Official Says Fraud Loophole Was A ‘Mistake’
WASHINGTON - The Bush administration inadvertently exempted foreign contracts in Iraq from fraud oversight, a top administration official said Tuesday, resulting in a loophole that Rep. Peter Welch, D-Vt., said could have protected private firms that steal taxpayer money. 
The admission follows weeks of controversy surrounding the exemption’s mysterious appearance in a new rule guiding contractors being paid billions for government work in the U.S. and in foreign countries around the globe.
The administration removed the single paragraph exemption on Monday, hours before a House panel convened a hearing to question officials about its origin and to debate legislation introduced by Welch to close the loophole and punish fraudulent contractors.
“We did not knowingly, thinkingly put in the exemption,” said David Drabkin, the top acquisition officer at the General Services Administration. “The exemption language was a drafting error.”
That didn’t comfort Welch.
“What you’re saying is this wasn’t a conspiracy,” Welch told Drabkin. “It was a mistake. Well, that’s not reassuring to taxpayers.”
The U.S. has spent about $102 billion on rebuilding Iraq and Afghanistan over the last five years. Federal investigators have uncovered about $14 million in fraud.
Welch publicized the exemption earlier this year after his office received a confidential tip.
Leading lawmakers concerned by the freshman Democrat’s discovery quickly joined him in questioning the administration and scheduling the hearing Tuesday by the Subcommittee on Government Management, Organization and Procurement.
Drabkin said Welch and other lawmakers made a “horrible” allegation that the exemption was intentionally included. He said civil service employees made the mistake by copying language from another federal rule that included the exemption.
“I’m offended that the suggestion was made without a scintilla of evidence,” Drabkin said. “The truth of the matter is they made a drafting error. They were in a hurry.”
Welch, however, is skeptical of the timing surrounding the exemption’s removal one day before the panel convened the hearing. He suggested the administration might have ignored the error to please private industry without congressional interference.
“I don’t trust the Bush administration on this,” Welch said after the hearing.
The Committee on Oversight and Government Reform could vote on Welch’s loophole legislation as early as today, but administration officials and Republican lawmakers say it’s unnecessary now the exemption has been removed.
The bill would require contractors aware of fraud, waste or abuse to report it to the Justice Department. Their companies could be barred from government contracts if they failed to do so.
The White House opposes the measure, saying proposed regulations would implement the same requirements as the legislation.
The Professional Services Council, a trade association that represents more than 300 contractors, like Blackwater Worldwide and KBR, for the former subsidiary of Halliburton, strongly opposes Welch’s legislation.
The group also urged Congress to replace the exemption for foreign contracts, saying it threatens American companies working overseas with costly self-investigations for fraud.
Colleen Preston, an executive vice president for the group, said American contractors could be punished for fraud being committed by the foreign subcontractors they hire abroad.
“It is unreasonable and impractical to expect a company in Africa or the Middle East to understand and be able to comply with the procedural requirements we impose on U.S. government contractors,” she said.
The group says companies can voluntarily report fraud. That won’t work, said Barry Sabin, principal deputy attorney general for the Justice Department’s Criminal Division.
The agency has prosecuted 46 contractors for fraud in Iraq, Afghanistan and Kuwait. A recent case involves a KBR fuel technician who allegedly accepted bribes to divert more than $2 million worth of fuel to the black market in Afghanistan.
© 2008 The Brattleboro Reformer
What is the single paragraph that was “inadvertently” included, and what existing rule did the exemption come from?
Did Darth Cheneyburton get his fingers caught in the National Cookie Jar - again?
How much longer will this administration (and the permanent bureaucracy that benefits from these kinds of fraud) get away with “incompetence” as a plausible defense to get everything they want?
If it was “inadvertent” why was a confidential tip
necessary? Just one more piece of BS to pile on the
sky-high pile.
The bush White House makes a lot of mistakes, doesn’t it? Somehow these mistakes always seem to revolve around bush’s buddies making a lot of money off the taxpayers.
“…conspiracy,” Welch told Drabkin. “It was a mistake!!!”
There is 8 long and bitter years of ‘mistakes’ [sic]…There is clearly a pattern of unlawful misfeasance that fits perfectly into criminals gangs known ‘modus operandi’…deliberate ‘mens rea’ and ‘actus reus’ on the part of these Bu$hCo cronies…
Impeachment should have always been on the table, notwithstanding the complicity of the spineless dimocrats….
Who has the longer nose - Pinocchio or Drabkin?
Inadvertently inserted a clause exempting fraud oversight? How stupid do they think we are? Obviously the level of morons. How timely to yank it the day before the oversight hearing.
This whole story is so outrageous it is hilarious. My favorite part was the comment from the Professional Services Council that the group says companies can voluntarily report fraud. Oh yeah, like they eagerly have been all along. Or would have, if only they could have found any.
Talk about audacity. There is no limit to what they think they can get away with.
kathyodat
Considering that our country is going broke, why isn’t this on the front page of every newspaper? Oh I forgot, it’s an election year and a Republican is running for President.
kathyodat
Mistake? Really? And, how many ‘mistakes’ are in all of the other no bid war contracts? Just one dumb person with a slight curiosity…..Who in the world will buy this story?
Probably all of Congress, they don’t appear to care much for indepth investigations of any sort, might just rock the boat..
Let’s see a real mistake is equally likely to be either advantageous or deleterious to profits of the contractors.
How come all of the bushism MISTAKES are to the advantage of the contractor?
Yeah, right. And I’ve got a bridge for sale, cheap.
“Leading lawmakers concerned by the freshman Democrat’s discovery quickly joined him in questioning…”
says a lot that the long-time folks didn’t “discover” it first. or did they just let it slide? I guess they haven’t explained the way things work to this Welch fellow yet.
oculus
“How much longer will this administration (and the permanent bureaucracy that benefits from these kinds of fraud) get away with “incompetence” as a plausible defense to get everything they want?”
