Missing money, a murder mystery, spooks and more

For years, a few brave souls have dared to talk about the missing Iraq reconstruction money. Now we learn that the problem was worse than ever we thought. From Juan Cole:

The US Special Inspector General for Iraq Reconstruction (SIGIR) has issued a report on as much as $125 billion unaccounted-for reconstruction and military equipment money in Iraq. Patrick Cockburn at the Independent quotes a US businessman active in Iraq after the US invasion who observed that Iraq was looted alright, but the big looting did not come at the hands of poor urbanites but rather at that of US officers. Although immense peculation was engaged in by Iraqi government and military figures, it seems unlikely that their US military minders were not complicit in the corruption.

The fraud involves dwarfs Madoff. From the Independent piece, cited above:

"I believe the real looting of Iraq after the invasion was by US officials and contractors, and not by people from the slums of Baghdad," said one US businessman active in Iraq since 2003.

In one case, auditors working for SIGIR discovered that $57.8m was sent in "pallet upon pallet of hundred-dollar bills" to the US comptroller for south-central Iraq, Robert J Stein Jr, who had himself photographed standing with the mound of money. He is among the few US officials who were in Iraq to be convicted of fraud and money-laundering.

The photo above shows Stein's money, although that is not Stein guarding it. The story was covered by the NY Times in 2006, although it received insufficient attention at the time.

Inquiries are focusing on specific military figures. I'm not sure that guys like that would know how to hide billions of dollars. They may have acted on behalf of others.

Is there a murder mystery in this tale? But of course...

In the expanded inquiry by federal agencies, the evidence of a small-time US businessman called Dale C Stoffel who was murdered after leaving the US base at Taiji north of Baghdad in 2004 is being re-examined. Before he was killed, Mr Stoffel, an arms dealer and contractor, was granted limited immunity from prosecution after he had provided information that a network of bribery – linking companies and US officials awarding contracts – existed within the US-run Green Zone in Baghdad. He said bribes of tens of thousands of dollars were regularly delivered in pizza boxes sent to US contracting officers.

"A small-time US businessman"? Hm. Seems that Mr. Stoffel may have been something a bit more. An anti-U.S site in Iraq refers to him as a "CIA shadow director" in Iraq. That description is certainly hyperbolic, but other sources speak of a CIA link. Here's the Wikipedia version (and don't scoff -- Wikipedia is usually a good starting point when it comes to spy stuff):

Some time after his graduation, he became involved in international arms dealing including an attempt to acquire X-31 missiles from the Ukraine for study by the United States Navy. According to the Zambezi Times, he was a "mysterious arms dealer", and the Australia Daily Telegraph called him "a CIA Operative."

Stoffel had contacts, according to court documents, in Czech Republic, Hungary, Ukraine, Russia and Bulgaria.

He became famous for his relationship with the Makarov pistol, which became referred in gun circles as the "Stoffel Makraov." This pistol was sold through his company Miltex. His company Miltex had a relationship with the Bulgarian Arms company Arsenal to market firearms.

Sounds pretty damned spooky to me. The guy looks like a latter-day Mitch WerBell. He was originally recruited not by the CIA, but by the Office of Naval Intelligence (ONI) -- and he worked closely with none other than Israeli spy Jonathan Pollard:

Stoffel despised Pollard and told friends and associates for years afterwards that Pollard had been unprincipled, a money-grubber who claimed heartfelt allegiance to Israel only as a way out of trouble.

Stoffel left official government service in 1989, although his wide-ranging dealings clearly benefited factions within the intelligence community.

Although Stoffel's firm had only five employees, he was able to get major Iraq reconstruction contracts, thanks to high-powered Republican lobbyist Charles Black. Joe Conason says that Stoffel's Iraqi patron was none other than Achmed Chalabi (see here and here):

Last January, the Associated Press published a fascinating and thorough feature story about a $300 million deal awarded by the Iraqi Defense Ministry to a consortium that included Robert Irey and his brother William Irey. The Irey brothers had joined up with a shadowy arms dealer named Dale Stoffel, whose Iraqi patron was none other than Ahmed Chalabi -- the former exile leader and alleged conman who provided deceptive intelligence about Saddam Hussein's "weapons of mass destruction," and who has remained a favorite of Pentagon neoconservatives despite his checkered history. With Chalabi's support, Stoffel and the Ireys won a bid to rebuild military equipment for the Iraqi armed forces and market military scrap metal from all over the war-ravaged country.

Clever as Stoffel's scheme may have been, it ended very badly. He soon became embroiled in bitter financial disputes with the Iraqi Defense Ministry, which he accused of corruption. In December 2004, not long after Stoffel started making official complaints to Washington, unknown assailants murdered him and an American associate in a mysterious drive-by shooting near Baghdad.

Some of you may find, within this paragraph, a possible clue as to who might have had a motive to order the hit. Robert Irey is married to Diana Irey, a Pennsylvania politician who ran against Murtha (and lost). No, I don't think Irey did it. We will soon name a much likelier suspect.

Incidentally, we learn in this important L.A. Times piece that General Petraeus supervised the project. (None of the recent stories on the missing billions have mentioned Petraeus.)

Stoffel's company was called Wye Oak Technology, of Monongahela, Pa.

Allawi wanted at least one tank brigade in place before the Jan. 30 national assembly election. The deadline put pressure on the U.S. military to deliver the tanks quickly. Petraeus backed Stoffel, a weapons dealer with extensive experience in the Eastern European equipment used by the Iraqi army, as a man who could obtain and deliver the goods. Stoffel had a long history of working with the U.S. government. He acted on behalf of U.S. intelligence agencies to covertly buy foreign military equipment for research and testing by the U.S. military, documents show.

