Report: U.S. Paid Iraq Contractors in Cash

[rainbow4321]

http://www.sierratimes.com/rss/newswire.php?article=/ap/20050213/ap_on_go_ca_st_pe/iraq_loose_cash&time=1108321382&feed=iraq



WASHINGTON - U.S. officials in postwar Iraq paid a contractor by stuffing $2 million worth of crisp bills into his gunnysack and routinely made cash payments around Baghdad from a pickup truck, a former official with the U.S. occupation government says.


Because the country lacked a functioning banking system, contractors and Iraqi ministry officials were paid with bills taken from a basement vault in one of Saddam Hussein 's palaces that served as headquarters for the Coalition Provisional Authority, former CPA official Frank Willis said. Officials from the CPA, which ruled Iraq from June 2003 to June 2004, would count the money when it left the vault, but nobody kept track of the cash after that, Willis said.

Describing the transfer of $2 million to one contractor's gunnysack, Willis said: "It was time for payment. We told them to come in and bring a bag." He said the money went to Custer Battles of Middletown, R.I., for providing airport security in Baghdad for civilian passengers.


Willis' allegations follow by two weeks an inspector general's report that concluded the occupying authority transferred nearly $9 billion to Iraqi government ministries without any financial controls.

[merwin]

1. How can I get in on this?

[elehhhhna]

2. ..and nobody thought to write these transactions down? Right-o!

[elehhhhna]

3. you go to war with the bookkeeping methods you have...

[llmart]

4. What a bizarre world we now live in.

Nothing else to say.

[acmavm]

5. Bullshit. But nice try explaining where all the money mysteriously went.

But you know, if it were true someone should get ten years in a cell for criminal stupidity.

[HysteryDiagnosis]

6. Imagine if Clinton had lost... oh say....

300 dollars. My my wouldn't we have to spend 40 million finding out where it went??? Hypocritical bastards.

[napi21]

7. I'm sure this story is true!

I even agree these cash transaction might have been necessary, HOWEVER...appointments were made to meet these folks with the truck, and there should have been SOME records kept, no matter how cryptic, to be able to show approximately where this cash went, and to whom.

[joanski01]

8. I heard Wolfowitz say at the

recent Congressional hearings that they paid the Iraqi soldiers in cash. That's why when they got paid they had to take a leave of absence and take the money home. Sometimes the soldiers came back, and sometimes they didn't. They's why they aren't getting trained. They don't stay on the job long enough.

[Tandalayo_Scheisskopf]

9. Some of these guys, the payors and the payees...

Probably learned their cash chops back when they were cocaine dealers.

I ain't jokin'. Much.

[grasswire]

10. what the hell is Custer Battles?

It's time to start investigating some of these contractors. And are they paying tax on these cash payments?

[rainbow4321]

11. Iraq Contractor Accused of Offshore Shell Game (Custer Battles)

Here ya go... a googled tidbit :


http://www.corpwatch.org/article.php?id=11575

Former managers working with Custer Battles, a high-profile private security company in Iraq, are accusing the firm of using affiliated "shell" companies in the Cayman Islands and other "tax haven" countries to fraudulently overcharge on government contracts by tens of millions of dollars. The accusations are spelled out in a lawsuit filed under the False Claims Act and made public October 8.

Founded by two Army veterans, Scott Custer and Michael Battles -- a former Republican candidate for Congress in Rhode Island -- the firm had little experience in private security and employed only a handful of people at the time. The two entrepreneurs, both in their mid-30s, made their first payroll with credit cards and personal loans. Since then, Custer Battles has landed security contracts totaling an estimated $100 million that include protecting Iraq’s new currency and training the Iraqi army.

But during those early months in Iraq, the company resorted to using crooked accounting and "sham" companies in far-flung countries including the Cayman Islands, Cyprus and Lebanon, to dramatically pump up charges on contracts by as much as 162 percent on equipment, construction supplies and services, claim plaintiffs’ Robert Isakson and W.D."Pete" Baldwin, both of who worked for Custer Battles.

<snip>

Nevertheless, the Pentagon temporarily banned the company from future government contracts on September 30 until legal proceedings are resolved. In an Air Force memo calling for the government-wide suspension, Custer Battles and its officers are accused of creating "sham" and "interlocked" foreign companies to fraudulently increase profits and inflate costs charged to the Coalition Provisional Authority (CPA), the temporary governing body in Iraq largely led and funded by the U.S. government

[Spazito]

12. Here is a link to their site

http://www.custerbattles.com/press/pr032203.html

and they are listed here on ContractWatch: (note they have not responded to the request)

http://www.contractwatch.org/datavault/FOIA.htm

Interesting, one of the principals in Custer Battles was a republican candidate, looks like he was defeated in his primary:

http://www.insidepolitics.org/heard/heard110401.html

Will keep looking for links

Edited to add this:

