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Daily Column
US Papers Tue: KBR In Hot Water Over Fraud
3 Koreans Found Guilty of Iraq Corruption, Situation in Basra
By DANIEL W. SMITH 05/05/2009 02:00 AM ET
US tax dollars lost in fraud and corruption are the main focus today, with good old KBR at the center of most investigations. As usual, the numbers are staggering. Also, Basrans enjoy safety, but few jobs, and Adm. Mike Mullen says that Afghanistan is officially on the front-burner, instead of Iraq.

Overbilling, Bribery, and Extortion
Two articles from the states develop the story of graft in Iraq.

Ellen Nakashima of the Washington Post writes that, In testimony before the bipartisan Commission on Wartime Contracting, April G. Stephenson, director of the Defense Contract Audit Agency, said that KBR, the Army's largest contractor in Iraq and Afghanistan, is linked to "the vast majority" of suspected combat-zone fraud cases that have been referred to investigators, as well as a majority of the $13 billion in "questioned" or "unsupported" costs.

The article isn’t at all ambiguous – any folks who were high-level KBR managers in Iraq in past years might find it uncomfortable reading. 32 separate cases have been sent to the inspector general by investigators. Says Stephenson, "I don't think we're aware of a program, contract or contractor that has had this number of suspensions or referrals.”

Just how competitive the bidding was for the majority of KBR’s contracts is looked at by Nakashima. The answer? Not so much.
Stephenson also revealed that some $553 million in payments have been suspended or blocked because contract officials questioned them or said they were invalid. The payments were run up by KBR in Iraq, said commissioner Charles Tiefer, a contract law professor at the University of Baltimore.

The commissioners cited a May 1 letter to Defense Secretary Robert M. Gates from Sens. Claire McCaskill (D-Mo.) and Susan Collins (R-Maine), calling on the Pentagon to do more to recover more than $100 million in overcharges and excessive profits associate with KBR employees suspected of fraud.
In what the New York Times’ James Glanz, Eric Schmitt and Choe Sang-hun call “a new front in the rapidly expanding investigation of corruption in Iraq”, three South Korean military officers have been convicted of leading an extortion and bribery scheme in a reconstruction program in northern Iraq that was financed with over $70 million of United States taxpayer money.

Another officer, a colonel who directed the Korean Army’s reconstruction efforts in Iraq, has received a military reprimand, and a “senior American official” told the trio of Times writers that the official inquiry was expanding to include possible involvement of Kurdish government officials and others. They write an Iraq corruption story with a new dimension – international relations.
. The case is seen as deeply embarrassing by Korean military and civilian officials, who partly justified the mission as a necessary show of loyalty to the United States. “There is no doubt that this is a shameful incident,” a Korean Defense Ministry official said. “Our unit had done an honorable job during its four-year-and-three-month stay in Iraq. We hope that these few people did not damage that record.”

Although the convictions for accepting bribes of more than $25,000 in one branch of the scheme became official last month, they have not been previously reported in the West.
From Iraq
The Christian Science Monitor’s Jane Arraf files from the southern city of Basra, where security has been vastly improved since one year ago, when militias ran the streets. In their absence (though they are often described as “waiting”), safety has become a reality, but so has extremely high levels of unemployment. Services, such as electricity and water, are pitifully low.

Arraf describes Basra through its people, as is common in her writing.
In the streets today, schoolgirls in white head scarves run to school past rivers of sewage. Down one of the twisting alleys, Raid Thamer Wadi sits outside his crumbling house in a wheelchair. He lost both legs two years ago, he says, when militiamen shot him as a punishment for drinking.
Particularly unflattering is her description of the British tenure in Basra, in the section entitled “False US and British Promises.”
Most Iraqis say that they (British troops) will be remembered for withdrawing from the city when it got too dangerous. ...As weapons from Iran came through porous borders, Shiite militias gained strength until they took Basra and its lucrative port. The British, under mortar attack at their base in the city withdrew to the airport, calling it "strategic overwatch."
Military Matters
That US military resources are being redirected from Iraq to Afghanistan has been apparent for a while, but Ann Scott Tyson of the Washington Post writes that Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, finally came out and said it for the first time. He designated the war in Afghanistan as the military's "main effort,” or most important combat mission. Fighting "isn't over" in Iraq, he said, speaking of a country where U.S. troops still number at 136,000.

There isn’t a lot of new information, but Tyson puts the announcement in perspective a little (with a bit of a comparison to an announcement from an earlier year (and an earlier administration) when Iraq was clearly the priority. She then goes on to lay out some of the key security concerns in Afghanistan and Pakistan.

Wall Street Journal, USA Today, no Iraq coverage.

Comments on the US Papers roundup are welcome at ds@iraqslogger.com


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