In a letter to Iraqi Defense Minister Hazem Shaalan on July 20, 2004, Petraeus pledged to "fully support" Stoffel, who proposed to refurbish Iraq's tanks and personnel carriers and buy new equipment from Eastern European sources. On Aug. 16, Stoffel's firm, Wye Oak Technology of Monongahela, Pa., signed a "broker's agreement" with the Defense Ministry, giving Stoffel the exclusive right to buy tanks and other equipment for the mechanized division on the ministry's behalf. Stoffel was awarded the contract without competitive bidding. The contract was structured so that Stoffel was paid a percentage of the price of goods purchased — an arrangement barred by U.S. law but allowed in Iraq.

Iraqi Deputy Defense Minister Mashal Sarraf insisted on another unusual provision, according to sources with knowledge of the contract: He required that Stoffel conduct all financial transactions through middleman Zayna.

The Zayna mentioned here is one Raymond Zayna, the middleman between Stoffel and the Iraqi government. He's a shadowy Lebanese businessman. This is not the first time the "seedy of Lebanon" have come to our attention. (Remember good old Bill Smatt?)

When Stoffel blew the whistle, he was particularly incensed by the role played by Zayna. Naturally, Stoffel was not bothered so much by corruption per se; he was pissed off because he wasn't getting his cut.

After Stoffel's murder, the deal continued with Zayna at the helm. Zayna, it seems, may be at the center of a lot of this fraud -- not just the part of it that involved Stoffel. His contacts allowed him to stash a much of the loot in Lebanese banks.

Zayna worked with one Mohammed abu Darwish, another Lebanese who has been up to all sorts of mischief over the past eight-or-so years. This site quotes extensively from Beirut newspapers looking into the Zayna/Darwish money route. This bit may be of particular interest...

Mohammed abu Darwish's name also surfaces in connection with a lawsuit against Fairfax, Virginia-based Custer Battles by a former executive of that company, William Baldwin, and one of its subcontractors, Robert Isakson—who together accuse the company of defrauding the U. S. government.

A $33,000 food order in Mosul was billed to the U.S.-led interim government of Iraq at $432,000. Electricity that cost $74,000 was invoiced at $400,000. Even $10 kettles got a 400 percent markup.

Documents unearthed as part of a whistleblower suit against Fairfax, Va.'s Custer Battles reveal for the first time the extent to which the defense contractor is accused of gouging the Coalition Provisional Authority, which governed Iraq following the U.S. invasion of the country in 2003.

Among those documents is a spreadsheet that appears to show the company billing the government nearly $10 million for dozens of items, including food, vehicles, and cooking pots. The total cost to Custer Battles, according to the spreadsheet, was less than $4 million—a profit margin of 150 percent, far higher than the 25 percent margin allowed under its contract.

How does Darwish figure into that scandal? Well, he may be the "Mr. Big" behind Zayna...

Darwish ("a citizen of Lebanon who resides in Lebanon and Iraq") is named as a defendant in the lawsuit in his capacity as founder of Custer Battles Levant, the Beirut-based arm of the company, and a company called Secure Global Distribution, headquartered in the Cayman Islands. According to the complaint, Darwish and his co-defendants "were directly involved in the scheme to use intermediary shell companies to obtain excess profit mark-ups on the cost-plus items in the ICE [Iraqi Currency Exchange] contract, and to bill for items and services that they did not provide."

The story goes on to discuss other Lebanese businessmen.

In previous posts, we've already noted the relationship between the "Seedy of Lebanon" and the Bush family. Does anyone really believe that the pilfering of Iraq Reconstruction Funds could have occurred without the acquiescence of the highest figures within the Bush administration?

The FBI has investigated all of these connections. But that investigation has not resulted in any prosecutions or public reports.

(There's more about Darwish here.)

Can we fit Barack Obama and his shady Chicago pals into the picture? Well...maybe. Sort of.

We know that Stoffel blabbed about Zayna. The person he blabbed to was John A. "Jack" Shaw, who was the deputy undersecretary of Defense for international technology security. I've talked about Shaw before, not always in a flattering fashion. (I did not trust what he had to say about the Al-Quaqaa weapons facility -- see here and here -- although perhaps I should reconsider my skepticism.) Shaw, whatever else you may say about him, was a loose cannon -- which is why he was "axed to leave" after he started to draw attention to the massive corruption in Iraq.

He also claimed to have uncovered a conspiracy by London-based Egyptian tycoon Nadhmi Auchi to take over Iraq's cellphone service (see my post "Iraq, Disconnected"). He himself fell under suspicion of attempting to line his own pockets with cell phone licensing agreements.

In a letter written to Defense Secretary Rumsfeld on December 3, 2004--the same day that Stoffel's raised his official warnings about graft--Shaw accused senior Pentagon officials of over $265 million in bribes, missing and misappropriated funds pertaining to Iraq's cellphone service. According to Shaw's letter, figures involved in the scandal included Douglas Feith, his former law partner Mark Zell, Ahmed Chalabi and others. On December 10, the Defense Department dismissed Shaw from his position.

No, this passage does not -- in and of itself -- connect Zayna/Darwish to Auchi, except to the extent that Shaw tried to blow the whistle on both scandals. Are the two problems intertwined? You'll have to ask Shaw.

Evelyn Pringle has written extensively about Auchi, an international crook with connections to Tony Rezko, Barack Obama's original patron. Nadhmi Auchi is the fellow who wired $3.5 million to Tony Rezko (who later claimed to be a near-pauper at the time) which allowed Rezko to buy that infamous property for Barack Obama. Nobody quite knows why Auchi forked over millions to help an Illinois "progressive" politician.

And now all good progs are hoping that Obama will clean up the mess. Heh heh heh heh....