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Army Probes War Contractor Fraud

By JOHN HEILPRIN
The Associated Press
Saturday, January 27, 2007; 6:20 PM

WASHINGTON -- From high-dollar fraud to conspiracy to bribery and bid rigging, Army investigators have opened up to 50 criminal probes involving battlefield contractors in the war in Iraq and the U.S. fight against terrorism, The Associated Press has learned.

Senior contracting officials, government employees, residents of other countries and, in some cases, U.S. military personnel have been implicated in millions of dollars of fraud allegations.

"All of these involve operations in Iraq, Afghanistan and Kuwait," Chris Grey, a spokesman for the U.S. Army Criminal Investigation Command, confirmed Saturday to the AP.

"CID agents will pursue leads and the truth wherever it may take us," Grey said. "We take this very seriously."

Battlefield contractors have been implicated in allegations of fraud and abuse since the war in Iraq began in spring 2003. A special inspector general office that focused solely on reconstruction spending in Iraq developed cases that led to four criminal convictions.

The problems stem in part from the Pentagon's struggle to get a handle on the unprecedented number of contractors now helping run the nation's wars. Contractors are used in battle zones to do nearly everything but fight. They run cafeterias and laundries for troops, move supplies, run communication systems and repair weapons systems.

Special agents from the Army's major procurement fraud unit recently were dispatched to Iraq, Afghanistan and Kuwait, where they are "working closely and sharing information with other law enforcement agencies in the region," Grey said.

"Given the billions of dollars in contract dollars that have been and are being spent, it is our experience that our agents will detect millions of dollars in fraud before we are done," Grey said. "And just as likely, we will be instrumental in bringing back to the U.S. government millions of dollars in recoveries."

One case involves an Army chief warrant officer accused of taking a $50,000 bribe to steer a contract for paper products and plastic flatware away from a government contractor and to a Kuwaiti company, according to an indictment unsealed Thursday in federal court at Rock Island, Ill.

Prosecutors say the officer took the bribe while at Camp Arifjan in Kuwait, while he was the Army's food service adviser for Iraq, Afghanistan and Kuwait, according to the indictment. The officer is also accused of trying to smuggle $40,000 in undeclared cash into the United States on a December 2005 flight from Kuwait to Dover, Del.

Other cases involve a government officer manipulating a contract in exchange for large bridges, a contractor making false claims against the government and an official accepting gratuities. The cases range in type, seriousness and complexity and involve contractors both inside and outside the United States.

The Pentagon has viewed outsourcing a wide variety of military tasks as much more efficient, leaving troops trained in combat to the business of war.

But the Government Accountability Office reported in December that the military has been losing millions of dollars because it cannot monitor industry workers in far-flung locations.

The Defense Department's inability to manage contractors effectively has hurt military operations and unit morale and cost the Pentagon money, the GAO said.

Some 60,000 contractors have been supporting the Army in Southwest Asia, which includes Iraq. That compares with 9,200 contractors in the 1991 Persian Gulf War.

Commanders are often unsure how many contractors use their bases and require food, housing and protection, according to the report. One Army official said the service estimates losing about $43 million each year on free meals provided to contractors who also get a food allowance.

The new Democratic Congress plans to ramp up oversight of the billions of dollars being spent in Iraq, including dollars awarded to contractors. Rep. Ike Skelton, D-Mo., chairman of the House Armed Services Committee, has said he plans to target contractor abuse.

© 2007 The Associated Press