Military Subcontractors Bribing U.S. Personnel With Prostitutes? The Shady World of War Contracting in Afghanistan and Iraq

When federal investigators discovered that the manager of a Saudi Arabian company paid bribes to win two lucrative subcontracts supplying food to American troops in Iraq, they naturally wanted to know more. Did he act on his own? Had U.S. taxpayers been cheated?

Five years later, investigators are still largely in the dark. They suspect similar activities by other subcontractors may have tainted contracts worth up to $300 million. But the investigators are unable to uncover even basic information, such as how the manager of the Saudi company had come up with $133,000 in bribe money.

The investigators likely could have compelled a U.S.-based contractor to turn over financial records. But the Saudi firm still hasn’t shared its books with Pentagon auditors or KBR, the big U.S. company through which it operated as a subcontractor. Nor does it have to. The long arm of the U.S. law doesn’t extend to foreign businesses on which the military increasingly depends – and spends huge sums.

Even now, as the U.S. military anticipates withdrawal from Iraq and transferring of vital functions to civilian businesses, foreign subcontractors are playing an enormous role in war zones. Often operating through larger big-name U.S. contractors, they ferry supplies such as ammo and weapons through dangerous terrain. They provide translators and food for troops, help build military outposts, and keep soldiers and civilians safe. Without such local and regional subcontractors, the modern military says it could not operate in two war zones halfway around the globe.

The foreign firms are seen as so essential, in fact, they’re not part of the $100 billion cutback in contractor spending being urged by Defense Secretary Robert Gates, who has complained about “our over-reliance on contractors.”

But a series of ongoing congressional and military investigations underscore the perils of unbridled dependence on foreign firms – and the difficulties in making sure money is well spent. Reliance on foreign companies often involves murky arrangements that can endanger U.S. troops and strategic goals, and put taxpayer dollars to bad use. Customary contracting rules don’t apply, and even big U.S. companies aren’t always sure whom they are ultimately paying. That can lead to fraud and shoddy work.

Interviews, testimony, and records of recent and ongoing investigations – like the one involving a Saudi company – reviewed by the Center for Public Integrity and the Huffington Post Investigative Fund suggest more extensive problems with subcontractors than previously known. Besides the bribery case involving a Saudi company, the government suspects certain foreign subcontractors providing security in Afghanistan of bribing both sides in the conflict – officials of the U.S.-supported Afghan government as well as leaders of the Taliban.

In Iraq, meanwhile, U.S. money for trash collection, administered by a bevy of foreign subcontractors, has allegedly ended up in the pockets of insurgents, according to one investigation. In Baghdad, a whistleblower is alleging that Middle Eastern subcontractors with special security access sneak prostitutes into the highly secure Green Zone, in an effort to persuade contractors and the U.S. military to hire the company.

Taxpayer funds have even wound up in the hands of enemy fighters – despite efforts undertaken by top military officers such as Gen. David Petreaus, who warned in an August memo on counterinsurgency efforts in Afghanistan that “money is ammunition; don’t put it in the wrong hands.”

“Without good subcontract control by prime contractors and good oversight by the government,” Michael Thibault, co-chair of the Wartime Contracting Commission, said in a written statement, “we risk not only wasting money, but also depriving our troops of support they need, overlooking misconduct that alienates local populations, and even handing funds to violent insurgents.”