Ex-CIA Official Pleads Guilty to Fraud
Executive Director Helped Defense Contractor Friend Win Lucrative Deals
By Jerry Markon
Washington Post Staff Writer
Tuesday, September 30, 2008; A02

The CIA's former top administrator pleaded guilty yesterday to steering agency contracts to a defense contractor and concealing their relationship, making Kyle "Dusty" Foggo the highest-ranking member of a federal intelligence or law enforcement agency to be convicted of a crime, officials said.
Foggo, 53, admitted that he conspired to defraud the government through his relationship with Brent R. Wilkes, a California businessman and close friend. Prosecutors said Wilkes took Foggo and his family on a $30,000 Hawaiian vacation and courted the CIA official with expensive meals throughout the Washington area, including at Ristorante La Perla in the District, the Capital Grille in Tysons Corner and the Serbian Crown restaurant in Great Falls. Wilkes also offered Foggo a job.
In return, court documents say, Foggo helped Wilkes get lucrative contracts, including one in which the CIA paid 60 percent more than it should have for water a Wilkes-affiliated company supplied to CIA outposts in Afghanistan and Iraq.
Foggo, a longtime logistics officer, was the CIA's executive director from November 2004 until May 2006, holding the agency's third-ranking position and one in which he oversaw the CIA's daily operations and budget. The position, which has since been eliminated, was sometimes referred to as "Mayor of the CIA." Foggo was accused of using his seniority and influence at a prior CIA job in Europe to help Wilkes. It is one of the first cases that has involved the CIA's clandestine operations in Europe and the Middle East.
Although Foggo, a Vienna resident, pleaded guilty to one count of wire fraud in U.S. District Court in Alexandria, prosecutors agreed to dismiss 27 other counts against him and to recommend a sentence of no more than 37 months in prison. Judge James C. Cacheris, after accepting Foggo's plea, took the unusual step of telling Foggo that his attorneys "have done a good job for you in this case." Under federal law, Foggo could receive a prison term of as much as 20 years when he is sentenced Jan. 8.
Defense attorneys had threatened in a secret court filing to expose highly sensitive intelligence programs and the covers of undercover operatives as part of Foggo's defense, according to a prosecution filing this month. Prosecutors had been fighting the defense threat -- a tactic in national security cases known as "graymail" -- and said they planned to introduce no classified information at trial.
Prosecutors and defense attorneys declined to comment yesterday. Nathan Sales, an expert on national security law at George Mason University, said the defense tactic might have accounted for the government's relatively light sentencing recommendation.
"The government may have been afraid that Mr. Foggo's lawyers would actually succeed in introducing some of this information into court," he said.
Foggo left the CIA abruptly in 2006 after word leaked that he had been targeted in a corruption investigation. The spy agency declined to comment on his plea, other than to say that it had worked closely with investigators from start. The CIA's inspector general had begun a separate probe into Foggo's activities before the criminal investigation.
Current and former agency officials have followed the case with a mixture of astonishment and horror, especially after attorneys for Foggo -- who had been fiercely proud of his CIA affiliation -- threatened to expose the agency's secrets.
"It is a colossal disappointment," said one former high-ranking agency official who declined to be identified because of the sensitivity of the issue.
Foggo was first indicted in February 2007 in federal court in San Diego, but the case was transferred to Alexandria in February. Wilkes was initially indicted along with Foggo but was later dropped from the case. He was convicted last year in a separate corruption case in San Diego of showering then-Rep. Randy "Duke" Cunningham (R-Calif.) with more than $700,000 in bribes, including money for a mortgage, a yacht and prostitutes.
Staff writer Joby Warrick and staff researchers Meg Smith and Julie Tate contributed to this report.

Based on what I read here alone, I think I would have concerns about the current edition of this bill. It sounds like something Cheney would have written with help from John Yu. Certainly problems need to be addressed, but not so fast, and no in a way that further degrades our government and allow allows more raping and pillaging (figuratively speaking) of the U.S. taxpayers. -VM

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From The Washington Post
Link to Original: http://www.washingtonpost.com/wp-dyn/content/article/2008/09/29/AR2008092903163_pf.html

