Contracting Executive Charged With Fraud, Money Laundering
A new Project On Government Oversight (POGO) investigation details troubling allegations that the chairman of a huge logistics contractor supporting the U.S. military in the Middle East has been involved in illicit money laundering and defrauding investors. Losses to investors in the case are estimated at more than $160 million, and could go higher.
Meanwhile, unreported court documents in a Pennsylvania lawsuit appear to contradict statements made by former Defense Secretary Ashton Carter in support of the contractor, In 2011 Carter signed letters to key US Senators and House members saying there was “no substantial information” that the contractor maintained continuing business ties to Iran that would prevent it from holding US military contracts. The accusations raise questions about the US military's heavy reliance on the company.
The case highlights how America’s military can be held captive to questionable contractors in one of the most strategic parts of the globe, an area where US forces cannot operate without extensive logistical support.
Saed Dashti, chairman of the contractor, Kuwait & Gulf Link (KGL), was charged last month with criminal money laundering and defrauding investors in a Kuwaiti court. An indictment is a formal allegation and the defendant is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Additional previously unreported allegations include sworn statements from 2013 by two former executives of a KGL affiliate filed in the Pennsylvania court case. Four years prior to the criminal indictment of KGL's chairman, one of the executives reported transfers of money to the KGL affiliate, purportedly from Iran, Russia and Syria.
Other documents from the Pennsylvania court case appear to show that KGL's ties to an Iranian shipping company under U.S. sanctions persisted after the company said publicly they were being terminated.
In 2008, Treasury Under Secretary for Terrorism and Financial Intelligence Stuart Levey accused the Iranian shipper, a joint venture partner of KGL, of using "deceptive schemes to shroud its involvement in illicit commerce." He described the shipper's actions as " part of a broader pattern of deception and fabrication that Iran uses to advance its nuclear and missile programs.”
KGL is far from the only US contractor operating in Middle East to be plagued by allegations of wrongdoing. As one potential solution, POGO recommends that Congress and the Pentagon examine how to foster more competition and explicitly encourage DoD to make deals with a wider variety of market participants so it is less reliant on companies that may engage in risky or illegal behavior.
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