Monday, August 21, 2006
Monday, August 21, 2006 Tens of billions of dollars have been spent on rebuilding Iraq, so if a federal judge says that a few million that was obviously misspent can't be recovered because of a technicality, should that be cause for alarm? Oh, yes, indeed it should. In a ruling made public Friday, U.S. District Judge T.S. Ellis III said that Custer Battles LLC, a Fairfax, Va., contractor, wouldn't be forced to pay a $10 million jury verdict because the victim of the company's fraud was the Coalition Provisional Authority, which was formed to run Iraq until a government was established. The company's accusers, Ellis said, failed to prove that the U.S. government was defrauded. The ruling has the effect of making post-war Iraq a legal no-man's land where billions of U.S. tax dollars were spent — and at least tens of millions misspent — with no mechanism for holding thieves to account. The implications go beyond Custer Battles to every private contractor operating in Iraq. The ruling did not come as a complete surprise, since the judge had made it clear that he was uncomfortable with the legal status of the Coalition Provisional Authority. It was incumbent on President Bush's Justice Department to jump in on the side of the plaintiffs and make it clear to the judge that the United States government considered the CPA to be an entity of the United States and that any fraud perpetrated against the CPA was a fraud against the United States and its taxpayers. The case shouldn't have been that hard to make. President Bush signed an executive order in November 2003 declaring the CPA "an entity of the United States government." And Custer Battles, as well as other contractors operating in Iraq, were often paid in cash: six-inch thick stacks of $100 bills, still wrapped in plastic, fresh from the U.S. Mint. Newsweek magazine ran a picture of CPA officials standing behind a tabletop loaded with hermetically sealed fistfuls of C-notes in April 2005. One such cash payment to Custer Battles was for $2 million. Is the Justice Department simply inept or is it malfeasant that it couldn't make a case for protecting the United State taxpayers against avaricious war profiteers? Given all that has gone wrong in Iraq, shouldn't the Justice Department be determined to hold to account anyone who took a U.S. $100 bill without providing $100 worth of value? Suit's background The lawsuit was brought by a former Custer Battles employee who had sued under a whistle-blower statute, alleging that the company used shell companies and false invoices to vastly overstate its expenses on a $3 million contract to assist in establishing a currency to replace the Iraqi dinar used during Saddam Hussein's regime. The jury agreed there was fraud and returned a $10 million verdict, because the law calls for triple damages, plus penalties, fines and legal costs. The judge's ruling puts in question a separate suit not yet heard regarding an even larger contract Custer Battles had to provide security at the Baghdad airport. Among other transgressions, the company has been accused of confiscating equipment found at the airport, repainting it and charging the government for it. And there are allegations of fraud by much larger contractors, such as Halliburton and Bechtel, who were working on contracts worth not millions, but billions. If the ruling on this case is allowed to stand as precedent, greedy contractors will be allowed to laugh all the way to the bank with hundreds of millions of unearned payments that came directly from the pocket of U.S. taxpayers. It is time for Congress to step in and demand that the administration explain its decision not to vigorously pursue a court ruling that would have made it clear that money stolen from the CPA was money stolen from the U.S. government. Congress must also demand that Attorney General Alberto Gonzales take personal responsibility for seeing that the Justice Department joins the appeal in this case and joins any other case in which it is necessary to convince a court that any dishonest defense contractor in Iraq did, indeed, steal from the American people and will be held to account. Conservatives in Congress have long railed against allegations of fraud in the oil-for-food program that was overseen in Iraq by the United Nations. Let's hope they can be just as outraged by fraud that may have impeded the U.S. post-war rebuilding effort in Iraq.