TPMMuckraker Andrew Tilghman
AEY, Inc.
Feds Find Emails Revealing Chinese Ammo Scam
First Efraim Diveroli was mocked for being the only U.S. arms dealer with a MySpace page. Now it looks like the feds will rest most of their prosecution on his emails.
The feds say they've got a pretty good paper trail on Diveroli, the 22-year-old arms trader who was just arrested and accused of providing shoddy and illegal Chinese ammo for the Afghan Army.
You remember him? He's the Miami party boy who inexplicably landed a $300 million U.S. Army weapons contract in January 2007. The New York Times put him on the front page back in March.
He was arrested along with several others involved with his company, AEY, Inc., including David Packouz, the AEY director and vice president; Alexander Podrizki, the company's man in Tirana, Albania; and Ralph Merrill, who provided "financial and managerial assistance."
They were charged with violating the Arms Export Control Act, which prohibits buying and selling weapons from certain countries.
According to the indictment released today by the U.S. attorney in Miami, Diveroli got nervous last year when his Albanian supplier emailed him some photos showing that the weapons he planned to buy and ship were clearly marked "Made in China."
Diveroli emailed the U.S. State Department in April asking whether, hypothetically, it was OK to fulfill a U.S. Army contract with weapons from China, the indictment says.
It's not, they told him. Not without special permission from the President.
He emailed back and asked if there was an exception for weapons that may have been sitting in Albania for 20 years, the indictment says.
The State Department emailed back and said there was no such exception.
So he had one of his financial backers, Ralph Merrill, help take care of the problem.
On or about April 25,2007, RALPH MERRILL sent an electronic communication to EFRAIM DIVEROLI and DAVID PACKOUZ, which referenced attached photographs showing methods of "cleaning wooden crates." Attached to the communication was a photograph showing a person scraping the words "MADE IN CHINA" off of a wooden crate.
Diveroli then filled out forms for the Army indicating that the ammo was from Hungary rather than China.
The Army paid AEY more than $10 million between July and December 2007, according to the indictment, before the Times broke the story in March and his arms exporting license was suspended.
There may be more charges coming from this investigation. A spokeswoman for the ICE office, Nicole Navas, said Friday that the investigation was ongoing and declined to comment further.
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (13)Topics: AEY, Inc., Efraim Diveroli
Scott McClellan
Rep. King: "Could You Not Have Taken Some Of This To The Grave With You"
Scott McClellan isn't offering much in the way of new revelations about the Plame affair during his testimony on Capitol Hill today but there has been a moment or two of good political theater.
Rep. Steve King (R-IA) asked whether McClellan's very presence today was poisoning the relationships between all future presidents and their press secretaries.
"What is your advice to your successor secretaries, White House press secretaries, as to how they should handle themselves and how a president might want to handle them - and there's two parts to this question - what would you say to the succeeding secretaries on whether, at what point they should step up and tell the world in the middle of their job perhaps, and how will the president handle this from this point? Does he have to then put the next press secretary into a cubicle and slide press releases to him under the door for fear that he'll be coming, either write a book or come before the judiciary committee and divulge information that I believe was at least from a national security- not national security but from the integrity standpoint, could you not have taken some of this to the grave with you and done this country a favor?"
For those who've read McClellan's book, we not hearing much new. He's talking about the "permanent campaign" and how the Bush Administration was "less than truthful" in selling the Iraq invasion to the public in 2002 and 2003.
About Bush and Iraq: "I think his driving motivation was this idealistic and ambitious vision that he could transform the Middle East...that Iraq would be a lynch pin for democracy in the Middle East."
Rep. Sheila Jackson Lee (D-TX) was looking for more.
Should the president be impeached?
"I do not support impeachment based on what I know," McClellan said.
The Democrats on the House Judiciary Committee seemed eager to extract something new from McClellan, asking him for all sorts of the details about the administration's inner workings.
Steve Cohen (D-TN) asked McClellan what he knew about Iran.
"I think the views of the people in the administration are pretty well know in terms of what we ought to do to confront Iran," McClellan said.
As for Republican National Committee email accounts, Cohen asked: "Are you aware of any particular policy to use those to avoid government oversight?"
"No," McClellan said.
Cohen finally asked: Is there anything else that your editor 'edited out?'
"I don't think there is anything that would be of interest to this committee that was, as you say, edited out," McClellan said.
Rep Hank Johnson (D-GA) asked about the commutation of Scooter Libby's prison sentence.
"There are some who believe that he did that so that he could make sure that Scooter Libby would not at some point spill the beans on the VP or someone else."
"I don't know," McClellan said. "I can understand why people view it that way."
"It sends a terribly message... and I think that the president should not have made that decision. But that is his right to do it."
The repeated mention of impeachment seemed to irritate some Republicans.
"You didn't come here believing someone ought to be impeached did you?"
Dan Lungren (R-CA) asked.
"I am not here for that purpose," McClellan said.
"I have heard my colleagues here refer to impeachment four times, yet we've been told by the leadership on the Democratic side that impeachment is off the table," Lungren said. "Is what we are doing here Kucinich like?"
