Proof That War Spending is a Fraud and Wasteful

September 1st, 2011

The Associated Press

By: Richard Lardner

The U.S. has lost billions of dollars to waste and fraud in Iraq and Afghanistan and stands to repeat that in future wars without big changes in how the government awards and manages contracts for battlefield support and reconstruction projects, independent investigators said Wednesday.

The Wartime Contracting Commission urged Congress and the Obama administration to quickly put in place its recommendations to overhaul the contracting process and increase accountability. The commission even suggested that the joint House-Senate debt reduction committee take a close look at the proposals.

“What you’re asking for is more of the same,” said Dov Zakheim, a commission member and the Pentagon comptroller during President George W. Bush’s first term. “More waste. More fraud. More abuse.”

The bipartisan commission, created by Congress in 2008, estimated that at least $31 billion and as much as $60 billion has been lost in Iraq and Afghanistan over the past decade due to lax oversight of contractors, poor planning, inadequate competition and corruption. “I personally believe that the number is much, much closer to $60 billion,” Zakheim said.

Yet new legislation incorporating the changes could prove difficult with Republicans and Democrats divided over the best way to reduce the deficit.

Several of the proposals would require new spending, the commission acknowledged, and that would be a hard sell in an election year when reducing the size of government is a priority for many. Other proposals would cost little or simply require money to be shifted from one account to another, the panel said.

“If these recommendations are not implemented, there ought to be a Hall of Shame,” said Michael Thibault, co-chairman of the commission. “There’s an opportunity at hand.”

The commission’s 15 recommendations include creating an inspector general to monitor war zone contracting and operations, appointing a senior government official to improve planning and coordination among federal agencies, reducing the use of private security companies, and carefully monitoring contractor performance.

Massachusetts Rep. John Tierney, the top Democrat on the House Oversight and Government Reform national security subcommittee, said Wednesday that the commission’s findings are “alarming.” Tierney said he plans to introduce legislation next week to create the inspector general’s post.

Sen. Claire McCaskill, D-Mo., chairwoman of the Senate’s contracting oversight subcommittee, said she plans to prepare legislation based upon the commission’s recommendations.

The commission’s report said contracting waste in Afghanistan and Iraq could grow as U.S. support for reconstruction projects and programs wanes. That would leave the countries to bear the long-term costs of sustaining the schools, medical clinics, barracks, roads and power plants already built with American money.

Overall, the commission said spending on contracts and grants to support U.S. operations is expected to exceed $206 billion by the end of the 2011 budget year. Based on its investigation, the commission said contracting waste in Afghanistan ranged from 10 percent to 20 percent of the $206 billion total. Fraud during the same period ran between 5 percent and 9 percent of the total, the report said. Fraud includes bribery, kickbacks, bid rigging and defective products, according to the commission.

“It is disgusting to think that nearly a third of the billions and billions we spent on contracting was wasted or used for fraud,” McCaskill said.

Styled after the Truman Committee, which examined World War II spending six decades ago, the commission had broad authority to examine military support contracts, reconstruction projects and private security companies. But the law creating the commission set this September as the end of its work, even as contractors continue their heavy support of U.S. operations in the war zones.

Security, transportation, food preparation and delivery, and much more are now handled by the private sector. At the same time, the officials responsible for monitoring contractor performance have been overwhelmed by increasing reliance on private companies.

“We are far more reliant on contractors than we ever were,” said commission member Charles Tiefer, a professor of government contracting at the University of Baltimore Law School. “We always bought munitions from them. But we didn’t used to buy much in the way of services from them.”

The commission cited numerous examples of waste, including a $360 million U.S.-financed agricultural development program in Afghanistan. The effort began as a $60 million project in 2009 to distribute vouchers for wheat seed and fertilizer in drought-stricken areas of northern Afghanistan. The program expanded into the south and east. Soon the U.S. was spending a $1 million a day on the program, creating an environment ripe for waste and abuse, the commission said.

“Paying villagers for what they used to do voluntarily destroyed local initiatives and diverted project goods into Pakistan for resale,” the commission said.

