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American Faces Charge of Graft for Work in Iraq
By JAMES GLANZ
11/17/05 "New
York Times" -- -- In what is expected to be the first of a
series of criminal charges against officials and contractors
overseeing the rebuilding of Iraq, an American has been charged with
paying hundreds of thousands of dollars in bribes and kickbacks to
American occupation authorities and their spouses to obtain
construction contracts, according to a complaint unsealed late
yesterday.
The man, Philip H. Bloom, who controlled three companies that did
work in Iraq in the multibillion-dollar reconstruction effort, was
charged with conspiracy, wire fraud, conspiracy to launder money and
interstate transportation of stolen property, all in connection with
obtaining up to $3.5 million in reportedly fraudulent contracts.
The complaint, unsealed in the Federal District Court of the
District of Columbia, also cites two unnamed co-conspirators who
worked in the Coalition Provisional Authority, the American
administration that governed Iraq when the contracts were awarded in
early 2004. These were the officials who, with their spouses,
allegedly received the payments.
"This is the first case, but it won't be the last," said Jim
Mitchell, a spokesman for the Special Inspector General for Iraq
Reconstruction, an independent office. Mr. Mitchell said as many as
a dozen related cases had been referred to the Justice Department
for possible prosecution.
Mr. Bloom's lawyer, Robert Mintz of Newark, said he still knew
little about the case beyond what was in the complaint. "The
complaint and the supporting affidavit were unsealed for the first
time today and we're in the process of reviewing the allegations,"
he said.
Mr. Bloom, who lived in Romania for many years, appeared in court
yesterday, Mr. Mintz said. He was arrested recently at Newark
Liberty International Airport, the lawyer added.
The complaint says that in order to obtain lucrative reconstruction
contracts, Mr. Bloom paid at least $200,000 a month to an
unspecified number of coalition authority officials, including the
two co-conspirators and their spouses. Neither co-conspirator is
named in the complaint, although it indicates that one is
cooperating with the prosecution.
The other co-conspirator, the complaint says, held the position of
comptroller and financing officer for "C.P.A. South Central Region
in Iraq," which included Hillah. This person controlled $82 million
"to be used for payment of contract services rendered in Al Hillah,
Iraq, including contracts awarded to Bloom," the complaint asserts.
A United States government official said this person was named
Robert J. Stein.
The complaint says the contracts Mr. Bloom obtained "were purported
to be for the rebuilding and stabilization of Iraq" in Hillah and
Karbala, a holy city in the south. The work included "the renovation
of the Karbala Public Library; demolition work related to, and
construction of, the Al Hillah Police Academy; the upgrading of
security of the Al Hillah Police Academy, and the construction of
the Regional Tribal Democracy Center."
With the assistance of the alleged co-conspirators and others, the
document says, Mr. Bloom submitted multiple bids on the same
contracts, using the names of different companies that were either
controlled by Mr. Bloom or did not exist. Once there were sufficient
bids to satisfy United States government regulations, the
co-conspirators, including Mr. Stein, would ensure that the contract
went to one of the companies, the complaint says.
"The value of these contracts ranged up to $498,900," the complaint
says. "Co-conspirator 1's approval authority for awarding contracts
was limited to contracts less than $500,000."
The complaint contends that the monthly bribes to coalition
officials have been corroborated by an Iraqi witness, one of the
conspirators "and other persons with personal knowledge of the
payments, and through reviewing various financial records."
In one case Mr. Bloom, "who paid the aforementioned bribes,
kickbacks and gratuities," the complaint says, "caused the transfer
of funds totaling more than $267,000 from foreign bank accounts to
accounts in the United States in the name of Co-conspirator 1 and/or
his spouse." Other transfers came from banks in Kuwait, Switzerland,
the Netherlands and Romania to accounts controlled by the alleged
conspirators, the complaint says. Some transfers also went to
jewelers, automobile dealerships and a realty firm, all apparently
for the benefit of the fellow conspirators.
"I believe that the financial and monetary transactions described
above are part of a conspiracy to violate United States law," wrote
Patrick McKenna Jr., a special agent for the inspector general's
office, as part of the complaint.
Little information was immediately available about Mr. Bloom or Mr.
Stein. But the inspector general previously noted that in the rush
to start reconstruction projects in south central Iraq, contracts
were handled sloppily and oversight was minimal.
The charges are likely to fuel further criticisms of the rebuilding
effort in Iraq, which has largely failed to live up to the hopes of
United States officials. Large amounts of the money appropriated for
rebuilding have been spent on securing projects and repairing
sabotage, both results of insurgent activity. The effort has also
been criticized for failing to take into account the problems faced
by any building project in Iraq, including the difficulty of
visiting project sites.
Copyright 2005 The New York Times Company
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