Effort to Skirt Contracting Rules Unnerves Federal Workers
By Joe Davidson
Tuesday, September 30, 2008; D04
When -- maybe that should be if-- Congress passes legislation to bail out floundering financial institutions, the Treasury secretary likely will be granted unusually broad power to waive regulations covering the government's hiring of outside contractors.
But not as much power as he wanted.
While the nation's current economic situation gives everybody a headache, this provision, even though restrained when compared with the original, gives federal employees heartburn.
Treasury Secretary Henry M. Paulson Jr. wants the ability to move quickly to smooth the very rocky road that is now Wall Street. He proposed granting his office essentially unlimited authority to hire outside firms to help manage the assets of companies the government basically nationalizes.
He didn't get that. But under the legislation the House rejected yesterday, he still would have had extensive authority to ignore regulations on federal acquisitions. That provision, or a similar one, probably will be in whatever legislation finally passes.
That's anathema to federal workers who recoil at Bush administration efforts to give public business to private companies.
"We are not comfortable with Treasury being granted authority to waive contracting procedures," said Richard N. Brown, president of the National Federation of Federal Employees, with some bit of understatement. "It is an unnecessary power grab and we can envision this authority being abused."
The bailout bill says Paulson can disregard the regulations "upon a determination that urgent and compelling circumstances make compliance with such provisions contrary to the public interest."
Federal acquisition regulations generally can be waived in other cases, but this authority is "much broader" than what officials normally have, according to Alan Chvotkin, executive vice president of the Professional Services Council, the trade association for companies with government contracts.
The government did not use such broad authority even after Hurricane Katrina or during the war in Iraq, he said.
But the power Paulson would get would not be unfettered. He would have to tell Congress what he is doing and why.
Federal regulations now require officials to follow certain procedures when paying contractors to do the government's business. That can be time consuming, by design, because officials must follow specific guidelines for soliciting contracts, seeking broad competition, reviewing proposals and ensuring participation by small, disadvantaged and minority businesses.
When Paulson tried to explain, at a Senate committee hearing last week, how the purchase of services related to the buyout would work, he left committee members wanting.
Consider this exchange with Sen. Daniel K. Akaka (D-Hawaii):
Akaka: Mr. Secretary, you mention about needing the right group of experts to help in this huge effort. Has there been any consideration, Mr. Secretary, given to specifically what parts of the Federal Acquisition Regulations would need to be waived to get contractors and consultants to establish this program?
Paulson: Yeah, we -- we've given a -- a lot of thought to that. We've got -- worked it through very carefully with our -- with our general counsel.
Akaka: Do you plan to have competitive bidding? And if not, why not?
Paulson: Well, we -- we -- we have procedures that are designed to -- to mitigate against conflicts, but we need to move very quickly here. And so we can't go through all of the -- the normal processes or it won't work for the markets.
He won't have to go through the normal processes, but he would have to reassure Congress that he won't flaunt them too much.
For example, if Paulson decided he was not going to follow established rules regarding minority participation in the hiring of outside contractors, the legislation says he still would have to "develop and implement standards and procedures to ensure, to the maximum extent practicable, the inclusion and utilization of minorities."
Chvotkin isn't worried about a lack of oversight on the contracts. What bothers him, is "the lack of resources . . . to do it right the first time."
He's concerned that the process to hire contractors, train them and provide technical support is not in place. Chvotkin also wants Treasury to develop a clear statement of the work to be done, a plan for awarding and administering the contracts, and a strategy to have sufficient government workers on the front end to monitor work being done by the financial experts.
But union boss Brown cites the Federal Retirement Thrift Investment Board that manages the Thrift Savings Plan for federal employees as an example of government workers doing a fine job of asset management.
"It's appalling that the proposal allows for the contracting out of asset management," he said. "We are going to reward the folks that got us into this mess with the biggest new client in history. Give me a break."
Contact Joe Davidson atfederaldiary@washpost.com.

From The Boston Globe Online
Study finds cronyism in Iraq, Afghanistan contracts
By Bryan Bender, Globe Correspondent | October 31, 2003

WASHINGTON -- Many of the companies that have received government contracts to rebuild Iraq and Afghanistan have collectively contributed more money to President Bush's election campaigns than to any other candidate in more than a decade, according to a study released yesterday.

In one of the most detailed studies of postwar contracts, the Center for Public Integrity, a nonprofit government watchdog, found that at least 70 companies have been awarded a total of $8 billion in contracts in the past two years.

While some of the contractors were previously known to have ties to White House officials -- such as Halliburton, formerly headed by Vice President Dick Cheney -- the group found several lesser-known firms that also are linked to senior government officials. One small company's sole employee is married to a deputy assistant secretary of defense, the study found.

Allegations of cronyism were quickly denied yesterday by government officials and company spokesmen. But the report raised new questions about whether political allies of the White House or Congress are being repaid for their support with lucrative, taxpayer-funded contracts. Most of the 70 contracts -- for tasks ranging from restoring electricity to rebuilding ports and schools -- were put out to bid, but some were not.
"Most of the companies that won contracts in Iraq and Afghanistan were political players," said Charles Lewis, the center's executive director. "Those companies contributed more money to the presidential campaigns of George W. Bush -- more than $500,000 -- than to any other politician over the last dozen years. These two wars in two years and their aftermaths have brought out the Beltway Bandit companies in full force, and there is a stench of political favoritism and cronyism surrounding the contracting process in both Iraq and Afghanistan."