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (4)Topics: Scott McClellan
FISA
NEW FISA LAW PASSED
No surprises. The House has passed a new federal surveillance law. It's expected to go to the Senate next week and on to the President for a signature.
The final vote was 293 for, 129 against.
A big win for AT&T and Verizon.
Meanwhile, the House Judiciary Committee is getting underway again with the Scott McClellan hearing.
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (6)Topics: FISA
Surveillance
Dems Vent Opposition To Surveillance In Today's FISA Debate
The House is now voting on changes to the new federal surveillance law.
There were plenty of Democrats speaking out against it during the hour-long debate.
"This bill scares me to death and I urge a no-vote," said Rep. Barbara Lee (D-CA), co-chair of the House's Progressive Caucus.
She compared the bill to the era of former FBI head J. Edgar Hoover. "We already remember how Dr. [Martin Luther] King and his family were the victims of the government's most shameless wiretapping. We must never go down this road again."
House Speaker Nancy Pelosi (D-CA), gave the bill a lukewarm endorsement, saying the bill many supported was "not an option."
She said the real decision was between this "compromise" bill and the one the Senate has passed, which offered even broader surveillance powers and more protection for telecom companies. "That is the comparison, the contrast, that we have to make today."
"I'm not asking anybody to vote for this bill. I just wanted you to know why I was," Pelosi told the House. "Difficult decisions for all of us. ... I respect every point that was expressed on this floor today. ... The knowledge, the sincerity, the passion and intelligence of those who supported and who don't support this bill have been very valuable in making this bill better."
Rep. John Conyers (D-MI) pointed to a constitutional concern.
"The grant of retro-active immunity is inconsistent with our basic principles. We are breaking with a very proud tradition and intervening in a pending court decision in an effort to reach a preordained legal outcome. This is a bad precedent," he said.
Republicans without exception spoke in favor of the bill, often citing the dangers of terrorism.
"This bill will prove that we have the ability to monitor the conversations of al Qaeda overseas," said Rep. Dan Lungren (R-CA) "It's not the Mona Lisa, but it's not a bad paint job."
Rep. Dennis Kucinch (D-OH) spoke briefly. "These blanket wiretaps make it impossible to know whose calls are being intercepted by the National Security Agency."
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (3)Topics: Surveillance
Efraim Diveroli
22-Year-Old Arms Dealer Arrested
From the Miami Herald:
A 22-year-old munitions dealer and others in his Miami Beach company were arrested on charges of selling prohibited Chinese weaponry to the U.S. government to supply allied forces in Afghanistan, according to law enforcement officials.Efraim Diveroli, president of AEY Inc., and three other employees were arrested Thursday night and Friday morning -- accused of conspiring to misrepresent the types of munitions they sold to the U.S. Department of Defense as part of a $300 million Army weapons contract, officials said.
Diveroli and the others are charged with violating the Arms Export Control Act stemming from an investigation that began earlier this year by the Pentagon and Immigration and Customs Enforcement.
Remember this guy?
Topics: Efraim Diveroli
Surveillance
FISA Debate Gets Underway In The House
The House debate about the FISA law is underway. The House has capped debate at just one hour.
So far, the Democrats seem to emphasize that this legislation will not get the Bush Administration off the hook.
Rep. John Conyers (D-MI) said he opposed the bill, but did point to one bright spot in the legislation.
"[The bill] will ask the inspector general to conduct an independent investigation of the president's wiretapping program," Conyers said. "This will uncover the truth for the American people, hopefully, about the president's activity."
Rep. Sylvester Reyes (D-TX), the chair of the House Intelligence Committee, also noted that: "This bill does not grant immunity to any government official that might have violated the law."
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (5)Topics: Surveillance
Scott McClellan
McClellan Testimony Underway
Scott McClellan's testimony is underway before the House Judiciary Committee.
He was asked early on about President Bush's involvement in the leak of CIA operative Valerie Plame's identity.
"I do not think the president in any way had knowledge of it," McClellan said.
Also, we heard he got a $75,000 advance for the book.
Read more for the text of his opening statement.
Late Update: The Judiciary Committee recessed for the House debate on the compromise bill on the federal wiretapping law. That debate is underway and will last one hour.
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (3)Topics: Scott McClellan, Valerie Plame
Surveillance
Today's Must Read
After everyone had a chance to sift through yesterday's breakthrough "compromise" on a new federal surveillance law, the biggest winer of the day was not Republicans or Democrats but the telecom companies.
Today's Washington Post summarizes the legal impact succicntly in it's front-page story :
The agreement extends the government's ability to eavesdrop on espionage and terrorism suspects while effectively providing a legal escape hatch for AT&T, Verizon Communications and other telecom firms. They face more than 40 lawsuits that allege they violated customers' privacy rights by helping the government conduct a warrantless spying program after the Sept. 11, 2001, attacks.
The final compromise on the immunity issue was this: Many Democrats had wanted the federal courts to review whether the surveillance program was legal before granting immunity. The White House wanted the courts to have no involvement whatsoever. The "compromise" calls on the courts to consider the surveillance legal if the companies can prove that the Administration told them it was legal. (Which we know they did).
