Thursday, January 31, 2008
Guest Blogging - Professor Christopher W. Behan writes:
In Catch-22, Milo Minderbender started a successful enterprise, the Syndicate, that accomplished extraordinary feats of logistical and financial legerdemain: the Syndicate bought eggs for seven cents apiece and sold them at a profit for five cents apiece, used American military assets to transfer goods and products throughout an entire war theater, and even contracted with the American military to bomb a bridge that the German military was under contract with the Syndicate to defend. An amoral war profiteer, Milo defended his actions by saying, "I just saw a wonderful opportunity to make some profit out of the mission, and I took it. What’s so terrible about that?"
Milo’s Syndicate flourished in an atmosphere of enormous temptation and little oversight. In many respects, military operations in Iraq and Afghanistan offer similar temptations and remarkably, not much oversight at all given the scope of contracting operations. To an unprecedented extent, US forces rely on contractors to provide everything from bullets and beans, to translation services, maintenance, and security. Contractors have billed United States taxpayers enormous amounts of money since the beginning of the war, much of it from cost-plus contracts in which incentives for efficiency (and in some cases, even honesty) do not exist. Individuals and corporations alike have succumbed to the temptation to bribe and accept bribes, double-bill, bill for services not provided, or engage in what might charitably be called "fraud, waste and abuse."
In the past two weeks, the government has taken steps to increase oversight and end contracting abuses. The Army has transferred significant responsibility for contract oversight from the troubled Kuwait contracting office to Rockford, Illinois, Rockford Link Transferring oversight of contract activity to Rockford will permit the Army to use the technical contracting expertise and experience that seems to be in short supply in a deployed environment. According to news reports, the Army took this action after identifying the Kuwait office as a hub of corruption. The Army Criminal Investigation Command (CID) has 87 ongoing criminal investigations related to contract fraud in Iraq, Kuwait and Afghanistan, and 24 individuals have been charged with contract fraud so far. CID has uncovered evidence of more than $15 million in bribes. Those bribes involved military and civilian personnel. An Army officer, Major Gloria Davis, committed suicide after an investigation revealed she had accepted at least $225,000 in bribes; another investigation found that Army Major John Cockerham and his wife and sister accepted up to $9.6 million in bribes for defense contracts. Davis Article
Congress has begun a round of hearings into the matter of contract oversight in Iraq, Kuwait and Afghanistan. Last week, the House Appropriations defense subcommittee released a GAO report that details the Department of Defense’s shortcomings in managing contracting operations in a deployed environment. Those shortcomings include failure to plan, failure to integrate lessons learned, failure to supervise and failure to devote sufficient resources to tackling the problems. GAO Report
Still, the Department of Defense’s failure to properly plan for and supervise contractors provides no excuse for fraudulent behavior. American corporations have a shameful history of placing profits over patriotism during wartime: in past conflicts, American troops have endured rotten food, shoddy uniforms, substandard equipment, defective arms and ammunition and inadequate shelter because of the malfeasance of individuals and corporations. In the current conflicts, the American taxpayer seems to be the chief victim of contracting abuses; it’s as if the Department of Defense is a giant ATM dispensing gobs of free money to whomever will take it. And plenty of corporations and individuals have stepped up to take the money.
On Monday the 28th of January, a federal judge unsealed an indictment against Elie Samir Chidiac, a U.S. citizen, and Raman International Inc. of Cypress, Texas, which does business as Raman Corporation. Samir and Raman are charged with conspiracy to commit bribery and contract fraud with respect to military contracts in Iraq and Kuwait. [Download chiriac_indictment.pdf ] According to the DOJ press release, Chiriac Release An unidentified military contracting officer canceled contracts that were already awarded to, and often had been performed by, third-party contractors;
- The unidentified military contracting officer re-awarded those contracts to Raman and fraudulently verified that Raman had performed the requisite service or delivered the requisite goods;
- Chidiac and the unidentified military contracting officer forged various contracting documents and fraudulently modified the military contracting database in order to create the appearance of propriety with respect to these canceled and re-awarded contracts;
- The unidentified military contracting officer authorized Chidiac to receive cash payment on those contracts, which Chidiac did, despite the fact that neither Chidiac nor Raman performed any work, provided any service, or delivered any good with respect to these contracts;
- Upon receipt of cash payment from the United States, typically in U.S. $100 bills, Chidiac remitted a portion of the money back to the unidentified military contracting officer, often delivering the money to the officer at Raman’s compound, adjacent to Camp Victory; and
- The unidentified military contracting officer sent money received from Chidiac via U.S. Postal Service to a family member in Midwest City, Okla.
All of these allegations, if true, are disturbing. They illustrate the harm that can arise from greed and a lack of oversight on the part of the government. One hopes that a combination of increased congressional oversight, improved Army and DoD accountability, and an active justice system will help stem the tide of modern-day war profiteers doing business in Iraq and Afghanistan.