A BUZZFLASH NEWS ALERT
by Amy Weiss

The House Committee on Oversight and Government Reform continued its work toward uncovering fraudulent defense contracts in Iraq and elsewhere this week, both by requesting further investigation by the Department of Defense (DoD) Inspector General and requesting pertinent documents to investigate the government contract with the International Oil Trading Company (IOTC).

The Committee held a hearing on May 22 [1] regarding the problem of improper accounting and management of defense contracts, primarily in Iraq.

In his opening statement [2], Committee Chair Rep. Henry Waxman (D-CA) said, "The Inspector General reviewed approximately $8.2 billion in Defense spending and estimated that the Department failed to properly account for $7.8 billion. That means the Defense Department had a stunning 95% failure rate in following basic accounting standards."

Deputy DoD Inspector General Mary Ugone testified at the hearing to present the Inspector General's full findings.

The DoD review was conducted by thoroughly investigating a sample of transactions. The Committee applied those findings to the entire set of transactions and estimated that of the 180,000 total transactions, more than 7,000 may be identifiable as criminal cases, totaling over $190 million, a figure Waxman called in his June 16 letter [3] to Inspector General Claude M. Kicklighter "an astounding amount of potential criminal fraud," which he then asked Kicklighter to further investigate.

In June 17 letters to Defense Secretary Robert M. Gates [4] and IOTC President Harry Sargeant III, Waxman [5] continued to show concern about abusive spending of government funds. This concern comes in light of information that IOTC charges the Pentagon an additional $1.08 to the market price per gallon of jet fuel sent to Iraq.

According to Waxman's letters to Gates and Sargeant, "the Pentagon confirmed that 'IOTC was not the lowest bidder' for this contract, but that IOTC was the only company with a 'Letter of Authorization' from the Jordanian government, which was a Defense Department requirement in the contract."

Waxman requested copies of many documents from both Gates and Sargeant be presented no later than July 11.

A BUZZFLASH NEWS ALERT

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