The Afghan insurgency’s second largest funding source after the illegal drug trade is the diversion of money from U.S.-backed construction projects and transportation contracts, according to the commission. But the report does not say how much money has been funneled to the insurgency. The money typically is lost when insurgents and warlords threaten Afghan subcontractors with violence unless they pay for protection, according to the report.

The Associated Press reported this month that U.S. military authorities in Kabul believe $360 million has ended up in the hands of the Taliban, criminals and power brokers with ties to both.

The military said only a small percentage of the $360 million has been garnered by the Taliban and insurgent groups. Most of the money was lost to profiteering, bribery and extortion by criminals and power brokers.

Click here for the full report from AP

Democracy Could Disappear in Greece, Spain, and Portugal

June 16, 2010

Daily Mail

By Jason Groves

Democracy could ‘collapse’ in Greece, Spain and Portugal unless urgent action is taken to tackle the debt crisis, the head of the European Commission has warned.

In an extraordinary briefing to trade union chiefs last week, Commission President Jose Manuel Barroso set out an ‘apocalyptic’ vision in which crisis-hit countries in southern Europe could fall victim to military coups or popular uprisings as interest rates soar and public services collapse because their governments run out of money.

The stark warning came as it emerged that EU chiefs have begun work on an emergency bailout package for Spain which is likely to run into hundreds of billions of pounds.

Click here for the full report.

Fed Looking To ‘Reinvent’ Journalism

June 14, 2010

The New York Times

By Jeremy W. Peters

Looking for the federal government to come to the rescue of newspapers? Don’t hold your breath. The Federal Trade Commission has set out on the somewhat quixotic journey of trying to identify ways to save journalism as we know it from possible extinction.

Through a series of public forums, the last of which will take place in Washington on Tuesday, the commission has been gathering and analyzing an array of suggestions to help make the business of gathering and reporting news profitable again. A broad range of ideas — loosening antitrust statutes to allow news organizations to start charging for online content all at once; imposing a tax on iPads and other electronic devices to subsidize the cost of reporting; creating a public fund akin to AmeriCorps to pay young journalists — have been suggested.

But the commission could easily sidestep making any recommendations to Congress or invoking its regulatory powers, and instead issue something along the lines of an analysis of its findings.

The commission is expected to produce a final study late this year.

Click here for the full report.

Facebook Shares Personal Data Without Consent

May 21, 2010

Daily Finance

By Sam Gustin

Facebook, the giant social network now under fire over its privacy practices, has been sending personal information to online advertising companies without its users’ consent, according to a Harvard Business School professor who filed a letter of complaint with the Federal Trade Commission Thursday.

“Facebook has been telling its users one thing and then doing the opposite,” Ben Edelman, an assistant professor at Harvard Business School, told DailyFinance Thursday. “Facebook never told anyone, anywhere, they were going to do this. It’s no longer about quality of disclosure, but about whether Facebook is telling the truth in the first place.”

Click here for the full report.

Trudeau Nets Contempt Appeal

May 21, 2010

The Chicago Tribune

By Duaa Eldeib

Infomercial pitchman Kevin Trudeau was spared 30 days in prison when a federal appeals court Thursday overturned a ruling in which a judge held him in criminal contempt of court.

U.S. District Judge Robert Gettleman had made the ruling after Trudeau urged supporters to communicate with the judge, and the judge’s e-mail inbox was flooded with messages.

Gettleman has been presiding over a dispute between the Federal Trade Commission and Trudeau regarding Trudeau’s hair- and weight-loss treatments.

Click here for the full report.

Google Under Surveillance For Data Collection

May 18, 2010

FT

By Joseph Menn

Authorities on both sides of the Atlantic on Monday moved towards investigating Google  following the internet group’s disclosure that it had recorded communications sent over unsecured wireless networks  in people’s homes.

Peter Schaar, the German commissioner for data protection, called for a “detailed probe” by independent authorities into the practice by Google.He said the group’s explanation of the collection of data as an accident was “highly unusual”.

“One of the largest companies in the world, the market leader on the internet, simply disobeyed normal rules in the development and usage of software,” he said.

In the US, the Federal Trade Commission was expected to launch an inquiry as well, according to people who spoke to agency officials.

Click here for the full report.