Monday, Jun 13, 2011


   (From THE WALL STREET JOURNAL) 
   By Joel Millman

As the U.S. draws down its combat forces in Iraq, the Special Inspector General for Iraq Reconstruction is ramping up its investigation and prosecution of soldiers and civilians accused of stealing hundreds of millions of dollars since the fighting began in 2003.

Sigir, as the agency is known, monitors the disbursement of billions of dollars in the war effort for everything from buses to bottled water. With the agency's budget of $225 million since 2004, Sigir chief Stuart W. Bowen Jr. said his auditors have saved taxpayers $1.1 billion in financial benefits and more than $150 million in seizures or forfeiture orders.

One tool, called Ferret, relies on artificial-intelligence software to sift online through thousands of financial transactions -- including those of some military officers and occasionally their spouses, searching for evidence of embezzlement.

Sigir has 18 months of sleuthing left before Congress shuts it down. Staffers worry about money that may still be hidden in offshore accounts that could be recovered by corrupt officers, now or after serving time in prison.

Among the latest indictments resulting from Sigir's efforts are those of two businessmen, George H. Lee and his son, Justin W. Lee, who ran a contractor called Lee Dynamics International. They are charged with participating in a scheme, launched at U.S.'s Camp Arifjan in Kuwait, that federal investigators say involved bribes and kickbacks of more than $20 million. Each faces one count of conspiracy and four counts of bribery in U.S. district court in Pennsylvania.

On Thursday, Justin Lee pleaded not guilty at his arraignment in Philadelphia, after being arrested over the Memorial Day weekend. He didn't respond to messages left with his attorney and at his home.

In Los Angeles on Monday, another officer implicated in the Arifjan affair, Lt Col. Derrick Shoemake, is expected to enter a guilty plea to two counts of bribery related to the awarding of bottled-water contracts he oversaw while in Kuwait, according to a plea agreement reviewed by The Wall Street Journal. That would make him the second lieutenant colonel who was in Arifjan to plead guilty to bribery.

Lt. Col. Shoemake didn't respond to requests for comment. His attorney confirmed Monday's court appearance.

Sigir has funding through December 2012, when files from more than 100 current investigations will be farmed out to agencies, including the Pentagon's Criminal Investigation Command, the inspectors general for the State Department and the Agency for International Development and the Federal Bureau of Investigation.

"There's still a problem with controls over cash in Iraq," Sigir's Mr. Bowen said. As the combat mission has been winding down over the past three years, evidence of prior wrongdoing continues to surface, he said.

The Lee case stems from an alleged band of conspirators uncovered by the Pentagon known as the Cockerham Group. John L. Cockerham, a former Army major, pleaded guilty in 2008 to soliciting millions of dollars in bribes and kickbacks from defense contractors and is serving a 17-year federal prison sentence. So far, 16 other soldiers and civilians have been convicted on a variety of charges. Federal investigators say a dozen more arrests are expected.

According to Sigir and federal prosecutors, the Lees' involvement began in early 2004, when U.S. Army Maj. Gloria Dean Davis, who was in Arifjan, awarded one of the Lee companies a contract to provide buses to Camp Arifjan. Court papers allege that George Lee, the father, subsequently offered work to Maj. Davis's son and, in late 2004, "caused approximately $80,000 to be deposited in [Maj. Davis's] Thai bank account."

George Lee is still living in Kuwait, where the U.S. has made an extradition request. In interviews with The Wall Street Journal last year, he said he wasn't involved with Maj. Cockerham. He hasn't responded to recent requests for comment.

The indictment against him quotes from emails he and his son allegedly exchanged discussing payments to "JC" -- Maj. Cockerham -- and other alleged contacts with co-conspirators.

In the interviews, George Lee didn't refute charges that he knew Maj. Davis or that Lee Dynamics had hired her son. He said he made payments to her out of friendship but had no role in depositing money in any offshore bank accounts. Maj. Davis committed suicide in 2006, shortly after admitting guilt to the allegation against her to U.S. Army investigators in Iraq.

In maintaining his innocence, George Lee has portrayed himself in interviews as a victim of a "tainted" Army investigation motivated by racial bias, as almost all of the suspects probed in the Cockerham case are African-Americans. Sigir's Mr. Bowen says race has nothing to do with the probe.

---

James Oberman contributed to this article.

(END) Dow Jones Newswires

13-06-11 0413GMT