The Chicago Tribune reports:
The new bill would require federal courts to cast those lawsuits aside if the companies can show that they received written requests from the government stating that their cooperation was deemed lawful and had been authorized by the president.The House is expected to vote on the measure today. Though billed as a compromise, the final version was viewed as a victory for the White House, according to the Post.
But overall, the deal appears to give Bush and his aides, including Attorney General Michael B. Mukasey and Director of National Intelligence Mike McConnell, much of what they sought in a new surveillance law.
As for the future of the spying program, this new law allows it to grow.
The Wall Street Journal this morning wrote:
The lasting impact of the agreement would be a broader scope for the government's domestic surveillance.Before 9/11, the NSA had to acquire a specific warrant if it wanted to listen to any conversation involving a U.S. citizen. Now, the secret court would be able to approve broad patterns of surveillance, focused on groups of people believed to be overseas, even if they are communicating with people in the U.S. So without a warrant, the NSA could listen to the conversation of a U.S. citizen if he or she was talking to a suspicious person overseas.
Several Democrats spoke out against the bill, but enough of them agreed to assure this version will pass into law.
Again, from the Journal:
The outcome was driven largely by the realities of election-year politics. Democrats, particularly more conservative ones, in vulnerable re-election races couldn't afford to appear to be dodging a big national-security issue. And many believed the law needed to be updated before surveillance orders expired in August. House Democratic leaders struggled for months to find a proposal their entire party could support but couldn't overcome splits between conservative and liberal Democrats -- some of whom are reacting angrily to the deal.Behind the political positioning, however, was the pressure from the telecom firms -- particuarly AT&T and Verizon, which both stepped up their lobbying efforts this spring. PERMALINK | COMMENTS | RECOMMEND RECOMMEND (6)
Topics: Congressional Subpoenas, Surveillance
John Sweeney
Feds Searched Sweeney's Congressional Office, Grand Jury Set For Next Week
We know the feds have had their eye on former Rep. John Sweeney for a while.
DOJ investigators pulled some of Sweeney's financial records from the House clerk in 2006 and reviewed them along with those from other lawmakers linked to convicted Washington lobbyist Jack Abramoff.
Now we're learning about a previously unreported search of his congressional office just about the time voters kicked him out of office in late 2006.
The Times Union up in Albany has made two references (here and here) to the search in its recent coverage:
The FBI also entered Sweeney's congressional office on his last day in Congress in 2006 and took computers, cellphones, various electronic devices, equipment and records from his aides, two sources familiar with the matter said.
A source close to Sweeney's former congressional office said the FBI first indicated its interest in Sweeney's activities when it seized records and computers of his staffers at the end of 2006.
It's not precisely clear whether this was a search of Sweeney's office on Capitol Hill or an office back in his district. Whatever the FBI got during that search might not be much help. A federal judge has since ruled that FBI searches in Congressional offices can violate the constitution. (Thanks to Rep. William Jefferson, whose Hill office was raided in May 2006.)
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (1)Topics: John Sweeney
Surveillance
Senate Opponents Decry Immunity Deal
As lawmakers continue to react to the "compromise" deal on a new federal surveillance law, several Democrats in the Senate are coming out against the bill.
Sen. Russ Feingold (D-WI) has been the most outspoken since the deal was unveiled this morning.
"The proposed FISA deal is not a compromise; it is a capitulation. The House and Senate should not be taking up this bill, which effectively guarantees immunity for telecom companies alleged to have participated in the President's illegal program, and which fails to protect the privacy of law-abiding Americans at home. Allowing courts to review the question of immunity is meaningless when the same legislation essentially requires the court to grant immunity. And under this bill, the government can still sweep up and keep the international communications of innocent Americans in the U.S. with no connection to suspected terrorists, with very few safeguards to protect against abuse of this power. Instead of cutting bad deals on both FISA and funding for the war in Iraq, Democrats should be standing up to the flawed and dangerous policies of this administration."
Sen. Patrick Leahy (D-VT) also said he opposed the House deal.
"This bill would dismiss ongoing cases against the telecommunications carriers that participated in that program without allowing a judicial review of the legality of the program. Therefore, it lacks accountability measures that I believe are crucial.
Sen. Harry Reid (D-NV), who has been cool to recent talk about the House deal, appears on the fence, and issued this statement today:
"Senator Reid believes this version is better than the bill the Senate passed in February and much better than the Protect America Act signed by the President last summer, but he remains opposed to retroactive immunity and is reviewing the bill in its entirety."
The Senate passed a bill that provided retroactive immunity to telecom companies earlier this year, so it's unlikely that there will be enough votes to defeat the latest version of immunity.
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (6)Topics: Surveillance
Surveillance
"Bipartisan" Solution on Surveillance Unveiled
Clearly the wrangling is over regarding the surveillance compromise. A formal statement went out today that everyone agrees on this matter.
Senate Intelligence Committee Chairman John "Jay" Rockefeller (WV), Senate Intelligence Committee Vice-Chair Kit Bond (MO), House Majority Leader Steny Hoyer (MD), and House Minority Whip Roy Blunt (MO) announced today that a bipartisan compromise has been agreed to that will modernize the Foreign Intelligence Surveillance Act.
