Special Reports
Bribery and fraud at heart of defense contracting work in Iraq and Afghanistan
By Wayne Madsen
Online Journal Contributing Writer


Jul 28, 2009, 00:17

(WMR) -- WMR has learned from a knowledgeable contractor who served in Iraq and Afghanistan that a number of large U.S. defense contractors have been involved in questionable deals to land major contracts in countries that made up the �Coalition of the Willing� that invaded and occupied Iraq.

The companies named by the contractor include Booz Allen of McLean, Virginia, where Donald Rumsfeld�s Comptroller Dov Zakheim took a job after resigning in 2004; Lockheed Martin; and VSE Corporation of Alexandria, Virginia. In December 2003, a Government Accountability Office (GAO) audit concluded that there was $1.6 billion in lost funds from the war in Iraq and on information technology contracts.

VSE provided �support services� to the U.S. military in Iraq and Afghanistan.

WMR has learned that VSE and Lockheed Martin�s Tokyo representative were involved in distributing $2 million in �black funds� to bribe South Korean diplomats and politicians who were involved in crafting an international arms tender from South Korea to purchase from the United States F-15E Strike Eagle fighter jets fitted with Lockheed Martin�s Low Altitude Navigation and Targeting Infrared for Night (LANTIRN) system. The competitors on the potential $7 billion contract with South Korea included companies representing the Eurofighter, as well as the Russians.

The back room dealing primarily occurred in 2006 and the U.S. embassy in Seoul helped in arranging payments of untraceable cash for several South Korean politicians. The U.S. ambassador to South Korea at the time was Alexander Vershbow, who was nominated in March 2009 by President Obama as Assistant Secretary of Defense for International Security, a post in which Vershbow oversees foreign military sales. 

Successive South Korean governments have been wracked by bribery scandals, some involving top retired armed forces and police commanders and, in one case, the South Korean tax chief.

WMR�s source stated that Booz Allen�s representative for arms sales to Egypt had previously been responsible for the sale of $55 billion of de-commissioned U.S. military hardware to countries friendly to the United States. The same Booz Allen representative to Egypt allegedly was also working for Lockheed Martin�s rocket propulsion division in the deal to sell the fighters to South Korea. The dubious U.S. arms dealing based out of Tokyo also involved, according to our source, a wealthy Pakistani businessman from Lahore, a Saudi prince, and a Japanese firm based in Yokohama.

In February of this year, two Japanese businessmen revealed that they were involved in the secret A. Q. Khan nuclear acquisition ring that saw Pakistan serve as a hub for the proliferation of nuclear technology to Pakistan, Iran, Libya, Saudi Arabia, and North Korea. One of the businessmen worked for Western Trading, a firm headquartered in Tokyo.

The U.S. arms dealing team in Tokyo got its start after the outbreak of war with Iraq. WMR has learned that then-British Prime Minister Tony Blair was deeply involved in British profiting from major contracts involving U.S. and U.K. defense contractors supporting the Iraq war effort. The pay back for the contractors was lucrative defense contracts from other countries in the �Coalition of the Willing,� including South Korea, Italy, Bahrain, and Japan and �soft partners� like Egypt, Saudi Arabia, Greece, and Turkey.

Allegations of bribery payments to South Korean officials suggests that there were systematic violations of the U.S. Foreign Corrupt Practices Act by American defense contractors during the Bush administration. Such payments in return for contracts are prohibited by the U.S. law. Another contractor in Iraq, Titan Corporation, came under a federal probe in 2004 for paying bribes to foreign officials in return for providing communications equipment. The revelations about Titan surfaced as Lockheed Martin prepared to purchase the firm. Lockheed Martin later scrapped the merger deal. Titan was later acquired by L-3 Communications.

A bribery scandal involving bribes paid by Lockheed to Japanese Prime Minister Kakuei Tanaka led to his conviction and imprisonment in 1976 for granting contracts to Lockheed in return for $1.7 million in bribes paid between 1973 and 1974. The scandal also involved officials of Japan�s Marubeni Trading Corporation, Lockheed�s agent in Japan. Japanese transportation officials, including the Transport Minister, were also convicted of accepting bribes from Lockheed. The bribery scandal also involved Prince Bernhard of the Netherlands, husband of Queen Juliana, who admitted receiving a $1.1 million bribe from Lockheed in return for steering Dutch fighter plane contracts to Lockheed. Bernhard was a driving force in establishing the Bilderberg Group, thought by many to be a behind-the-scenes influence-peddler of a globalist policy among industrialized nations.

Lockheed was also accused of paying $2 million in bribes between 1970 and 1971 to a top Italian politician code-named �Antelope Cobbler� in return for a contract to sell 14 C-130 Hercules aircraft to Italy. Although he flatly denied the charges, suspicions swirled around Italian President Giovanni Leone, who died in 2001, as the actual identity of Antelope Cobbler.

The Lockheed bribery scandal resulted in the enactment of the Foreign Corrupt Practices Act of 1977.

In 1995, Lockheed paid a $24.8 million fine for bribing an Egyptian official in return for a $79 million contract to provide three C-130 Hercules planes to Egypt. Lockheed Aeronautical�s director for Middle East and North African sales, Allen Love, pleaded guilty to paying and covering up the bribes and Suleiman Nassar, Lockheed�s regional vice president for Lockheed International, fled to Syria to avoid prosecution.

In 1979, four McDonnell Douglas top executives were charged witb paying bribes to Pakistani officials in return for Pakistan International Airways purchase of four DC-10 aircraft. The firm was also charged with bribing South Korean and Venezuelan officials in return for aircraft contracts.

Previously published in the Wayne Madsen Report.

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