One of the U.S. security companies operating in Iraq has been suspended
from doing business with the U.S. government after being accused of overbilling
millions of dollars through a series of sham companies.
Security company Custer Battles sent fake bills to the
U.S.-financed Coalition Provisional Authority, which ran Iraq under American
occupation, according to a U.S. Air Force memo obtained by the Los Angeles
The company is also under investigation by the FBI and the Pentagon
Inspector General's Defense Criminal Investigative Services, the memo said. It
could not be immediately determined yesterday whether those investigations were
The company's founders are Scott Custer, a former Army Ranger and
defense consultant, and former CIA officer Michael Battles, who ran for Congress
in Rhode Island in 2002 and was defeated in the Republican primary. The Federal
Election Commission fined Battles for misrepresenting campaign contributions.
Battles is a Fox News Channel commentator.
Custer Battles was a newly formed company with no experience in the
security industry when it landed one of the first contracts issued in Iraq in
the spring of 2003 to secure the airport. The no-bid contract was worth $16
million when it was awarded in the chaos after the fall of Saddam
Using Nepalese Ghurkas hired from abroad to fill out its limited staff,
the company quickly expanded its presence, winning a contract in August 2003 to
supply logistical support for a massive currency exchange in which Iraqis turned
in their old dinars for new currency.
That contract committed the Coalition Provisional Authority to paying
for all the company's costs for setting up centers where the exchanges would
take place, plus a 25 percent markup for overhead and profit, according to the
Air Force memo. Custer Battles then created a series of "sham companies"
registered in foreign countries, the memo said. The companies were then used to
create false invoices making it appear they were leasing trucks and other
equipment back to Custer Battles. The scheme had the effect of inflating the 25
percent markup allowed under the contract, the memo said.
In October, company representatives accidentally left a spreadsheet
in a meeting that was later discovered by CPA employees. The spreadsheet showed
that the currency-exchange operation had cost the company $3,738,592, but the
CPA was billed $9,801,550, a markup of 162 percent
This is exemplary of the true nature of Bush's "Iraq Liberation."
Anybody who thought it had anything to do with enslaved Iraqis is in such a strong state of denial as to be considered delusional.