The report, entitled "Windfalls of War," is the result of a six-month review of information collected through 73 requests filed under the Freedom of Information Act and through appeals to the US Agency for International Development, the Department of Defense, and the State Department.
More than 7 million federal contracting actions maintained in a General Services Administration database also were reviewed.
The center described the report as "cautious and conservative," noting that the center was not given access to all the documentation it requested and that it filed suit Wednesday against the State Department and the Army for not complying fully with its information requests.
Government officials and company spokesmen insisted that postwar contracts have been awarded on merit and cost and according to strict federal contracting guidelines that require that politics be kept out of the selection process.

J. Edward Fox, assistant administrator of USAID, told the researchers in a letter Wednesday that there are procedures in place to keep political appointees both inside and outside the agency out of the decision-making process -- what he called "strict firewalls" -- so that career government specialists can award contracts on an objective basis and are not pressured to favor a particular firm. "This firewall was in place for all Iraq procurements," he wrote on the eve of the report's release.

Jonathan Marshall, a spokesman for Bechtel, the second-largest recipient of postwar contracts, said yesterday that "there was no cronyism involved and no access to civil servants other than under very strictly-controlled federal procedures." As for political contributions, "we are not ashamed of that," he said. "They were legal and proper, and the conclusion that that is why we were awarded the contracts is flatly untrue and grossly unfair."

But the report outlined a pattern of political contributions and personal links to senior government officials overseeing the agencies responsible for parceling out the postwar work.

Framingham-based Perini Corp., which has electricity contracts in Iraq and Afghanistan worth as much as $525 million, is owned by a group of investors that includes Richard Blum, husband of Senator Dianne Feinstein, a Democrat of California who is a member of the Appropriations Committee.

The center's report identified several companies based in New England among the contractors, including Abt Associates, a public health consulting firm; Camp, Dresser & McKee Inc., an engineering consulting business; and Red River Computer Co., a reseller of computer equipment.

Fourteen of the 70 companies gave $23 million in political contributions to Republican and Democratic campaigns since 1990, and 13 of them employ former government officials or have other ties to various US government agencies and departments, according to the report. "Among individual candidates, President George Bush received more money from these companies than any other," Lewis said.

Topping the list, with more than $2.3 billion in contracts, was Kellogg Brown & Root, a subsidiary of Halliburton, the energy services conglomerate. Bechtel, a major construction and engineering firm that landed more than $1 billion worth of contracts for a variety of capital projects in both Iraq and Afghanistan, counts among its board members former secretary of state George Shultz and retired Marine Corps general Jack Sheehan, also a member of the Pentagon's advisory Defense Policy Board.

Science Applications International Corp., a major defense contractor, employs many former high-ranking government officials. SAIC is assisting in Iraq's reconstruction but also has been awarded a contract to operate US-funded media outlets in Iraq, which it has no experience doing.
"SAIC is setting up a news station in Iraq, and it is not generally [known] in Washington for doing that kind of work," Lewis told reporters at the National Press Club.

Chemonics International, another of the top contractors, is principally owned by Scott Spangler, a senior agency official in the administration of George H.W. Bush.

A firm called Sullivan Haave Associates was hired as a subcontractor to provide advice to various Iraqi ministries. The center's researchers found that the firm's only employee, Terry Sullivan, is married to Carol Haave, who since November 2001 has been the deputy assistant secretary of defense for security and information operations.

They both denied to the report's authors that their situation constitutes a conflict of interest.
Another contractor, the Center for Afghanistan Studies at the University of Nebraska, is directed by Thomas E. Gouttierre, a longtime friend of Zalmay Khalilzad, Bush's nominee for ambassador to Afghanistan.

McCain, keep digging? Not much chance of that since he went over to the "dark side." He is lost, I believe. Wanting to become President overcame all sense in this matter and many others. -GFS

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Military-Industrial Complex—updated
By Robert D. Novak
Monday, February 21, 2005

Link to original: http://townhall.com/columnists/RobertDNovak/2005/02/21/military-industrial_complex_--_updated

WASHINGTON -- "I'm off to speak again with my Little Darlings at the Academy," said then Air Force Secretary James Roche's April 28, 2002, e-mail to Robin Cleveland, assistant director of the Office of Management and Budget (OMB). Roche trusted Cleveland sufficiently to put in writing his dismissive description of female Air Force Academy cadets who had been raped. Indeed, 11 days later on May 9, Cleveland was asking Roche for help in getting her brother a job with a big defense contractor.