...
"This bipartisan bill balances the needs of our intelligence community with Americans' civil liberties, and provides critical new oversight and accountability requirements," said Hoyer. "It is the result of compromise, and like any compromise is not perfect, but I believe it strikes a sound balance. Furthermore, we have ensured that Congress can revisit these issues because the legislation will sunset at the end of 2012."
The Electronic Frontier Foundation has a copy of the new legislation here.
Read on for the complete text of the Congressional statement.
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (10)Topics: Surveillance
Surveillance
Lawmakers Reach Deal Over Government Surveillance Powers
From the Wall Street Journal:
WASHINGTON -- After more than a year of partisan acrimony over government surveillance powers, Democratic and Republican leaders have agreed to a bipartisan deal that would be the most sweeping rewrite of spy powers in three decades. The House is likely to vote on the measure Friday, House aides said.Removing the final barrier to action on the measure, which has been hashed out in recent weeks by senior lawmakers in both parties, House Democratic leaders decided to allow a vote on the bill, despite the opposition of many in their party.
The new agreement broadens the authority to spy on people in the U.S. and provides conditional legal immunity to companies that helped the government eavesdrop after the 2001 terrorist attacks, according to congressional aides in both parties.
Late Update: The deal-maker was offering some retroactive immunity to the telecom companies who have already participated in the program.
Critical to sealing the deal was a compromise that would grant conditional immunity to telecommunications companies for assistance they provided from September 2001 through January 2007. If the companies can show a federal district court judge "substantial evidence" they received a written request from the attorney general or head of an intelligence agency stating the president authorized the surveillance and determined it to be lawful, the cases against them will be dismissed.
We haven't heard what "conditional" means.
Politico reports that the House Democrats have agreed to vote for it, possibly tomorrow.
Late Update: The Electronic Frontier Foundation says the deal offers broad immunity and says the Democrats caved in to pressure from the telecom industry and the White House.
"Whatever gloss might be put on it, the so-called 'compromise' on immunity is anything but: the current proposal is the exact same blanket immunity that the Senate passed in February and that the House rejected in March, only with a few new bells and whistles so that political spinsters can claim that it actually provides meaningful court review," said EFF Senior Staff Attorney Kevin Bankston. "We call on all members of Congress to reject this sham compromise and maintain the rule of law, rather than deprive the millions of ordinary Americans whose privacy rights were violated of their day in court."
EFF is representing plaintiffs in a class-action lawsuit of AT&T customers who claim their records were illegally handed over to the National Security Agency (NSA). PERMALINK | COMMENTS | RECOMMEND RECOMMEND (18)
Topics: Surveillance
Scott Bloch
"Why Isn't The White House Letting Him Go?"
Career officials are in open revolt over at the Office of Special Counsel.
The underlings are outraged at their boss, Scott Bloch, who is under investigation by the FBI. The one man in the Bush Administration who is supposed to investigate whistle blower complaints is himself accused of retaliating against whistle blowers.
"We're trying to deal with this by decapitation," one official told TPM. "The big question is: Why isn't the White House letting him go?"
Meanwhile, Bloch is desperately trying to improve morale.
Against the advice of career officials in the office -- some of whom have been subpoenaed in the investigation -- Bloch is convening a day-long "retreat" in Alexandria, VA, flying in officials from offices in Dallas, Oakland and Detroit, for a pep talk.
During the training session, Bloch himself will give a talk entitled: "Training on Accountability, Efficiency, OSC's Independence, and "What a Whistleblower is."
The meeting was scaled back from Bloch's original idea of a multi-day retreat out in the Shenandoah Valley.
"He brought up the idea and said, 'What does everybody think? And everybody just kind of sat there," the official said.
We'll post the agenda for next week's retreat shortly.
Late Update: One former OSC official points to the afternoon session on "E-Discovery Training" and says it's "ironic in the extreme, given the accusations of his own attempted destruction of computer files that were requested in connection with the investigation of him!"
Bloch reportedly hired Geeks on Call to erase his email files.
Late Update: Here's the agenda.
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (23)Topics: Office Of Special Counsel, Scott Bloch
Today's Must Read
More than five years after the U.S. invasion of Iraq, the western alliance of big oil firms is making its final move on Mesopotamian oil reserves.
The New York Times reports today that the Iraqi government will soon announce the award of no-bid oil service contracts with a coalition of western oil companies, marking the first legal agreement between big oil and the post-Saddam Iraqi government.
The no-bid contracts are unusual for the industry, and the offers prevailed over others by more than 40 companies, including companies in Russia, China and India. The contracts, which would run for one to two years and are relatively small by industry standards, would nonetheless give the companies an advantage in bidding on future contracts in a country that many experts consider to be the best hope for a large-scale increase in oil production.
The Times notes the four main companies -- the Texas-based Exxon Mobile, British BP, Total of France and Royal Dutch Shell, which has its headquarters in the Netherlands -- were the four companies that made up the Iraq Petroleum Company that Saddam Hussein ousted when he nationalized Iraq's oil resources in 1968.
According to the Times, "It is not clear what role the United States played in awarding the contracts."
