Dan Rather

The majority of recent headlines may not be especially encouraging, but at least one group has found plenty to celebrate in news about Iraq: war contractors. From the beginning, one of the distinguishing factors of this war has been the tremendous reliance on private contractors in everything from logistics to security to rebuilding efforts. And over four years, the allegations of waste, fraud and abuse by private contractors have been piling up.

The U.S. Army has opened 50 criminal investigations into contractors involved in operations in Iraq, Kuwait (a staging area for Iraq) and Afghanistan. Pertaining to Iraq alone, the special inspector general for Iraq reconstruction had, as of December 2006, 78 open investigations.

The good news for these contractors has come in the form of two court rulings, one from last year and the other delivered earlier this month.

Both rulings involved fraud cases against a U.S. firm called Custer Battles. Custer Battles' website carries the perhaps telling motto 'Transforming Risk Into Opportunity' and summarises the company's operations in Iraq as providing "security assistance, critical infrastructure and protection, and business facilitation."

In the first case, an American jury found Custer Battles guilty of defrauding the U.S. government - that would be taxpayers, folks - in connection with a contract to help establish a new currency to replace the Iraqi dinar used under Saddam Hussein's rule. However, Judge T.S. Ellis, presiding over that case, dismissed it and the $10 million verdict rendered against Custer Battles on the grounds that the company was contracted by the Coalition Provisional Authority in Iraq, and not the U.S. government.

Corruption allegations

The Coalition Provisional Authority, you will recall, was the entity created by the U.S. to oversee the Iraq occupation and reconstruction until the "transfer of sovereignty" in June 2004. The CPA was headed by L. Paul Bremer III, who was appointed by President Bush. The CPA itself has been the subject of corruption allegations, with at least $8.8 billion of funds it oversaw unaccounted for.

Whether by accident or design, the authority under which the CPA was created and the jurisdictional issues associated with it were never spelled out. So even though it conducted its operations with U.S.taxpayer money and Iraqi Government assets seized by the U.S. during the invasion, it was possible for Judge Ellis to rule that there was no proof that the U.S. government was, itself, defrauded. And in an apparent Catch-22, an Iraqi law put in place just before the handover of sovereignty grants U.S. contractors immunity from prosecution by Iraq courts.

Right lawsuit

Alan Grayson, the lawyer who brought the suit against Custer Battles, may have had it right when he quipped that the legal morass associated with the CPA effectively turned its rule into a "free-fraud zone."

Then there was the second case, involving a $16.8 million contract awarded to Custer Battles to provide security at the Baghdad Airport — security that was not provided (21,000 troops were, at the time, doing that very job) but was billed for nonetheless. That case was dismissed by the same judge, on the grounds that Custer Battles did not knowingly commit fraud.

The bar for fraud seems to have been set mighty high for U.S. contractors operating in Iraq. One might ask just what it takes to get convicted of the offence. And one might further ask where the accountability is. Accountability for our tax dollars and for seized Iraq government assets, yes. But also - and perhaps more importantly - accountability for the reconstruction projects upon which Iraqi stability, and the ability of our men and women in uniform to return home, might well rest.