Mike Battles — former Republican candidate for Congress in Rhode Island
and Fox News war-on-terror analyst — figured he could make a quick fortune
off the rebuilding of Iraq. So he and pal Scott Custer set up a contracting firm
with the catchy name of Custer Battles. The company proceeded to steal a cool
$50 million from American taxpayers, according to two of its former employees.
In March, Custer Battles became the first U.S. contractor to be found liable for
fraud in Iraq.
Ex-employees now accuse two former Pentagon officials of plotting with Custer
Battles to set up shell companies that, among other things, sold arms on the
Iraqi black market — weapons that could have been used against American
troops. These startling charges come in a sealed federal lawsuit obtained by
the Associated Press (AP).
The Iraq occupation has become a "free fraud zone,"
in the words of a former top official at the Coalition Provisional Authority.
Washington has simply left the cash register open. Hundreds of millions seem
to have vanished into corrupt contractors' pockets, according to U.S. audits.
And the government shows little passion for going after the crooks. The only
case to have gone to a jury involved a civil suit filed by former workers.
Custer Battles had won over $100 million in contracts for work in Iraq.
Its politically connected founders defrauded the government with brazen non-concern.
Retired Brig. Gen. Hugh Tant III testified that the company was paid to provide
trucks to the military, but that the vehicles didn't run and had to be towed.
Tant said that when he confronted Mike Battles, the reply was, "You asked
for trucks ... it is immaterial whether the trucks were operational."
The company was hired to screen civilian passengers and freight at the Baghdad
airport, but because of the violence, there were no commercial flights. So the
company sent its screeners to do other jobs while continuing to bill the Coalition
Provisional Authority for the nonexistent security services, former employees
Plunder can be fun. In 2003, a sack filled with bricks of $100 bills was delivered
to the company at the Baghdad airport. Custer Battles employees playfully tossed
the bricks back and forth on the tarmac. In another stunt, the company painted
over the Iraqi Airways name on forklifts and leased them back to the U.S. government.
The first whistleblower suit stemmed from Custer Battles' work in helping to
introduce a new Iraqi currency. A jury found that the company had defrauded
the U.S. government of $3 million.
In 2004, the Air Force banned the company from getting any more contracts in
Iraq. But that didn't mean the game was over. Custer Battles moved its assets
and most of its employees to a new company called Danubia Global — which,
The Wall Street Journal reports, won government contracts worth $1.28 million
a month. The principals created other companies to get around the suspension,
including two based in Battles' Rhode Island office.
The latest suit says that former acting Navy Secretary Hansford Johnson and
former acting Navy Undersecretary Douglas Combs were in on a scheme "to
set up sham companies" to conceal Custer Battles' ownership and control,
according to AP. Last year, one of those companies bought Danubia.
Johnson and Combs reportedly asked Air Force Deputy General Counsel Steven
Shaw to lift the ban on Custer Battles. In an e-mail to Shaw, Combs called Battles
and Custer men with "stellar records." Shaw refused the request.
With $21 billion now budgeted for Iraq reconstruction, you'd think the leaders
in Washington would tighten up the oversight. Think again.
Sen. Byron Dorgan, a North Dakota Democrat, has proposed creating a special
committee to review government contracts in Iraq. Last month, it went down in
flames with only one Senate Republican voting for it, Rhode Island's Lincoln
It all sort of leaves you speechless.
Froma Harrop's column appears regularly on editorial pages
of The Times. Her e-mail address is email@example.com
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