Fox interview excerpt with Battles:

http://www.custerbattles.com/press/news041904yourworld.html

Whoa, papers file in 04 against Custer Battles

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF VIRGINIA

http://www.taf.org/custerbattles.pdf

Another interesting addition:

Mike Battles, Mike is a founding partner of the Global Risk Management Firm Custer Battles LLC. He graduated from the United States Military Academy at West Point with a BS in Geopolitics. He served over 7 years in the U.S. Army as an Infantry officer in Airborne and Special Operations assignments with extensive service throughout the Balkans and Eastern Europe. After leaving the military, Mike served as an operations officer with the Central Intelligence Agency. Mike was also a candidate for the US House of Representatives from Rhode Island. Mike is a visiting lecturer at West Point, a frequent commentator on national security affairs for the FOX NEWS Channel, and an active member of the Council for Emerging National Security Affairs.

http://www.thecamelotgroup.com/mbattles.htm

[Babel_17]

13. IIRC

The US military has a history of doing this at times. The Civil War being a good example.

While very hazy my recollection from reading history though is that even back in the days of parchment and fountain pen the US military, generally speaking, did quite a good job of accounting for dollars spent.


Conservatives used to have a good table thumping style of delivery when they would rail against gov't waste and fraud as they were speaking in congress.

Our party's legislators would do well to study up on those speeches and emulate them.

[tanyev]

14. I'll bet they didn't lose track of 9 billion dollars

in the Civil War.

[Carl Brennan]

15. Custer Battles linked to Fox news

http://seattletimes.nwsource.com/html/nationworld/20020...

By T. Christian Miller
Los Angeles Times

WASHINGTON — One of the U.S. security companies operating in Iraq has been suspended from doing business with the U.S. government after being accused of overbilling millions of dollars through a series of sham companies.

Security company Custer Battles sent fake bills to the U.S.-financed Coalition Provisional Authority, which ran Iraq under American occupation, according to a U.S. Air Force memo obtained by the Los Angeles Times.

The company, which provided security at the Baghdad airport, is also the target of a suit unsealed yesterday accusing it of systematically bilking U.S. taxpayers and threatening a worker and his 14-year-old son at gunpoint.

... The company's founders are Scott Custer, a former Army Ranger and defense consultant, and former CIA officer Michael Battles, who ran for Congress in Rhode Island in 2002 and was defeated in the Republican primary. The Federal Election Commission fined Battles for misrepresenting campaign contributions.

Battles is a Fox News Channel commentator.

[cornermouse]

16. No money trail. No evidence. No trial.

All nice and tidy...

[brentspeak]

17. That's our money, of course

Right down the toilet to a bunch of "Soldier of Fortune"-reading weirdos from Rhode Island.

[u2spirit]

18. U.S. Said to Pay Iraq Contractors in Cash

http://story.news.yahoo.com/news?tmpl=story&u=/ap/20050213/ap_on_go_ca_st_pe/iraq_loose_cash


U.S. officials in postwar Iraq paid a contractor by stuffing $2 million worth of crisp bills into his gunnysack and routinely made cash payments around Baghdad from a pickup truck, a former official with the U.S. occupation government says.

snip

"In sum: inexperienced officials, fear of decision-making, lack of communications, minimal security, no banks, and lots of money to spread around. This chaos I have referred to as a 'Wild West,'" Willis said in testimony he prepared to give Monday before a panel of Democratic senators who want to spotlight the waste of U.S. funds in Iraq.


A senior official in the 1980s at the State and Transportation departments under then-President Ronald Reagan , Willis provided The Associated Press with a copy of his testimony and answered questions in an interview.

snip

Willis concluded that "decisions were made that shouldn't have been, contracts were made that were mistakes, and were poorly, if at all, supervised, money was spent that could have been saved, if we simply had the right numbers of people. ... I believe the 500 or so at CPA headquarters should have been 5,000."

[Hard Attack]

19. You can't dig into this to deep...

First of all, how else were we to pay anyone there without cash?

The sloppy book keeping, overpaying, wrong people doing the job, heck, thats a taste of good old American Government Values!

Shit, we lease planes when its cheaper to buy them, we've paid hundreds of dollars for military hammers, toilet seats,,,,

What this is, is a delivery of the 'Good Old U.S. of A'

[bemildred]

20. Well, I did wonder what the alternative was? nt

[Hard Attack]

21. I don't think 'Promissory Notes' Would have Cut it.

[bemildred]

22. Checks? ATM cards? Gold? Lakers Tickets? Hmmm.

But it would seem like they should have taken notes.

[hector459]

23. Not to mention tax avoidance.

What the hell is going to happen next under this incompetent and lying regime?

[Spazito]

24. A lawsuit was filed in the United States District Court...

in Virginia against Custer Battles and others for submitting false payment claims to United States Government-funded entities involved in the reconstruction of Iraq. It was filed by two persons. I don't know if it has been dealt with in any way yet. It was filed on the 26th of August 2004.

http://www.taf.org/custerbattles.pdf

Edited to correct typo