To be sure, the companies are somewhat disappointed that this is how they have to return to Iraq. The companies and the Bush Administration for years pushed the Iraqis to accept a so-called Hydrocarbon Law that would permit Production Sharing Agreements for the oil companies. That was among the so-called "benchmarks" that Bush enumerated at the outset of the "surge" in early 2006.
The PSA's are often called "colonial" style agreements that permit western oil companies to exert a lot of control over a nation's subterranean resources. Few countries still use them, as most, like Venezuela and Russia, demand more control over their own oil.
These no-bid deals were probably as good as the companies could expect.
The no-bid deals are structured as service contracts. The companies will be paid for their work, rather than offered a license to the oil deposits. As such, they do not require the passage of an oil law setting out terms for competitive bidding. The legislation has been stalled by disputes among Shiite, Sunni and Kurdish parties over revenue sharing and other conditions.
And it gives the Western oil giants a leg up on companies like the Russian-run Lukoil, which lost out big after the U.S. invasion.
A clause in the draft contracts would allow the companies to match bids from competing companies to retain the work once it is opened to bidding, according to the Iraq country manager for a major oil company who did not consent to be cited publicly discussing the terms.
Oil has been a major source of strife in domestic Iraqi politics. Opposition to giving foreigners access to Iraq's oil wealth has always been a critical motivation for followers of Moqtada al-Sadr, for example.
I wonder how this news will go over in Sadr City?
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (10)Topics:
Congressman's Sister Pleads Guilty
One day after Rep. William Jefferson (D-LA) announced he will seek re-election despite his upcoming federal trial, his sister pleaded guilty in a federal court in New Orleans.
From the New Orleans Times-Picayune:
Brenda Jefferson, a younger sister of embattled U.S. Rep. William Jefferson, pleaded guilty this afternoon to concealing her knowledge of an alleged conspiracy to take money from nonprofits that involved several of her relatives.The alleged conspiracy was the centerpiece of an recent indictment charging her sister, 4th District Assessor Betty Jefferson, her brother, political strategist Mose Jefferson, and her niece, Angela Coleman, with plundering more than $600,000 from three charities they controlled.
Brenda Jefferson, who also goes by the name Brenda Foster, signed a summary of the government's case against her in which she says that Coleman and Betty Jefferson made out a series of checks to her but then deposited the money in their own accounts.
Jefferson is awaiting trial on separate corruption charges in Virginia.
Topics:
John McCain
McCain Still Hasn't Updated Adviser List
After getting zinged for having a number of domestic and foreign lobbyists advising the candidate, the McCain campaign recently introduced
new campaign rules barring anyone currently employed as a lobbyist from serving on the campaign.
But they seem to have another new policy too: not telling anyone who the candidate's advisers are.
Until a couple weeks ago, JohnMcCain.com included a page with a long list of its advisers.
But they took it down right after TPM asked about an economic adviser who was linked to Jack Abramoff's lobbying scheme.
A McCain aide explained at the time that the list was outdated and did not reflect the new no-lobbyist rules that took effect in May. (Yes, the adviser we asked about, Carlos Bonilla, is both a lobbyist and a former White House official accused of taking favors from Abramoff's shop. He's no longer with the campaign, the aide said.)
We were curious about a handful of people with lobbying backgrounds who had been working for or advising the campaign. So we drew up a list and asked a McCain spokesman to tell us which ones remained with the campaign and which ones, like Bonilla, had been removed.
The spokesman refused to comment on the people individually and only reiterated the policy announced a few weeks ago, that no registered lobbyists work for the campaign and policy advisers can't be registered to lobby on issues they advise the campaign on.
It's been about a month since the campaign's new rules took effect, and the Web page we asked about is still blank.
When we asked today about the Web page that used to list advisers, the McCain aide told us they are "updating the page."
So how can anyone know who's on the McCain campaign, then?
The McCain spokesperson suggested that we go to the Federal Election Commission for information about staff and advisers.
Of course, that won't really tell us much. The FEC filings include expense records with outdated payroll payments for hundreds of campaign workers -- but without any indication of what the individuals actually do.
The McCain aide also responded: "Please show me a list of Obama campaign staff and advisers."
We asked the Obama campaign about that this morning and we haven't hear back from them. We'll let you know when we do.
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (5)Topics: John McCain
Countrywide
Dodd Thought "VIP" Status was "Just A Courtesy"
Senators Chris Dodd (D-CT) and Kent Conrad (D-ND) are still fending off questions about special-rate loans they received from Countrywide Financial.
Countrywide's been at the center of the mortgage meltdown, and the GOP is cranking up the pressure on the two Democratic lawmakers.
Dodd told reporters yesterday that a loan officer specifically told him and his wife they were getting "VIP" consideration in 2003 when they took out two loans on their Connecticut home and Capitol Hill townhouse.
But Dodd said he didn't think to ask precisely what that meant. Even though he is chairman of the Senate Banking Committee, which oversees the mortgage industry, Dodd said he "assumed" that "it was more of a courtesy thing."
From the New York Times.
"Somebody told you you were in a V.I.P. program," a reporter said, "And you didn't think you were getting ... "Mr. Dodd cut off the reporter and finished the question himself. "A special deal on a loan?" the senator asked. "No."
