Senate Democrats are investigating one of the greatest crimes in American history: the outright theft of uncounted billions of tax dollars perpetrated by GOP-connected corporations with the assistance of the Coalition Provisional Authority.
U.S. officials in postwar Iraq paid a contractor by stuffing $2 million worth of crisp bills into his gunnysack and routinely made cash payments around Baghdad from a pickup truck, a former official with the U.S. occupation government says.
Because the country lacked a functioning banking system, contractors and Iraqi ministry officials were paid with bills taken from a basement vault in one of Saddam Hussein’s palaces that served as headquarters for the Coalition Provisional Authority, former CPA official Frank Willis said.
Officials from the CPA, which ruled Iraq from June 2003 to June 2004, would count the money when it left the vault, but nobody kept track of the cash after that, Willis said.
“In sum: inexperienced officials, fear of decision-making, lack of communications, minimal security, no banks, and lots of money to spread around. This chaos I have referred to as a ‘Wild West,'” Willis said in testimony he prepared to give Monday before a panel of Democratic senators who want to spotlight the waste of U.S. funds in Iraq.
Describing the transfer of $2 million to one contractor’s gunnysack, Willis said: “It was time for payment. We told them to come in and bring a bag.” He said the money went to Custer Battles of Middletown, R.I., for providing airport security in Baghdad for civilian passengers.
Willis said a coalition driver would go around the Iraqi capital and disburse money from the a pickup truck formerly belonging to the grounded Iraqi Airways airline. The reason is because officials “wanted to meld into the environment,” he said.
Willis’ allegations follow by two weeks an inspector general’s report that concluded the occupying authority transferred nearly $9 billion to Iraqi government ministries without any financial controls.
The money was designated for financing humanitarian needs, economic reconstruction, repair of facilities, disarmament and civil administration, but the authority had no way to verify that it went for those purposes, the audit said.
So just who is Custer Battles, the security company paid with $2 million in cash stuffed in a gunny sack? Founded by two GOP opperatives, Custer Battles did not exist prior to the fall of Kabul in 2001 and had no prior security experience when given the contract to secure the Baghdad airport. The company has since been cut off from furter Pentagon contracts and is currently involved in a whistleblower civil lawsuit – a lawsuit that the U.S. Department of Justice has refused to join.
Managers of a security firm that won large contracts in Iraq warned their bosses in February of what they called a pattern of fraudulent billing practices, internal company memorandums suggest.
The memorandums, written primarily by two company managers, charged that the security firm, Custer Battles, repeatedly billed the occupation authorities for nonexistent services or at grossly inflated prices.
The memos and a lawsuit filed by former employees cite several specific instances, including billing the Coalition Provisional Authority $157,000 for a helicopter pad that in fact cost $95,000, and repainting forklifts abandoned by Baghdad Airways and then charging the authority thousands of dollars a month, claiming that the forklifts were leased.
The memorandums, provided by a lawyer for the managers who filed the lawsuit against Custer Battles, charge that the company submitted invoices from supposed subcontractors or suppliers that – unbeknownst to the American officials who paid the final tab – were virtual shells, newly created by Custer Battles executives and their partners.
Pete Baldwin, then the Iraq facilities manager, wrote in a Feb. 2 memorandum that in one typical invoice, Custer Battles claimed that one of its shell companies had installed a helicopter pad for $157,000. In fact, Custer Battles had hired a different company to build the pad for $95,000, he asserted. He wrote that “every line item on that invoice,” which was submitted for a total of $250,000, was just as “false, fabricated, inflated.”
Mr. Baldwin wrote that he had repeatedly informed Mr. Custer, the company co-owner, of similar practices, but to no avail. A lawyer for Custer Battles, Richard Sauber, said that Mr. Custer had subsequently brought accountants to Iraq to clear up incomplete books but that they had not found fraud.
Earlier this month, the Justice Department declined to prosecute Custer Battles, though the civil suit continues under the whistle-blower law. The department gave no public explanation, but officials had previously told lawyers in the lawsuit that because the alleged fraud was against the Coalition Provisional Authority, federal prosecutors did not have jurisdiction. Some experts have questioned that reasoning.
The company founders, Scott Custer and Michael Battles, are both Army veterans. Mr. Battles unsuccessfully ran for Congress in Rhode Island as a Republican two years ago.
The two started out by offering security services to nongovernmental organizations in Afghanistan after the fall of Kabul in late 2001.
But their business really took hold in June 2003, soon after the fall of Baghdad. The men obtained a $16.5 million contract from the occupation authorities to provide security for the Baghdad airport.