Blog 18 Diaa Salem - Jasmine's Role In More Than $10M Fraud

2. Email Home » Industries » War & Disaster Profiteering » US: Pentagon probes PagePrinter Safe US: Pentagon probes contractor fraud on Kuwait base by Matt Kelley, USA Today October 15th, 2007 Camp Arifjan, a sprawling base of warehouses and prefabricated office buildings in the dusty Kuwaiti desert, is the center of the Army's financial operation for Iraq. It has handled more than $4.2 billion in military contracts. It's also a center for corruption investigations. U.S. authorities are investigating a web of more than $10 million in favors, bribes and kickbacks among Army officers, contractors and subcontractors at Camp Arifjan, court and military records show. So far, 13 people associated with the Army's contracting operation in Kuwait have been charged with corruption in federal courts -- the majority of the 20 corruption cases brought to date involving Army contracts for Iraq. Eight of the 13 have pleaded guilty. Two enlisted soldiers at Camp Arifjan were court- martialed for taking bribes. Six companies accused of corruption in Kuwait also have been punished administratively by Army contracting officials, records show. Cash, gifts, parties alleged Those cases involve allegations of contractors offering shopping bags and suitcases stuffed with cash, wire transfers of hundreds of thousands of dollars into offshore accounts, gifts ranging from phone cards to SUVs, and parties with food, drinks and, in one case, a prostitute, court records show. The Pentagon has 90 criminal investigations involving $6 billion worth of contracts, and a third of those probes have ties to Kuwait, Deputy Inspector General Thomas Gimble told the House Armed Services Committee last month. "How did this culture of corruption come to pass in the office in Kuwait?" committee Chairman Ike Skelton, D-Mo., demanded during a hearing on the issue. Lt. Gen. Ross Thompson, co-chairman of an Army fraud-fighting task force, acknowledged problems with oversight, but added: "I do not think it's a culture. They are, for the most part, isolated incidents." Records from the corruption investigations tell a different story. "I've experienced numerous approaches from the contractor(s) themselves for bribery," Chief Warrant Officer Peleti "Pete" Peleti Jr. said in a July 2006 confession. Peleti told Army Criminal Investigation Command agents that he accepted cash, souvenirs, meals and the use of an SUV from three contractors from 2003 to 2005.

3. He confessed to taking more than $8,000 in Iraqi currency from Mohammad Shabbir Khan, a former executive with the Saudi Arabian company Tamimi Global Co., which provided meals to U.S. troops under an Army subcontract. Khan hosted gatherings at a "party house" in Kuwait for Army contracting officers and contractors, Peleti wrote. "I've spent approximately 10-12 times attending parties with other contractors and military personnel," he added. After confessing, Peleti agreed to cooperate with prosecutors in the wider corruption probes and pleaded guilty to one bribery charge for accepting $50,000 cash from an executive of Gulf Catering Co. seeking to supply napkins and cutlery to U.S. troops. In July, Peleti filed a motion to withdraw his plea, arguing that he wasn't guilty of bribery because he had no power to award the contract. Khan is serving a 51-month prison term after pleading guilty in a separate case to paying $133,000 in kickbacks to Stephen Seamans, a former employee of KBR, which awarded the subcontract to Tamimi. Khan's guilty plea says the scheme began in October 2002, when he hosted a birthday party for Seamans and provided him with the services of a prostitute. Seamans also pleaded guilty. He was released from prison last month after serving about eight months of a one-year term. The biggest bribery case of the Iraq war so far involves Army Maj. John Cockerham, a former contracting officer at Arifjan, who is accused of taking $9.6 million in bribes from at least eight companies seeking contracts to provide bottled water and other supplies. Other corruption cases Those linked to Cockerham include some involved in other cases: *Maj. Gloria Davis, a fellow contracting officer at Arifjan who worked on several contracts with Cockerham. Davis killed herself in December, a day after admitting to Army investigators that she took $225,000 in bribes from contractor Lee Dynamics International, federal court records say. Lee Dynamics also hired Davis' son, Damien Thomas, the company's lawyer says. The Army suspended Lee Dynamics from contracting in July. *Diaa Salem, a businessman from Kuwait whom Cockerham named as a business partner when creating a Texas company in 2004. The Army barred Salem and his firm, Jasmine International Trading, from getting contracts for a year in 2006 in a separate case. In that case, two Army soldiers working at Camp Arifjan's finance office were court-martialed for taking $7,000 from Salem to process Jasmine's payments more quickly, according to Army records released to USA TODAY under the Freedom of Information Act. Davis' son and daughter are challenging the government's efforts to seize $177,000 prosecutors say are proceeds from Lee Dynamics bribes. Their lawyer, Lars Liebeler, declined to comment on Thomas' job. Liebeler said the siblings do not want to discuss the case. Howell Riggs, Lee Dynamics' lawyer, said founder George Lee hired Thomas as a trainee.

4. "Mr. Lee was motivated by a desire to help a young black man see a different life than the life of an unemployed minority learning from the college of street life," Riggs said in an e-mail. "Other than expressing her distress about her son's situation, Maj. Davis played no role in LDI's decision" to hire Thomas. Cockerham, in jail since July, has pleaded not guilty. "We're going to be fighting the charges," said his attorney, Jimmy Parks. In response to the problems at Camp Arifjan, the Army has reorganized its contracting office in Kuwait, replaced its leaders, added staff and provided more ethics training, according to Thompson, the co-chairman of the Army contracting fraud task force. Thompson told the House panel that officials are examining all of the more than 18,000 contract actions from Kuwait since October 2002 and plan to transfer oversight of major contracts to an Army financial center in Illinois. The Army also created a contracting corps specially trained for military operations such as the Iraq war to help prevent future problems, Thompson said.