According to Portfolio, which broke the story last week, the lower rates Dodd received saved him "about $58,000 on his Washington residence over the life of the loan, and $17,000 on the Connecticut home."
Calculating the exact benefit is a challenge, and some suggest Dodd's perk was far less. The Washington Post reports:
Dodd borrowed $506,000 at 4.25 percent to refinance a Capitol Hill townhouse, originally purchased in 1999, and $275,042 at 4.5 percent to refinance a home in East Haddam, Conn.Rather than requiring him to pay the full amount to obtain the reduced mortgage rates, as other customers must, Countrywide waived three-eighths of a point, or about $2,000, on the first loan and a quarter-point, or $700, on the second.
Meanwhile, Sen. Conrad has moved quickly to quell the criticism. Through the special program -- known as the "F-O-A program", or "Friends of Angelo, named for Countrywide CEO Angelo Mozilo -- Conrad got a good deal on loans for both a Delaware beach vacation home as well as an eight-unit investment property he owns in Bismarck with his brothers.
Conrad said he gave $10,700 to Habitat for Humanity to compensate for any benefit he may have received on the vacation home loan. And this week, he said, he paid off the final $32,000 on the investment property.
Conrad spoke to Mozilo about his mortgage in 2002, but the deals under scrutiny were not finalized until 2004. Yet like Dodd, Conrad also said he was unaware of any discount. "I had absolutely no clue they had done that," he said yesterday.
"My conscience is absolutely clear," he told the Times.
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (3)Topics: Chris Dodd, Countrywide, Kent Conrad
Iraq Contractors
DoD IG: KBR Overcharged The Navy After Hurricane Katrina
We pointed out this morning the New York Times story that suggested KBR was over charging the military on Iraq-related contracts and threatening to cut off services to combat troops if the bills weren't paid.
Now here's another one about KBR's billing. This time from the Department of Defense Inspector General. And it looks at the company's role in the clean-up efforts after Hurricane Katrina.
The Houston Chronicle reports:
The Pentagon Inspector General said he could find no documentation in Navy contracting files to back up KBR claims it paid fair and reasonable prices to subcontractors that served meals in New Orleans.PERMALINK | COMMENTS | RECOMMEND RECOMMEND (16)"The prices KBR agreed to pay were greatly inflated," the 86-page audit said.
"The Navy paid approximately $4.1 million for meals and services we calculate should have cost $1.7 million, more than a $2.3 million difference," said the audit, signed by Assistant Inspector General for Acquisition Management Richard Jolliffe.
. . . Altogether, the audit requested that the Navy seek refunds of at least $8.5 million for "inappropriate" payments to KBR.
Topics: Defense Department, Iraq Contractors
Iraq
"Curveball" Speaks
A reporter for the Los Angeles Times landed a rare interview with the Iraqi known as "Curveball," the now-discredited source on whom the Bush Administration rested much of its case for Iraq having weapons of mass destruction.
Living in Germany and speaking out for the first time, "Curveball" says everyone has been lying about him:
"I never said Iraq had weapons of mass destruction, never in my whole life," he said. "I challenge anyone in the world to get a piece of paper from me, anything with my signature, that proves I said there were weapons of mass destruction in Iraq."PERMALINK | COMMENTS | RECOMMEND RECOMMEND (13)How did the Bush administration get it so wrong?
"I'm not the source of these problems," he said.
Topics: Iraq
Dick Cheney
Searching For The True Source Of A Bogus Story
We've been trying to find the original source for that mysterious meme about China drilling for oil off the coast of Cuba and Florida.
It's flat out wrong. The AP debunked it a few days ago after Vice President Dick Cheney tried to pass it off in remarks to the U.S. Chamber of Commerce about high energy prices.
But it lives on. GOP operative Mary Matalin repeated it on CNN just last night.
We've traced the evolution of the non-fact and found it emerged a few months ago with an inexplicable spate of letters to the editor at small and regional daily newspapers. Within weeks it was popping up as a talking point among many Republican lawmakers and getting traction from conservative pundits.
In most instances, the Republicans point to the (fake) story as reason to suspend the current moratoriums on offshore drilling that are largely based on environmental concerns. It may also serve to gin up opposition to the Cuban regime, a sentiment that has been vital to GOP support in Florida.
It is true that Sinopec, the Chinese oil company, along with a half dozen other foreign firms, signed an agreement with the Cuban government to possibly explore for drilling opportunities offshore. The Sinopec deal was forged back in 2005, and any actual drilling has been delayed until at least 2009.
A 1977 agreement between Cuba and the United States set the maritime boundary at the halfway mark along the 90-mile stretch from Key West to the Cuban coast. Cuban drilling about 50 miles off the coast of Florida could begin next year.
Cheney said he got the misinformation from a George Will column published on June 5.
By then, it was already a common talking point for GOP lawmakers. Also on June 5, Rep. Jean Schmidt (R-OH) spoke on the House floor and said: "The Chinese are drilling off the coast of Florida with their new energy partner, Cuba."
