[NYTr] JUS Says Company Bribed Officers for Work in Iraq

[All the News That Doesn't Fit]

The New York Times via Truthout - Aug 31, 2007


US Says Company Bribed Officers for Work in Iraq

By Eric Schmitt and James Glanz

Washington - An American-owned company operating from Kuwait paid
hundreds of thousands of dollars in bribes to American contracting
officers in efforts to win more than $11 million in contracts, the
government says in court documents.

The Army last month suspended the company, Lee Dynamics International,
from doing business with the government, and the case now appears to be
at the center of a contracting fraud scandal that prompted Defense
Secretary Robert M. Gates to dispatch the Pentagon inspector general to
Iraq to investigate.

Court documents filed in the case say the Army took action because the
company was suspected of paying hundreds of thousands in bribes to Army
officers to secure contracts to build, operate and maintain warehouses
in Iraq that stored weapons, uniforms, vehicles and other matiriel for
Iraqi forces in 2004 and 2005.

A lawyer for the company denied the accusations.

One of those officers, Maj. Gloria D. Davis, a contracting official
working in Kuwait, shot and killed herself in Baghdad in December 2006.

Government officials say the suicide occurred a day after she admitted
to an Army investigator that she had accepted at least $225,000 in
bribes from the company. The United States has begun proceedings to
seize Major Davis's assets, a move that is contested by her heirs.

The company has been known at various times as American Logistics
Services as well as Lee Dynamics International.

Details of the case have come to light because the company contested
the Army's decision, on July 9, to suspend it from obtaining contracts.

That forced the government to disclose elements of its case in court
papers, including a seven-page statement by an Army investigator.

Howell Roger Riggs, a lawyer for the company, denied the government's
accusations and said the company was appealing to the Army to lift the
suspension. Mr. Riggs acknowledged that the company was under a Justice
Department investigation but said that no charges had been filed
against the company or its officials.

"This is based solely on a declaration that is unsubstantiated and
uncorroborated," Mr. Riggs said in a telephone interview. "If they want
to come forward with hard evidence and accusations, we'll deal with it
at that time."

The case is now part of a broader investigation in which the Army has
sent a high-level team to review 18,000 contracts valued at more than
$3 billion that the Army contracting office in Kuwait has awarded over
the past four years.

The Army has suspended 22 companies and individuals, at least
temporarily, from pursuing government work because of contract fraud
investigations conducted in Iraq, Kuwait and Afghanistan, an Army
spokesman said Thursday. A total of 18 companies and individuals have
received a harsher penalty and are barred for a definite period of time
from seeking government work. An additional seven are currently facing
debarment.

The court papers make clear that investigators have concluded that Lee
Dynamics paid large bribes to numerous United States officials then
working in Iraq and Kuwait. One of the officials cited is Major Davis.

Another is an Army officer, identified in the Army investigator's
report as "Person B," because he is now cooperating with the
investigation. He acknowledged receiving $50,000 in cash bribes from
the company, according to the court papers. Two people with direct
knowledge of the investigation or the contracting office in Iraq at the
time said "Person B" was Lt. Col. Kevin A. Davis, who worked with an
officer in Iraq who has emerged as a focus of the criminal
investigation in the weapons case.

That officer, Lt. Col. Levonda Joey Selph, who is no longer in Iraq,
was at the heart of the effort to strengthen the fledgling Iraqi
security forces in 2004 and 2005. Colonel Selph in turn worked closely
with Gen.

David H. Petraeus, who commanded the effort at the time. General
Petraeus is now the top commander in Iraq. There is no indication that
investigators have uncovered any wrongdoing by General Petraeus.

In a brief phone conversation Thursday, Colonel Selph confirmed the
connection between her and Colonel Davis in Iraq. "I worked for Kevin
Davis," Colonel Selph said. Colonel Selph said she wanted to consult
with her lawyer before speaking further but then did not respond to
subsequent phone messages.

A woman who answered Kevin Davis's phone in Maryland and identified
herself as his wife said he was out of town and not available for
comment. She said that he had served in Iraq and later had gone to work
for Lee Dynamics after he retired from the army. It is not believed
that Kevin Davis is related to Gloria Davis.

As the case expands, investigators are looking at the possibility that
it has connections to what had appeared to be a separate major
corruption scandal centered in Kuwait. Last week, Maj. John Cockerham,
a former Army contracting officer in Kuwait, and his wife and his
sister were indicted on charges that they accepted up to $9.6 million
in bribes for Defense Department contracts in Iraq and Kuwait.

According to court documents, Major Davis also served as a contracting
officer at Camp Arifjan, Kuwait, from October 2003 to November 2004,
and awarded millions of dollars in contracts to American Logistics and
its affiliate companies during that period, raising the question of
whether the cases are related.

Lee Dynamics appears to be emblematic of the scores of companies that
have formed since the fall of the Iraqi government in 2003 to take
advantage of the billions of dollars in contracts to clothe, feed and
arm American troops in Kuwait and to sustain Iraq security forces in
Iraq.

According to a July 9 statement by Larry S. Moreland, an agent with the
Army's Criminal Investigation Command, the company's founder, George H.
Lee, and an unnamed person formed American Logistics Services, a
Kuwait-based company, to provide logistical support to the American
military.

In 2004, the company was awarded $11.7 million in contracts to build,
operate and maintain several warehouses in Iraq. The court papers
contend that as a result of bribes, the company illegally received
advance information about the contracts.

In May 2005, the document said, Mr. Lee and his son, Justin W. Lee,
shifted the company's assets and contracts to a new company, Lee
Dynamics, and its contract to maintain the warehouses was renewed in
July 2005 even though the company's performance had been abysmal, said
two American officials who were in the country at the time.

That same month, after Major Davis had moved to the Pentagon, Lee
Dynamics was awarded a $12 million warehousing contract. Before the
contract was awarded, Major Davis told George Lee that his company
would receive a "glowing report" during the bidding process, contend
the court documents filed in the government's case to seize Major
Davis's assets.

Between August 2005 and April 2006, the company transferred more than
$220,900 in three separate deposits to bank accounts controlled by
Major Davis, according to the court filings.

According to its Web site, Lee Dynamics' warehouses in Taji, Umm Qasr,
Ramadi, Mosul and Tikrit, all in Iraq, "have received, stored and
issued a large part of the more than a billion dollars worth of
materials and equipment that has been ordered for the reconstruction of
Iraq."