"Weapons of Mass Deception"


Feith, Zell & Chalabi accused of Iraqi contract fraud

By Bill Gertz and Rowan Scarborough
2004 12 30

John A. Shaw, until recently the deputy undersecretary of defense for international technology security, stated in a end-of-tour letter to Defense Secretary Donald H. Rumsfeld that senior Pentagon officials covered up contracting fraud related to a cellular telephone network project in Iraq.

The fraud involved $30 million in bribes, $225 million in misappropriated funds and $210 million in missing funds, according to Mr. Shaw's Dec. 3 letter.

Mr. Shaw stated that "the allegations involve [Undersecretary of Defense for Policy] Douglas Feith, his former law partner Mark Zell, Ahmed Chalabi and others."

"For referring these preliminary findings on, a substantial smear campaign against me and my report was launched at the highest levels of the Pentagon and in the national news media," said Mr. Shaw, who lost his job a week after writing the letter in a Pentagon reorganization that eliminated his post.

"So I am faced with a group of people who want to destroy me and quash serious criminal allegations, who are acting in your name,"he stated.

Mr. Shaw requested that he be allowed to continue in his post until he could produce a report and then said he would be willing to move on to another position.

"A cancer has been growing on some of our [Coalition Provisional Authority] CPA activities for over a year and I can perform a final service for you in dealing with it," Mr. Shaw said.

Raymond F. DuBois, director of the Pentagon's office of administration and management, replied in a Dec. 6 letter that Mr. Shaw's appointment would end Dec. 10. Mr. DuBois also notified the Pentagon inspector general of the charges made by Mr. Shaw.

A Pentagon spokesman dismissed Mr. Shaw's charges as "absurd and without foundation."

Two Pentagon officials working in Iraq for the CPA left under a cloud of suspicion after financial mismanagement was uncovered in Iraq's communications agency.

The departures followed an April 13 memorandum from the audit firm Bearing Point stating that financial controls over $435 million in U.S. funds "are either weak or nonexistent" and that funding of communications projects "is open to fraud, kickbacks and misappropriation of funds."

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Milton Frihetsson, 02:13


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