Executive Fraud Blog

Army investigators will look for fraud in the awarding of the roughly 6,000 Iraq war contracts worth $2.8 billion.

Many of these investigations will continue long after the war, but I'm still waiting for the investigation of where the pallets of cash went in the early days of the US occupation. I'm sure it is difficult now to divert resources from proactive solutions to iraq fraud investigations.

Auditors working for the US government this year have estimated that over $10 billion of the $38 billion approved to support the work in Iraq has been fraudulently spent on overcharging contractors and undocumented expenses. Since it has proven difficult to proceed with criminal prosecution due to a lack of detailed evidence the Department of Defense believes it is time to start suspending companies from receiving US government contracts in Iraq. The DoD has realized that the use of fines would only encourage continued fraud to pay for their fines as if they were a cost of doing business.

Committee Chairman Patrick Leahy, a Vermont Democrat, is suggesting the solution that would make war profiteering a crime that would apply to all contract fraud whether it takes place domestically or abroad.

On a personal note, how much more evidence do you need to say that Halliburton has committed fraud. They have received countless no bid contracts and have been charged with undocumented expenses. If the government wants to get serious about this they will need to take action on the one contractor that is closest to Cheney and the White House.

Federal audit sees risk of more Iraq fraud, waste

ASSOCIATED PRESS
February 16, 2007

The U.S. government is at risk of squandering significantly more money in an Iraq war and reconstruction effort that already has wasted or otherwise overcharged taxpayers billions of dollars, federal investigators said yesterday.
The three top auditors overseeing contract work in Iraq told a House committee that $10 billion in spending was wasteful or poorly tracked. They pointed to numerous instances in which Defense and State department officials condoned or otherwise allowed poor accounting, repeated work delays, bloated expenses and payments for work shoddily or never done by U.S. contractors.
That problem could worsen, the Government Accountability Office said, given limited improvement so far by the Department of Defense even as the Bush administration prepares to boost the U.S. presence in Iraq.
David M. Walker, comptroller general of the GAO, Congress' auditing arm, said his agency has been pointing out problems for years, only to be largely ignored or given lip service with little result.
"There is no accountability," Mr. Walker said. "Organizations charged with overseeing contracts are not held accountable. Contractors are not held accountable. The individuals responsible are not held accountable.
"People should be rewarded when they do a good job. But when things don't go right, there have to be consequences," he said.
A spokeswoman for the Army, which handles most of the Iraq contracting, did not have immediate comment.
Senate Democrats, calling recently cited cases of waste "outrageous rip-offs of the American taxpayer," quickly moved to introduce legislation yesterday to stiffen punishment for war profiteers and cut down on cronyism in contracting.
The bill, sponsored by Sen. Byron L. Dorgan, North Dakota Democrat, and 22 other senators, would impose penalties of up to 20 years in prison and fines of up to $1 million for war profiteering and restore a rule that prohibits awarding federal contracts to companies exhibiting a pattern of breaking the law in performance of government contracts.
That rule, put in place by President Clinton, was dropped by the Bush administration upon taking office, Mr. Dorgan said.
The auditors' joint appearance before the House Oversight and Government Reform Committee comes as Congress is preparing for a showdown with President Bush next month over his budget request of nearly $100 billion to pay for more U.S. troops in Iraq.
Rep. Henry A. Waxman, California Democrat, who chairs the panel, has pledged scores of investigations of fraud, waste and abuse -- with subpoenas if necessary -- on the Bush administration's watch. He decried the overpricing identified by the DCAA, a figure that has tripled since last fall.
Of the $10 billion in overpriced contracts or undocumented costs, more than $2.7 billion were charged by Halliburton Co., the oil-field services firm once headed by Vice President Dick Cheney.
"According to the Pentagon auditors, more than one in six dollars they have audited in Iraq is suspect," Mr. Waxman said.

A defense contractor was sentenced in Washington Friday to 46 months in prison and ordered to forfeit $3.6 million for fraud in Iraq's reconstruction.

The U.S. Justice Department said Philip Bloom, 67, of Bucharest, Romania, also was sentenced to two years' probation.

Bloom was arrested at Newark (N.J.) International Airport in November 2005. He pleaded guilty last March to bribery, money laundering and conspiracy in a scheme to defraud the Coalition Provisional Authority in Iraq.

The defendant conspired with U.S. officials and several high-ranking U.S. Army officers to rig bids in al-Hillah, Iraq, from December 2003 through December 2005, the department said.

Some of the money obtained in the conspiracy was used to buy weapons for personal use in the United States, the department said.

Bloom has cooperated in the investigation. Five other defendants have been prosecuted, including a U.S. Army colonel and two lieutenant colonels who were named in a 25-count indictment Feb. 1.

The defense contractor, Custer Battles, has won again for the short term. For those of you that have not heard of them they were in charge of the Bagdad airport during the US led invasion. The issue at hand was their use of cost-plus contracts that would allow them to over charge the government by inflating actual costs an then tacking on an additional profit by using the plus percentage. When all is said and done with IRAQ I would not be surprised if they were to take a better look at where all the US taxpayers money went.
For more information check out Imperial Life in the Emerald City, it has an interesting view of the behind the scenes in IRAQ.