Roche complied, though Peter Cleveland ultimately did not get the job with Northrop Grumman. In responding to Robin Cleveland, Roche put in a plug for the attempted $23.5 billion sweetheart deal for the Boeing Co. to build tankers for the Air Force: "Be well. Smile. Give tankers now. (Oops, did I say that?)" On May 15, Robin Cleveland sent her brother an e-mail about his upcoming interview at Northrop Grumman: "Great. Hope it works before the tanker leasing deal gets fouled up." But Cleveland reversed OMB opposition to the tankers.

A multi-billion dollar bailout for a troubled aircraft manufacturer entangled with a senior government official trying to place her brother in the defense industry confirms President Dwight D. Eisenhower's warning of the military-industrial complex. The reluctant, partial release of documents uncovers more evidence of how the complex works.

Boeing's tanker deal appeared set until 2002 when protests were heard from two Republican senators, John McCain of Arizona and Phil Gramm of Texas. Since then, the deal has been killed and reputations destroyed. Former Boeing executive Michael Sears Friday was sentenced to four months in prison for negotiating to hire Defense procurement official Darleen Druyun, who is serving a nine-month sentence.

Nevertheless, the Pentagon still resists McCain's quest for information. In a Jan. 27 letter to Defense Secretary Donald Rumsfeld, McCain protested that "the Department's production of documents has been riddled by disruption, obfuscation and delay. Some documents were doctored; others that should have been produced were improperly withheld."

McCain and his staff are not handed documents but are forced to copy them by hand. Even the recent ruling by the Pentagon's inspector general that Roche violated military ethics laws was labeled "FOUO (For Official Use Only)." It is not supposed to be publicly distributed, and a Feb. 10 report in the Washington Post constitutes its only publication, with Inspector General Joseph Schmitz paraphrased rather than quoted.

The actual language by Schmitz, in a Jan. 31 letter to senators, is harsh: "We substantiated the allegation that Secretary Roche's e-mail constituted a use of public office for private gain in violation of the applicable DOD [Department of Defense] ethics regulations. Because the e-mail implied Air Force sanction for employment recommended in behalf of Ms. Cleveland's brother, Secretary Roche's e-mail also violated DOD standards that govern personal use of the government communications system."

The inspector general noted that he has provided superiors with the results of the investigation but made no recommendations for penalties. The reason: Roche has finally left his Air Force office after a long lame-duck period.

Roche tried to keep secret his e-mails with Cleveland on grounds they had nothing do with the Boeing tanker deal. Atty. Gen. Alberto Gonzales, then White House counsel, told McCain in the senator's office that correspondence about Cleveland's brother "was just a joke." In fact, it was deadly serious, and Ms. Cleveland herself raised the tanker deal in connection with her brother's job.

One message July 24, 2002, to Roche from now retired Maj. Gen. LeRoy Barnidge admits outright that the Air Force was stalling McCain's efforts to get to the bottom of the case. Barnidge contended McCain aide Chris Paul "has been playing a pretty heavy game with us," and the general revealed "I have been stalling" Paul's requests, and referred to "this game with Chris."

Boeing's survivors sound penitent of the way they played "this game," but the Air Force is still covering up. Roche left his office unrepentant and continues to be excused and celebrated at the highest levels of the Pentagon. That's why it is important for John McCain to keeping digging into the foundations of the military-industrial complex.

McCain: Me First, NOT Country First? McCain’s Tacit Accord With Boeing

If you’ve kept up with all the posts about the original Druyan/Sears Tanker Deal matters and the settlement, and all the instances of reported corruption since then, you will find this curious also.

John McCain’s recent Presidential Candidate Debate, featured McCain painting himself as a champion of cleaning up corruption, reforming contracting, and standing up for doing right in the contracting world. Well rehearsed drama, but to this writer, far from the truth. McCain and his aides have been reportedly doing overtime duty trying to stop whistleblowers and government employees from successfully getting help in bringing Boeing to Justice in a number of instances. This includes attacking the credibility of those who’ve contacted his office with specific legitimate complaints, as well as trying to deep-six investigations concerning Boeing and possibly other involved and/or incriminated upper level entities in industry and government. The general concensus among people who’ve contacted me, frustrated with the shabby treatment they’ve received from McCain’s office, is that McCain wants to be elected President more than he wants to protect the citizens and economic and security welfare of this country. It appears he sold out to those with money and manipulation ability. This is a case of “Me First” not “Country First.” Sorry Senator McCain, we’re just not buying your double-speak anymore! -GFS
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From Boeing Frontiers, September 2006
What Boeing did here
conveys to me how
seriously the company
is committed to truly
reforming.”
—Sen. John McCain (R-Ariz.), in an Aug. 1
Senate Armed Services Committee hearing,
about Boeing’s decision to forgo claiming
a tax deduction on payments related to
settlement of investigations by the
U.S. Justice Dept