The ‘largest ring of fraud and kickbacks’ in Iraq to date

When Gen. David Petraeus was tasked with training and equipping Iraqi forces in 2004, he made it clear that he had little patience for bureaucracy. He wanted to get Iraqis prepared and ready to work independently, and getting lost in paperwork and accounting would only get in the way of more important goals. There was also no time, Petraeus said, for formal tracking systems to be put in place before distributing weapons to Iraqis.

Given the circumstances, this may sound fairly reasonable, but the approach was not without costs. We already know, for example, that this lax policy led to the military losing track of 190,000 AK-47 assault rifles and pistols given to Iraqi security forces. As it turns out, it also led to a vast system of fraud, waste, and abuse.

Several federal agencies are investigating a widening network of criminal cases involving the purchase and delivery of billions of dollars of weapons, supplies and other materiel to Iraqi and American forces, according to American officials. The officials said it amounted to the largest ring of fraud and kickbacks uncovered in the conflict here.

The inquiry has already led to several indictments of Americans, with more expected, the officials said. One of the investigations involves a senior American officer who worked closely with Gen. David H. Petraeus in setting up the logistics operation to supply the Iraqi forces when General Petraeus was in charge of training and equipping those forces in 2004 and 2005, American officials said Monday.

According to the NYT report, there are, so far, 73 criminal investigations underway involving “contractors, government employees, local nationals and American military personnel.” To date, 20 Americans (civilian and military) have been charged in federal court as a result of the corruption investigation, which apparently has uncovered more than $15 million in bribes on contracts valued at more than $5 billion.

The details are still a little unclear, but the most provocative revelation from the story involves Lt. Col. Levonda Joey Selph, a close Petraeus aide, who is now under investigation in the scandal.

Selph’s operation moved everything from AK-47s, armored vehicles and plastic explosives to boots and Army uniforms, according to officials who were involved in it. Her former colleagues recall Colonel Selph as a courageous officer who was willing to take substantial personal risks to carry out her mission and was unfailingly loyal to General Petraeus and his directives to move quickly in setting up the logistics operation.

“She was kind of like the Pony Express of the Iraqi security forces,” said Victoria Wayne, who was then deputy director of logistics for the overall Iraqi reconstruction program.

Still, Colonel Selph also ran into serious problems with a company she oversaw that failed to live up to a contract it had signed to carry out part of that logistics mission.

It is not clear exactly what Colonel Selph is being investigated for. Colonel Selph, reached by telephone twice on Monday, said she would speak to reporters later but did not answer further messages left for her.

There’s no indication that Petraeus has done anything improper, though the investigation exploring his decisions (and their consequences) may undermine his credibility a bit at a crucial time.

The good news is, several years after the fact, officials are now taking corruption seriously. The bad news, as Spencer Ackerman explained, is that it may very well be too late.

Corruption is a way of life in the new Iraq. Transparency International, an anti-corruption watchdog, labeled the country the second-most-corrupt business environment on the planet in 2005. Just yesterday, McClatchy reported that any Iraqi doing business in Anbar Province — including Iraqi contractors with the U.S. — pays an “insurgent tax” to militant groups who partially finance their fight against the U.S. through shakedowns. All that raises doubt about how much good a new anti-corruption effort can accomplish at this point.

When drawing up lists of the administration’s colossal failures and mistakes in Iraq, let’s not forget to put this right up near the top.

The top of that list is going to be awfully crowded. Since Fiasco, Hubris, and Imperial Life in the Emerald City were written there has likely been enough material within the scope of each of them to write a series of sequels. Even then, it is just the tip of what surely is a large iceberg: once BushCo is gone and investigators and historians get a better shot at documents and witnesses, we are likely to be amazed at how much worse it really is than even our wildest tin-foil nightmares could have hinted at. It can’t get here soon enough.

  • Lt General David Petraeus had a very cavalier attitude about corruption in Iraq in August 2005. When asked about the theft of $1 billion from the Iraqi treasury by the Iraqi defense ministry, Petraeus told Newsday that it was an Iraqi problem, not ours.

    8/2/05 Newsday story ,”Iraq Investigates Widespread Corruption” by Bassam Mroue:

    “Lt. Gen. David Petraeus, the American commander in charge of training and equipping the Iraqi military, declined to comment on the corruption claims, saying it was a matter to be resolved by the Iraqi government.”

    A billion dollars of Iraqi money vanishes into thin air and Petraeus didn’t think it was any of our business. Putting aside the fact that a billion dollars could finance an insurgency, why should the US taxpayer be footing the bill for a bunch of thieves?

    When I read that story, I was shocked. I thought that Petraeus was either a moron or he was on the take.

  • In addition to the NYT report, I would highly recommend Matt Taibbi’s article in Rolling Stone this month: http://www.rollingstone.com/politics/story/16076312/the_great_iraq_swindle

    It is an eye-opening, blood-boiling litany of fraud, greed and criminality.

    One paragraph:

    Operation Iraqi Freedom, it turns out, was never a war against Saddam Hussein’s Iraq. It was an invasion of the federal budget, and no occupying force in history has ever been this efficient. George W. Bush’s war in the Mesopotamian desert was an experiment of sorts, a crude first take at his vision of a fully privatized American government. In Iraq the lines between essential government services and for-profit enterprises have been blurred to the point of absurdity — to the point where wounded soldiers have to pay retail prices for fresh underwear, where modern-day chattel are imported from the Third World at slave wages to peel the potatoes we once assigned to grunts in KP, where private companies are guaranteed huge profits no matter how badly they fuck things up.

    If it doesn’t make you angry, you must have doubled up on your medication…

  • Corruption isn’t just a “way of life” in the new Iraq, it’s been a way of life in the Imperial Wehrmacht for an even longer time. Scumballs like General Betrayus long ago realized that living up to their West Point oath – “We will not lie, cheat, or steal, or tolerate among us those who do” – was a serious impediment to promotion to the rank of Perfumed Prince in Versailles-on-the-Potomac, not to mention their later careers in the Military-Industrial-Congressional-Complex. President Eisenhower knew what he was talking about when he warned against their “undue influence.”

    Colonel Selph only did what she’d learned from her superiors.

    Unfortunately.

  • What’s wrong with greasing a few palms in the name of Dick’s Private Empire?

    …more than $15 million in bribes on contracts…

    There’s that magic number again, $15M, this time its Big Bucks handed out by private NeoContractors in the Cheney Protectorate of Iraq to further bilk the U.S. Treasury. What a coincidence that $15M is the same amount that was allocated for the 9/11 Commission –and here it is being handed out like candy to anyone willing to sell the U.S. Taxpayer out to the highest bidder.

  • Hey George. Here’s your way out of this mess. You withdraw U.S. troops because it will be a tax cut for Iraqi citizens who will no longer have to pay an “insurgecy tax” if there is nothing left to be insurgent against. Grover Norquist praises you because the insurgent tax is also a “death tax” on American servicemembers because the funds raised in that tax are literally killing U.S. taxpayers. Noth the right and the left will find something to rejoice about. That’s one tax cut the most liberal of liberals would wholeheartedly support.

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