Tag Archive | "Corruption"

The latest corruption news from Iraq – company or government bribes, theft, stealing – brought to you by Iraq Business News

US Investigates Iraq War Recruitment Fraud

By John Lee.

BBC reports that more than 1,200 people are under investigation in relation to a US military recruitment fraud during the Iraq war.

The alleged fraud, in which referral fees were illegally collected for recruiting soldiers, is said to have cost the US government at least $29 million, and possibly as much as $100 million.

The programme paid soldiers, civilians and retirees $2,000 to $7,500 to recruit friends and family into the military, according to congressional documents.

Investigators claim that some high school principals and guidance counsellors accepted money for recruiting students who they knew were already planning to join the military.

Other recruiters illegally accepted bonuses after forcing subordinates to register as recruiting assistants, before substituting their own bank account information.

More than 700 recruiters and 200 military officers are under investigation, and several former recruiters and soldiers have been indicted on federal charges.

(Source: BBC)

(Corruption image via Shutterstock)

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KBR and Others Sued for Kickbacks

The US government has filed a complaint against Kellogg, Brown & Root Services Inc. (KBR) and Kuwaiti companies La Nouvelle General Trading & Contracting Co. (La Nouvelle) and First Kuwaiti Trading Co. (First Kuwaiti) for submitting false claims in connection with KBR’s contract with the Army to provide logistical support in Iraq, the Department of Justice announced. KBR is an engineering, construction and services firm headquartered in Houston, Texas. Kuwait-based La Nouvelle and First Kuwaiti provided transportation, maintenance and other services in support of KBR’s contract with the Army.

“We depend on companies like KBR and its subcontractors to provide valuable services to our military,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery. “We will en sure that contractors do not engage in corrupt practices at the expense of our troops abroad, while profiting at the expense of taxpayers at home.

Allegedly, KBR made claims to the government, knowing them to be false, under a contract with the Army to provide wartime logistical support, known as the Logistics Civil Augmentation Program (LOGCAP) III. The award of LOGCAP III paved the way for the company to become a critical source for logistical support services in Iraq, which included transportation, maintenance, food, shelter and facilities management. KBR performed many of these services through subcontracts awarded to foreign companies local to the region, such as La Nouvelle and First Kuwaiti.

In its complaint, filed in federal court in Rock Island, Ill., the government alleged that, in 2003 and 2004, KBR employees took kickbacks from La Nouvelle and First Kuwaiti in connection with the award and oversight of subcontracts awarded to these companies. KBR then claimed reimbursement from the government for costs it incurred under the subcontracts that allegedly were inflated, excessive or for goods and services that were grossly deficient or not provided.

For example, KBR allegedly awarded La Nouvelle a subcontract to supply fuel tankers for more than three times the tankers’ value. La Nouvelle later rewarded the KBR employee who awarded the subcontract with a $1 million bank draft. As another example, KBR allegedly continued to make monthly lease payments to First Kuwaiti for trucks KBR had already returned to the subcontractor. KBR billed the government for the costs of both of these subcontracts. The lawsuit also alleges that KBR used refrigerated trailers to transport ice for consumption by the troops that had previously been used as temporary morgues without first sanitizing them.

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Corruption and Construction in Karbala

This article was originally published by Niqash. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

Six Years to Build a Short Road: Corruption and Construction in Karbala

Despite the city’s tourism wealth, Karbala city officials say they don’t have enough money to complete important infrastructure projects, like roads and sewage systems. But critics say there are other reasons: such as corruption, the contracting of non-existent companies to do the jobs and lax contracting procedures.

Construction of a road next to Imad al-Moussawi’s house in Karbala started six years ago. But it still isn’t finished. “It’s not yet fully paved,” al-Moussawi says. “Parts were paved but other parts were not. The same thing happened with the roundabout in the middle of this road. It’s just been fenced off with iron bars and the centre has become a dumping ground for all kinds of rubbish.”

Al-Moussawi lives in the working class neighbourhood of Ghadeer. But this is not the only project in the relatively prosperous town of Karbala that remains uncompleted. A wide number of projects in various areas – roads, bridges, sewages systems – are unfinished. “We see these unfinished projects all around us and we worry about the money that is being spent on these failed projects,” al-Moussawi told NIQASH. “If that money had been spent to help hungry, poor people it would be much better.”

Apparently a lot of the projects are not being finished because the city is running out of money – that is despite it being a prosperous metropolis which, as the site of some of the most important Shiite Muslim shrines in the region, draws millions of tourists every year. The delays in construction and other projects have a major impact on the city’s all-important service sector.

“Karbala won’t be able to sign any new contracts for new services or construction projects until 2016,” Hussein Shadhan, a member of the provincial council’s religious tourism committee, said. “All of the current year’s budget will be used to finalize projects entered into previously.”

In 2012, Karbala received around IQD 200 billion (around US$167 million) from the national budget and in 2013, the city got IQD237 billion (around US$200 million). In 2014 Karbala expects to get about IQD300 billion (around US$350 million). The city also gets extra money from the government to cover expenses that it has around providing security and services to the millions of visitors it receives from Iraq and the region during major religious occasions. For example the Iraqi government gave the city an extra IQD100 billion dinars (US$83 million) to cope with the Ashura festival.

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$6b Refinery Deal to be Investigated

By John Lee.

An Iraqi parliamentary committee has asked the Commission of Integrity to investigate the contract awarded to Satarem to build a $6-billion refinery in Maysan.

Iraq Business News‘ Expert Blogger Ahmed Mousa Jiyad recently questioned the legitimacy of the contract signed with the Swiss company, prompting the Ministry of Oil to issue a statement in its defence.