On May 23, David Gay, a Republican Congressional candidate from New York, said: "I think it is appalling that we allow Cuba and China to drill in the Florida Straits, meanwhile forbidding our own selves from seeking the common good, in this case, a way to lower the price of gasoline."
No doubt the notion was helped along by Weekly Standard writer Fred Barnes, who cited it unsourced in a column widely distributed by Yahoo.
A few weeks before that, our old friend Sen. Larry Craig (R-ID) cited the alleged Chinese drilling in a May 1 press release.
Our Nexis search also found a reference to Chinese drilling from Rep. Thelma Drake (R-VA) in an April 12 op-ed in the Daily Press of Newport news.
It was in late March that the whole thing initially picked up steam. As though on cue, letter-to-the-editor writers nationwide began complaining about China's alleged drilling in the Gulf and fired off missives to their local papers.
On March 29. Jerry Lightsey in Texas wrote the Austin American-Statesmen, saying:
"China is drilling offshore from Cuba in waters where we should be."
Then a few days later on April 2 a man named Don Code of Reno wrote the Reno Gazette-Journal.
"As I write this letter, China is drilling oil in our own back yard, in the Gulf of Mexico for Cuba. They are drilling in the exact same spots we would be drilling in, but the tree huggers won't let us."
On April 6, from the letters to the editor page of the St Louis Post-Dispatch, Edward Wolfe of Kirkwood, who described himself as a retired physician, wrote:
"China is drilling off the coast of Cuba only 90 miles from the U.S., some of it being done laterally into our ocean spaces."
April 8 Letter to the editor to the Leaf-Chronicle in Clarksville, Tenn. Jim Weague wrote:
"We cannot drill in the Gulf of Mexico, although China and Cuba are drilling there right now."
Before late March, we could find only trace evidence of this story, in obscure places online like this one here. What triggered this sudden, widespread and misinformed outrage? Was there some sort of email blast that went out?
Maybe the March 17 news story from McClathy planted the seed. The story didn't say that China was drilling, but it raised the spector:
HAVANA, Cuba -- Imagine oil rigs drilling in deep waters just 45 miles off the coast of South Florida. Refineries process the oil in Cuba and sell it across the Caribbean and beyond. Canadian and Mexican companies supply billions of dollars in equipment and services.This could happen, as Havana invites foreign companies to explore its probable oil and natural-gas reserves while Washington's embargo against the communist-led island keeps U.S. companies locked out.
South Florida is watching closely, amid debate over drilling near its shores and concerns about U.S. energy policy. Oil companies increasingly seek to tap Cuba's deep-water reserves, now that oil prices are soaring and profits are more likely.
But all those letters all at once seems like an awful big coincidence.
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (22)Topics: Dick Cheney, Oil
David Safavian
Abramoff Crony Gets New Trial
From the AP:
A federal appeals court has ordered a new trial for a former Bush administration official convicted in the Jack Abramoff lobbying scandal.David Safavian, former chief of staff for the General Services Administration, was convicted of lying to investigators about his relationship with Abramoff. He was sentenced to 18 months in prison but the sentence was put on hold while the appeal played out.
He did cry at his sentencing.
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (4)Topics: David Safavian, Jack Abramoff
KBR
Today's Must Read
What would the U.S. military do without KBR, its largest logistical contractor?
That's not something the military ever wants to find out. The U.S. occupation of Iraq would collapse within days without KBR, which provides food, fuel, and potable water along with critical services ranging from complex engineering to cleaning out the port-o-potties.
And KBR knows it. A story on the front page of today's New York Times lays bare the leverage that KBR holds over the U.S. military.
In short, KBR can charge the U.S. government anything it wants under the implicit threat that the firm will halt logistical services to troops in Iraq. If the military doesn't pay up in full, KBR has warned, "it would reduce payments to subcontractors, which in turn would cut back on services."
That's according to Charles M. Smith, the senior civilian overseeing the multibillion-dollar contract with KBR during the first two years of the Iraq war. Smith, speaking out for the first time, said he was ousted from his job after he tried to question KBR's massive billing.
The Army itself admits to the Times that it really had no choice but to pay KBR.
"You have to understand the circumstances at the time," said Jeffrey P. Parsons, executive director of the Army Contracting Command. "We could not let operational support suffer because of some other things."
Smith said that he was forced from his job in 2004 after informing KBR officials that the Army would impose escalating financial penalties if they failed to improve their chaotic Iraqi operations.
As chief of the Field Support Contracting Division of the Army Field Support Command, he was in charge of the KBR contract from the start. Mr. Smith soon came to believe that KBR's business operations in Iraq were a mess. By the end of 2003, the Defense Contract Audit Agency told him that about $1 billion in cost estimates were not credible and should not be used as the basis for Army payments to the contractor."KBR didn't move proper business systems into Iraq," Mr. Smith said.
Along with the auditors, he said, he pushed for months to get KBR to provide data to justify the spending, including approximately $200 million for food services. Mr. Smith soon felt under pressure to ease up on KBR, he said. He and his boss, Maj. Gen. Wade H. McManus Jr., then the commander of the Army Field Support Command, were called to Pentagon meetings with Tina Ballard, then the deputy assistant secretary of the Army for policy and procurement.
