Feds Investigating Big Contractor's Ties to Blacklisted Iranian Companies

04/09/2012 02:07 pm ET Updated Jun 09, 2012


A major defense contractor is the focus of an apparent ongoing federal probe into its business dealings with Iranian companies -- dealings that could violate U.S. sanctions on Iran, a Project On Government Oversight (POGO) investigation has found. 

The contractor, Kuwait and Gulf Link Transport Co. (KGL), a Kuwait-based logistics firm, holds up to $1 billion in contracts with the U.S. military and retains access to sensitive U.S. military installations in the tense Gulf theater. 

The company faced allegations last year that it had ties to Islamic Republic of Iran Shipping Lines (IRISL), an Iranian, state-owned company that landed on the U.S. government's prohibited list in 2008 and that U.S. officials described as being "part of a broader pattern of deception and fabrication that Iran uses to advance its nuclear and missile programs." 

After lawmakers questioned the Pentagon about ties between KGL and IRISL, Ashton Carter, at the time the Under Secretary of Defense for Acquisition, Technology, and Logistics, said the Pentagon investigated the matter and could not find evidence of any Iran connection or violation of U.S. law.

But as POGO reports, the situation is not that simple. Sources told POGO of one recent incident that strongly suggests an FBI probe into the company remains active: 

A number of sources close to the case report that as recently as January 2012, federal agents pulled a senior KGL executive out of line for hours of questioning about the firm's ties to Iran as the executive tried to enter the country, supposedly at Washington's Dulles airport.

POGO also found that federal agents -- including those from the Pentagon -- reached out to several witnesses in 2011. The witnesses included KGL executives and Mrs. Mona Abdul Wahab, a whistleblower and former KGL employee:

Documents seen by POGO indicate that both the FBI and the Defense Criminal Investigative Service have spoken to Mrs. Abdul Wahab and other witnesses. She says she was interviewed by senior FBI agents in Kuwait on multiple occasions in 2011, the time frame within which Members of Congress were being told that KGL was above suspicion. 

Both KGL and the FBI declined to comment as to whether the firm faced an ongoing federal inquiry. Neither would comment on the airport incident or deny that it occurred. 

KGL continues to deny ties to Iranian businesses subject to U.S. sanctions, and in a little-noticed lawsuit says that reports of its ongoing ties to blacklisted companies are the result of a smear campaign. 

Nonetheless, KGL continues to attract scrutiny from lawmakers. Just last month, Senator Bob Menendez (D-NJ) asked the Treasury Department office that enforces U.S. sanctions to investigate KGL

Sen. Menendez also wrote, "I understand that the FBI and Defense Criminal Investigative Service may be actively investigating these allegations." 

For KGL, the stakes in this case are almost as high as Mount Damavand. As POGO's Adam Zagorin writes, "If links between KGL and Iran are proven as a result of current investigations, the company could face debarment as a U.S. military contractor, have current contracts terminated, and/or face false claims actions in U.S. civil court. American citizens or U.S. legal residents involved in sanctioned activity, if any, could face criminal prosecution."

But the case's impact could extend beyond just one contractor. "No contractor to the U.S. military has ever been debarred for doing business with Iran," Zagorin writes, "so KGL could emerge as a test case" of U.S. toughness on contractor misconduct and U.S. sanctions.

The bottom line, says POGO, is that we need answers: 

At a time when the attention of the American public and debate in the Senate focuses on strengthening sanctions against Iran, the time has come to set the record straight about what is going on with KGL, and its big DoD contracts. After what seems like many months of investigation, when will someone in the U.S. government provide clarity, as Congress considers legislation to better protect employees who allege wrongdoing at contractors, like KGL, that work for the U.S. military?

The full story -- which includes details on alleged death threats made to a whistleblower and an FBI agent's unusually frank acknowledgment of the "political" nature of the case -- is worth a read. Get the scoop on POGO.org.

Bryan Rahija edits POGO's blog.