a heart and critical thinking skills could actually become the president.

    The solution is so damned simple, but very few talk about attacking the true root of our problems for some reason. Until we quit allowing $ to corrupt absolutely we’ll only be wasting our breath complaining and the situation will continue to deteriorate.

  10. Sandra Price

    October 28, 2007 at 1:48 pm

    So you want the government to limit all finances from all the candidates? You will blame the lobbyists for giving money to the Congress? Do you believe that our Representatives are so corrupt they must be controlled by a squeaky clean government?

    Who controls the controler? Our nation was designed for the people to control the Congress every 2 years and the White House every 4 years and the Senate every 6 years. Now you suggest that we should only allow those candidates who are not the favored to be allowed more exposure by the media?

    You might feel safer with the government controlling our elections, our advertisements and finacing the elections. Why do you live in America if you want to change the system that has worked for 230 years?

    The problem can be solved if the voters were educated enough to recognized corruption and graft. Another way to help the voters would be for the POlitical parties themselves to live and promote by their partisan agendas. Look at the GOP! One very evil man changed the platform to include a one world order that set off a series of near revolutions in America. His name was George Herbert Walker Bush! He lost on this platform and his son, not reading very well simply brought in the Religious Right knowing damn well the voters were too ignorant to notice the change in platform again.

    So you want to pile on more authority over our elections releasing all responsibility from the voters? Wouldn’t it be easier to train our children to know right from wrong so they can spot corruption in our government?