After Smith was pushed out, the Defense Department hired a contractor to approve KBR's billing. (The department's own auditors had agreed with Smith that KBR was not properly documenting its billing.)
U.S.-paid contractors now outnumber U.S. troops in Iraq. Many contractors are recruited from poor Asian countries and paid far less than Americans would demand.
We've heard before about the "profound systemic problems" with KBR's billing. But Smith's account is the first time we've heard about an implicit threat to cut off services to troops.
KBR doesn't have the best record of providing troops' services. The company was criticized in March for making troops sick by failing to provide clean water. And top military officials have given false statements to Congress to quell controversy over the company.
But there's not much the military can do about it. Installing another company with the infrastructure inside Iraq needed to provide the same services would be an all-but insurmountable undertaking. So Smith's account should really come as no surprise.
"In the end," Mr. Smith said, "KBR got what it wanted."PERMALINK | COMMENTS | RECOMMEND RECOMMEND (36)
Topics: Iraq, KBR
Iraq
Senate Report Shows Intel Debunked Al Qaeda-Iraq Link Before Bush's Speech
Buried deep in the new Senate intel report is evidence that yet another pre-war Bush administration claim about Iraq had been discredited within the intelligence community, months before the president used the claim publicly as an argument for war.
In October 2002, a few weeks before Congress voted to authorize the Iraq invasion, Bush told a crowd in Cincinnati: "We've learned that Iraq has trained al Qaeda members in bomb-making and poisons and deadly gasses."
Problem is, it wasn't true. More importantly, a lot of people at the CIA and the Defense Intelligence Agency knew it probably wasn't true. That's one of the interesting revelations inside the Senate's recent 171-page Phase II report on whether White House statements were backed up by prewar intelligence.
Once again, it's important to make the distinction between good-faith flaws in prewar intelligence and evidence that the public was misled by a bogus case for war. (A lot of people have tried hard to make that a very hazy distinction in recent years)
As Newsweek noted, the Senate report reveals that: "The intelligence reports on chemical and biological weapons training came primarily from the interrogation of al Qaeda detainee Ibn al-Shaykh al-Libi."
But al-Libi had been widely discredited months before the president made that remark -- by both the CIA as well as the Defense Intelligence Agency.
From page 65 and 66 of Senate report:
A February 22, 2002 DIA Defense Intelligence Terrorism Summary noted that Ibn al-Shaykh [al-Libi] "lacks specific details on the Iraq's involvement, the [Chemical Biological Radiological and Nuclear Weapons] materials associated with the assistance and the location where the training occurred. It is possible he does not know any further details; it is more likely this individual is intentionally misleading the debriefers. Ibn al-Shaykh has been undergoing debriefs for several weeks and may be describing scenarios to debriefers that he knows will retain their interest. Saddam's regime is intensely secular and is wary of Islamic revolutionary movements. Moreover, Baghdad is unlikely to provide assistance to a group it cannot control.DIA reiterated some of these points in additional reports. On August 7, 2002, the CIA reported on al-Libi's credibility. The Summary of the report stated that questions persist about [al-Libi's] forthrightness and truthfulness" and later elaborating "in some instances, however, he seems to have fabricated information. Perhaps in an attempt to exaggerate his own importance, Ibn al-Shaykh claims to be a member of al-AQa'ida's Shura Council, a claim not corroborated by other intelligence reporting.
(emphasis added)
Intel officials long ago stopped trying to defend al-Libi as a source. He recanted in January 2004, leading the CIA to order all prior intelligence suggesting Iraq trained al Qaeda personnel in chemical and biological warfare "recalled and re-issued" in February 2004.
But the fact the intelligence community knew al-Libi was unreliable from early to mid-2002 casts many official statements in a new light. For example, al-Libi has been reported as a primary source for Colin Powell's claim that al-Qaeda received chemical or biological weapons training from Iraq when he addressed the United Nations in early 2003. Powell did not use his name, but referred to al-Libi as a "senior Al Qaeda terrorist" who ran a training camp in Afghanistan.
(U.S. forces captured al-Libi in Afghanistan in 2001 and flew him to Egypt, where he provided the false Iraq-al-Qaeda link while undergoing harsh interrogation.)
Also, we know that Bush's speech was vetted because that was the same speech on Oct. 7, 2002, that CIA director George Tenet personally called the president about and urged him not to make mention of Iraq's alleged effort to obtain uranium from Niger because intelligence sources did not support that claim.
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (9)Topics: George Bush, Iraq
Valerie Plame
Bush, Cheney's FBI Interviews Subpoenaed
At first Rep. Henry Waxman asked politely.
But today the chairman of the House Government Oversight and Reform Committee issued subpoenas for the FBI's paperwork stemming from interviews of Vice President Cheney and President Bush regarding the outing of covert CIA agent Valerie Plame Wilson.
What are the odds Attorney General Michael Mukasey turns them over?
Meanwhile, we can expect former White House press secretary Scott McClellan to be on Capital Hill testifying about the same matter on Friday.
PERMALINK | COMMENTS | RECOMMEND RECOMMEND (9)Topics: Dick Cheney, George Bush, Scott McClellan, Valerie Plame
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