Shafaaq News said the parliamentary integrity committee debated the issue at the request of Maysan’s governing council, and that the parliament’s oil and energy panel is still investigating alleged corruption in the contract.

(Source: Emirates 24/7)

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Chinese Firm Suspected of Fraud

By John Lee.

China’s Caixin has reported that the Missan Oil Company (MOC) has suspended all activities of a company called Hermic, an oilfield service company controlled by former executives of the China National Petroleum Corp. (CNPC).

Hermic is said to have won at least 12 engineering outsourcing contracts worth US$75 million from CNPC at the Halfaya oil field; the total value of contracts outsourced by the CNPC’s Halfaya operation to Hermic and its affiliated companies is estimated to reach US$115 million, a figure that apparently prompted fraud suspicions.

Caixin found that the sole shareholder of Hermic, Li Wei, is also the chairman of Hong Kong-registered DRK Energy, which has a US$20 million contract in Halfaya. Another company related to Li is Hong Kong-registered Power Petroleum Int., a company that has won more than US$20 million in service contracts on the same project. Altogether, the three companies have received about US$115 million worth contracts at Halfaya.

Three of the contracts are valued at between US$ 8 million and US$ 9 million, and are so similar that they have been described as “actually one contract … split into three smaller contracts in order to avoid regulations.

Hermic is alleged to have provided fake documents to secure contracts, and is said to be “a shell company registered in Las Vegas … The registration date is May 2010, about when CNPC entered Halfaya.

(Source: Caixin)

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Three Indicted for $23m Dinar Fraud

A federal grand indicted three men from the Toledo area for their roles in the operation of a $23 million fraud scheme involving the sale of Iraqi dinar currency and two non-existent hedge funds, said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio, and Kathy Enstrom, Special Agent in Charge, IRS-Criminal Investigation, Cincinnati field office.

Those indicted are: Bradford L. Huebner, 66, of Ottawa Hills, Ohio; Charles N. Emmenecker, 66, of Sylvania, Ohio, and Michael L. Teadt, 67, of Maumee, Ohio.

Rudolph M. Coenen, age 47, of Jacksonville, Florida, has already pleaded guilty to crimes related to his role in the conspiracy.

The men are charged with conspiracy to commit wire fraud and wire fraud. Huebner is also charged with multiple counts of money laundering, structuring and willful failure to file currency and transaction reports.

As a result of the defendants’ conduct, investors lost about $23.8 million from dinar sales and more than $700,000 from the sale of non-existent hedge fund “seats” and “placements,” according to the indictment.

“These defendants made false statements time and again to convince people to part with their savings and hard-earned cash,” Dettelbach said. “The fact that they falsely claimed one member of the conspiracy was wounded while fighting in Iraq is particularly egregious.”

“Illegal activity involving the investment industry has brought financial ruin to many Americans,” Enstrom said. “IRS Criminal Investigation is committed to unraveling complex investment schemes to ensure that the promoters of these schemes do not use the financial-services industry for personal gain.”

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Australian Oil-for-Food Case Dropped

By John Lee.

The Australian Securities and Investments Commission (ASIC) has today discontinued its proceedings in the Supreme Court of Victoria against Charles Stott and Michael Long for alleged breaches of their duties as officers of AWB Limited — formerly the Australian Wheat Board — in connection with the United Nations Oil for Food Programme in Iraq.

The discontinuance is by consent in both matters, on terms that the parties bear their own costs of and incidental to the proceeding. No finding of fault or declaration of contravention was made against Mr Stott or Mr Long.

ASIC decided to discontinue the proceedings after forming the view that it was no longer in the public interest to pursue its claims against Mr Stott, who was AWB’s former General Manager of International Sales and Marketing, and Mr Long, who succeeded Mr Stott in that role.

ASIC’s proceedings against Trevor Flugge, the former Chairman of AWB, and Peter Geary, the former Group General Manager Trading of AWB, are ongoing

In December 2007, ASIC commenced civil penalty proceedings in the Supreme Court of Victoria against six defendants for alleged breaches of their duties as directors and officers of AWB Limited. The proceedings arose from investigations conducted by ASIC following the completion of the Inquiry into certain Australian companies in relation to the UN Oil-For-Food Programme that had been established by the Australian Government.

In August 2012 Justice Robson of the Supreme Court of Victoria ordered that Andrew Lindberg, the former Managing Director of AWB be disqualified from managing corporations and pay a pecuniary penalty for contravening section 180(1) of the Corporations Act 2001 which requires company directors and officers to discharge their duties with due care and diligence.

In March 2013 the Victorian Court of Appeal ordered that Paul Ingleby, the former Chief Financial Officer of AWB, be disqualified from managing corporations and pay a pecuniary penalty for contravening section 180(1) of the Corporations Act 2001.

(Source: ASIC)

(Flag image via Shutterstock)

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US Man Jailed for Iraq Generator Theft

By John Lee.

A US man who helped steal two 10-ton electrical generators from a military base in Iraq in four years ago has been sentenced to three years in prison and ordered to pay $352,111 in restitution.

Ruebin S. Thomas, a former civilian contractor, had pleaded guilty to stealing the two generators from the Camp Victory Base Complex in Baghdad, but received a stiffer term than the two years called for at the top of the sentencing guidelines sought by prosecutors.

“It seems to me that a message needs to be sent,” said U.S. District Judge Robert E. Payne in imposing the sentence.

Thomas, who worked for Honeywell Technologies, stole two generators valued at $176,000 each in June 2009. An unidentified businessman paid Thomas $10,000 in cash, which he split with another unidentified person, said his lawyer.

(Source: Richmond Times)

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