January 23, 2005

Bucking The System

An interesting but disturbing story from the Los Angeles Times on Thursday regarding the deaths last month of businessmen and arms contractors Dale Stoffel and Joseph Wempel in an ambush in Iraq. (The online article is already archived, but the full text is at the "continue reading" link below. Via Laurie Mylroie- Ed.)

The killings came after Stoffel alerted senior U.S. officials in Washington that he believed Iraqi Defense Ministry officials were part of a kickback scheme involving a multimillion-dollar contract awarded to his company, Wye Oak Technology, to refurbish old Iraqi military equipment...

...Stoffel's death has prompted new worries about the integrity of the reconstruction effort in Iraq, which has been plagued by accusations of corruption and cronyism almost from the start.

One U.S. official said that corruption problems involving middlemen and kickbacks were become increasingly widespread as the Iraqis began to exercise more control over the contracting process.

Stoffel and Wempel were two businessmen having trouble getting paid for their company's work, but who were also reporting what they assessed to be fraud and corruption in the contracting process. They had written a letter to Rumsfeld and tried to enlist help from Sen. Rick Santorum.

It's disturbing not just because two Americans are dead. But also because it looks we could be allowing to happen under our reconstruction auspices the same kind of skimming and corruption by Iraqi Defense bigwigs that we found so odious in the U.N.'s Oil-For-Food fraud.

Thickening the plot is the Times disclosure that Stoffel a has a track record of doing business in weapons with the Pentagon:

Stoffel worked on a top secret U.S. program in the 1990s to buy Russian, Chinese and other foreign-made weapons for testing by the U.S. military, according to documents and interviews...

...Stoffel had long been active in the arms business. Since at least the mid-1990s, he worked with U.S. intelligence officials to obtain enemy weaponry to allow the U.S. military to examine and test the items, according to contract documents obtained by The Times.

In this work, Stoffel developed contacts across Eastern Europe, particularly in Ukraine and Bulgaria. He purchased weapons including surface-to-air missiles and antiaircraft systems, the documents show.

Not that there's anything wrong with that. Our military intelligence people need to be evaluating the weapons that might be sold to our enemies. But it might help explain why the Stoffel and Wempel killings were reported in The Australian like this:

A militant group killed two US intelligence agents in Iraq on December 8, according to a video released on an Islamist website today.

The video shows two armed and masked men reading a statement announcing the deaths of the two men near Taji, north of Baghdad, described as "two members of the Pentagon and the CIA".

For good measure the dead Americans were accused by the killers of having taken "archaeological artefacts belonging to (Mesopotamian) heritage and secret documents". Huh? The Islamic group that did the killing, Saraya al-Jihad Al-Islami, was, according to the Times, "not previously known to terrorism experts".

Sounds to me more like "silencing the whistle-blowers" than it does your garden variety "killing the infidels".

UPDATE 1/25: Rodger Morrow has much more on the Stoffel and Wempel killings at his terrific blog This isn't writing, it's typing. Check it out.

Los Angeles Times

U.S. Contractor Slain in Iraq Had Alleged Graft

The weapons dealer had accused officials in the Defense Ministry of a
kickback scheme.

By Ken Silverstein, T. Christian Miller and Patrick J. McDonnell
Times Staff Writers
January 20, 2005

WASHINGTON - An American contractor gunned down last month in Iraq had accused Iraqi Defense Ministry officials of corruption days before his death, according to documents and U.S. officials.

Dale Stoffel, 43, was shot to death Dec. 8 shortly after leaving an Iraqi military base north of Baghdad, an attack attributed at the time to Iraqi insurgents. Also killed was a business associate, Joseph Wemple, 49.

The killings came after Stoffel alerted senior U.S. officials in Washington that he believed Iraqi Defense Ministry officials were part of a kickback scheme involving a multimillion-dollar contract awarded to his company, Wye Oak Technology, to refurbish old Iraqi military equipment.

The FBI has launched an investigation into the killings and whether they might have been retaliation for Stoffel's whistle-blowing activities, according to people familiar with the inquiry. The FBI declined to comment.

Stoffel, of Monongahela, Pa., made his allegations in a Dec. 3 letter to a senior Pentagon official and in a meeting with aides to Sen. Rick Santorum (R-Pa.). Soon after, Stoffel was summoned to the Taji military base in Iraq by coalition military officials to discuss his concerns about his contract. He complained about payment problems with a mysterious Lebanese businessman designated by the Iraqis as a middleman, sources said.

As Stoffel, Wemple and an Iraqi interpreter left the Taji base in a car Dec. 8, another vehicle rammed theirs head-on. Two masked men jumped out and executed the two Americans in a fusillade of bullets, according to news accounts at the time. Their interpreter fled and is missing.


Stoffel's killing drew scrutiny from investigators not only because of his whistle-blowing activities but also because of his mysterious and controversial past. Stoffel worked on a top secret U.S. program in the 1990s to buy Russian, Chinese and other foreign-made weapons for testing by the U.S. military, according to documents and interviews.

Stoffel's Iraq deal was the first large-scale contract issued and funded directly by the Iraqi government for military purposes, and was crucial for training and equipping the Iraqi army, considered a key component of the U.S. strategy for exiting Iraq.

