The Long, Lazy Arm of the Law

Deputy Attorney General Paul McNulty has just announced that the Justice Department is going to begin cracking down on contract fraud. Now there's swift justice. The get-tough declaration comes right before the November elections, but far too late to expose any embarrassing examples of war profiteering or Katrina wrongdoing.

The fact is, the Department of Justice under the Bush administration has completely checked out of the accountability game when it comes to contractors operating in Iraq. It's not as if there has been a lack of leads. Consider these well documented cases, many of them found in Blood Money, my new book on the reconstruction of Iraq and its failures. Iraq for Sale, a blistering new documentary on the rebuilding, contains many other examples.

Blackwater: In May 2004, two Blackwater guards opened fire and killed an Iraqi taxi driver as a convoy containing the senior U.S. spokesman in Iraq drove down a Baghdad street last year.

An internal State Department investigation found that the men had violated procedures by failing to give the Iraqi driver enough warning before opening fire.

Their punishment? Plane tickets home. No investigation, no charges, nothing.

Jack Shaw: Whistleblowers accused the Rumsfeld appointee of trying to steer a lucrative contract to a company run by a group of friends who wanted to establish cellular phone service in Iraq. Joseph Schmitz, then the Inspector General for the Pentagon, turned Shaw's case over to the FBI. No charges were ever filed.

As for Schmitz, he quit in September 2005. At the time, Congress was looking into whether he had stonewalled the investigation of several senior Bush administration officials. The investigation went nowhere.

Where did Schmitz wind up? As chief operating officer for Blackwater (see above).

Zapata Engineering: A group of private security guards working for Zapata Engineering roll into Fallujah last year, where they allegedly begin randomly firing at Iraqis and Marine guard posts. The Marines detain them, confiscate their weapons and forbid them from operating in the area. Here's a quote from the Marine Corps' letter to the men, which I obtained during the course of reporting on the incident for the Los Angeles Times:

"Your convoy was speeding through (Fallujah) and firing shots indiscriminately, some of which impacted positions manned by U.S. Marines....Your actions endangered the lives of innocent Iraqis and U.S. service members in the area."

Let's be clear: These are not allegations by crazed insurgents. It's U.S. Marines talking. Is it possible to imagine someone firing a shot at a Marine Corps outpost anywhere in the United States, and being told to simply go home?

None of the accused security contractors were ever charged with a crime, much less prosecuted.

Custer Battles. A federal jury found the private security company guilty of fraud in a civil case earlier this year. Among other allegations, the company was accused of setting up shell companies in the Cayman Islands, backdating documents, and submitting false invoices. One company employee allegedly spent tens of thousands of dollars on a Mercedes Benz and a mistress on a shopping spree in Paris.

A federal judge overturned the verdict: The reason? Custer Battles' contract was with the Coalition Provisional Authority. The judge ruled that, although the United States had created and largely staffed the authority, it was not an American entity. Thus, American fraud laws did not apply.

Where has the Justice Department been on this case? Good question. They didn't help out the whistleblowers in prosecuting their civil suit. And they have never filed charges, despite initiating a criminal investigation more than two years ago.

This looks like a battle that Custer won.

The above list does not even include the Big Stuff, documented in audit after audit by the Special Inspector General for the Reconstruction of Iraq: shoddy workmanship by Parsons; questionable accounting by Bechtel; missing equipment by Halliburton; an astounding $9 billion in Iraqi funds overseen by the United States never properly accounted for. Not a single corporate executive or government contracting officer has faced the music in any of these cases.

Finally, there is by now a long list of mysterious murders of American civilians in Iraq: the unsolved killing of Dale Stoffel, an American contractor, and his colleague, Joseph Wemple, found shot to death in their vehicle on a back road outside of Baghdad after a contract dispute in Iraq; U.S. Army Col. Ted Westhusing, the highest ranking military officer to die in Iraq, found dead in his trailer of an apparent suicide after a dispute with contractors who had been accused of corruption; CPA employees Fern Holland and Bob Zangas and their translator, assassinated in the spring of 2004.

I'm sure McNulty will work diligently to shed light on these cases. I just hope he gets around to filing charges before November 2008.