Failing to stop the alleged corruption "will set a very negative precedent for subsequent dealings with the Iraqi military, harm U.S. companies seeking to do business according to U.S. law, and be the source of embarrassment and political tension to the Bush administration with respect to the effort in Iraq," said Stoffel's letter to the Pentagon, which was obtained by The Times.

According to the letter, Stoffel's Pennsylvania-based firm was awarded a contract last year by the Iraqi Ministry of Defense to help overhaul its aging Soviet-era military equipment, mostly T-55 tanks and artillery. Wye Oak Technology delivered some refurbished tanks in November to Iraq's 1st Mechanized Brigade.

As part of the contract, senior Defense Ministry officials required Stoffel's payments to be processed through a Lebanese middleman appointed by the ministry, according to the Dec. 3 letter.

By November, Stoffel was seeking a payment of $24.7 million, submitting invoices directly to the Defense Ministry. The ministry, in turn, cut three separate checks, sending each of them to the Lebanese businessman for "processing," people familiar with the contract said.

The middleman's role was to act as a sort of escrow account for the financial transactions, reconciling invoices and dispensing the payments, sources said.

But after the businessman failed to send him the money, Stoffel complained to U.S. officials in Washington that he suspected that the middleman's true role was to route payments back to Iraqi officials in the form of kickbacks, people familiar with the contract said.

He also told the Pentagon in his letter that the middleman was withholding payments in an attempt to force him to use subcontractors linked to the middleman and to Defense Ministry officials.

Stoffel spoke about his concerns with representatives from Santorum's office. Santorum, in turn, wrote Defense Secretary Donald H. Rumsfeld on Dec. 3 asking him to raise the issue with Iraqi Defense Minister Hazem Shaalan.

"I would appreciate comment on how the Department of Defense can assist" Wye Oak Technology in recovering payment for services provided, Santorum wrote.

Stoffel also met with John A. "Jack" Shaw, deputy undersecretary of Defense for international technology security, whose office monitored weapons sales to Iraq. In a later letter, Stoffel urged Shaw to require that a known accounting firm be hired to oversee the contract. He warned in his letter that the weapons contract "has fallen prey to . corruption and self-dealing."

Shaw was profiled in Times stories last year after coming under investigation in an unrelated matter. He was subsequently removed from his job. His office forwarded Stoffel's complaint to the Department of the Army.

"We are looking into the issue," said Army Lt. Col. Joseph Yoswa, a Pentagon spokesman.

One source said that Stoffel's complaints trickled down to British Brig. Gen. David Clements, the deputy commander of the mission to train Iraqi troops. Clements called together Stoffel, Wemple and the Lebanese businessman to sort out the problem.

Clements summoned Stoffel from the U.S. to Iraq meet at the Taji military base in early December, several sources said.

After several days of discussions, Clements told the businessman to release the money, sources said. On Dec. 8, Stoffel and Wemple were returning to Baghdad with their Iraqi interpreter when they were attacked.

The attackers stole Stoffel's computer from the scene. About a week later, a video showing photographs and identity documents of Stoffel and Wemple was posted on a website frequently used by insurgent groups. A group calling itself the Brigades of the Islamic Jihad claimed responsibility for the killings. The group was not previously known to terrorism experts.

The timing and the unusual details of the killings have raised suspicions in the U.S. and Iraq that the video was a ruse to disguise an assassination.

"The video was very unusual," said Evan Kohlman, a terrorism consultant who examined the video.

"It didn't show bodies or the killing, but only photos, documents and materials taken from the bodies. It is certainly possible that someone [other than insurgents] manufactured the video."

Army Capt. Steve Alvarez, a U.S. spokesman, acknowledged that Clements had spoken with Stoffel, but denied that Stoffel had mentioned "any corruption" during their conversations.

Instead, he said that Stoffel had complained about the "difficulties he was experiencing in getting the start-up funds" for equipping the mechanized brigade. Clements refused a request for an interview.

"There really isn't much more to our involvement," Alvarez wrote in response to a query from The Times. He referred further questions to the Iraqi Ministry of Defense.

Nick Hutchinson, the U.S. senior advisor to the Ministry of Defense who also met with Stoffel, did not respond to requests for comment.

An Iraqi Defense Ministry spokesman arranged an interview with a senior defense official, but then forbade a reporter to ask questions about the contract, calling it too "dangerous."

The Lebanese businessman could not be reached for comment.

Stoffel had long been active in the arms business. Since at least the mid-1990s, he worked with U.S. intelligence officials to obtain enemy weaponry to allow the U.S. military to examine and test the items, according to contract documents obtained by The Times.

In this work, Stoffel developed contacts across Eastern Europe, particularly in Ukraine and Bulgaria. He purchased weapons including surface-to-air missiles and antiaircraft systems, the documents show.

After the invasion of Iraq in March 2003, Stoffel went to Baghdad to pursue business opportunities afforded by the Pentagon's multibillion-dollar Iraqi reconstruction program.

He became concerned about possible corruption in the U.S. contracting process, and reported his suspicions to U.S. investigators in spring 2004.

A U.S. official said the investigation into those charges was ongoing.

Miller and Silverstein reported from Washington and McDonnell from Baghdad.

Posted by dan at January 23, 2005 2:59 AM