Considering that the one consistency in this Administration is its ability to fuck up everything it does, that its “key competency” (a business term used to identify a competetive advantage) is incompetence, it is their most plausible defense. Since ideoligical purity is valued over competence it likely happened just the way they say.
It’s not like they have been shy in the past about boning us. They screwed us with our pants on in the broad daylight with the Patriot Act. When they haven’t wanted us to know we were getting the shaft, they didn’t hesitate to lie to us, classify the document, or hide any outcome - Anyone here know who attended the infamous Energy Meeting with Dick Cheney?
When they don’t care enough to even try to hide something, The Shrub just uses a signing statement. “Here, you’ve been corn-holed because I say so”.
Nope, these people are natural-born fuck-ups. If they wanted the provision in law, it would be there one way or another. After all, we still don’t have our right of Habeus Corpus back yet, and we fought a revolution for that one.
Colleen Preston, an executive vice president for the group, said American contractors could be punished for fraud being committed by the foreign subcontractors they hire abroad.
“It is unreasonable and impractical to expect a company in Africa or the Middle East to understand and be able to comply with the procedural requirements we impose on U.S. government contractors,” she said.
Clearly the corporate structure has exceeded its level of competence - the Peter Principle?
Corporate headquarters are moved off-shore. Contracts are both drafted and completed by attornies.
Representatives hold stock in the companies.
The proposed legislation sounds most reasonable given that this is taxpeyer money.
earlier post noting: ‘modus operandi’…deliberate ‘mens rea’ and ‘actus reus’ - could the poster define these in lay terms?
“The admission follows weeks of controversy surrounding the exemption’s mysterious appearance in a new rule guiding contractors being paid billions ….”
‘MYSTERIOUS APPEARANCE’?
Mysterious, indeed; but we should all know enough by now that whatever the mystery source is, the new rule was intentional. Inadvertently? I doubt it.
“The U.S. has spent about $102 billion on rebuilding Iraq and Afghanistan over the last five years. Federal investigators have uncovered about $14 million in fraud.”
Where did the rest of the $102bn, so the $88bn, go to, for there’s been sh*t done for rebuilding in those two countries? Someone’s buying up a lot of heroin for later and perhaps current sales, hence profits, with “high returns on investments”.
“Leading lawmakers concerned by the freshman Democrat’s discovery quickly joined him in questioning the administration and scheduling the hearing Tuesday by the Subcommittee on Government Management, Organization and Procurement.”
So it’s a [freshman] who caught what so-called [leading] lawmakers would not have caught. Sounds like seniors need to be made freshmen again, and the present freshman a senior.
“Drabkin said Welch and other lawmakers made a “horrible” allegation that the exemption was intentionally included. He said civil service employees made the mistake by copying language from another federal rule that included the exemption.
“I’m offended that the suggestion was made without a scintilla of evidence,” Drabkin said. “The truth of the matter is they made a drafting error. They were in a hurry.””
I also believe it was likely [intentional].
And what’s this other rule that the drafters supposedly used in their writing of this new and denounced rule, for whatever that other rule is, it seems that it applies to exemptions for foreign contractors, and The People should know what ALL of these exemptions are!?!!
This reminds me of when daddy Bush was asked about April Glaspie giving Saddam the green light to go into Kuwait he objected strongly, “Now that gets at the national integrity!” Then he refused to talk about it further.
Same pattern all along since 911/Enron/Iraq/above…
They say something to the effect of “How dare you insinuate” while our lapdog media distracts us with sex scandals.
What national integrity?
A freshman huh? nobody reads the paper work they o.k. Didn’t we learn from the patriot act boys, maybe all our law makers should be freshman(remember this when its time to vote)and who would guess nobody wants to be held accountable. ( its time people its time)
we need to get rid of these embarrassments,and make them all accountable. they don’t have time to or don’t know how to read legislation , but they know how to invest. because our legislative branches have invested about 190 million in companies that got government contracts for the wars, do you think they really want out. God bless us cause were going to need it.
“The group also urged Congress to replace the exemption for foreign contracts, saying it threatens American companies working overseas with costly self-investigations for fraud.”
Which costs more, investigations or fraud? Any company doing work on the tax payers dime should be subject to audits just as is required of our governmental departments. It’s a basic function the ensures the citizens’ trust is maintained. If you refuse to operate with an open book, you shouldn’t be bidding for the contracts in the first place.
old goat:
“Clearly the corporate structure has exceeded its level of competence - the Peter Principle?”
Yes, and it seems to be awfully common; unfortunately.
You inquired as to the meanings of ‘modus operandi’, etc., and the following dictionary, encyclopedia, … website provides the definitions for these Latin-origin terms.
http://www.thefreedictionary.com/modus+operandi
The other terms can be searched for there, and the base dict. pages, like this above one, all provide basic definitions, but also links near the very top of the pages; links for legal dict. definition, and for Wikipedia copies. When it’s medical terms, or terms also used in medicine, then you’ll see a link for this definition page; just like with ‘legal’, etc.
Double-click in those pages of that site though and you’ll find that this triggers an automatic dictionary search for the text you happened to highlight. So when copying, to then paste, just scrape the text you want to capture; instead of double-clicking.
“The Bush administration inadvertently exempted foreign contracts in Iraq from fraud oversight, a top administration official said Tuesday, resulting in a loophole that Rep. Peter Welch, D-Vt., said could have protected private firms that steal taxpayer money.”
That has to be one of the funniest f-king statements I have ever heard in my life!
Did they also “indavertently” burn the Constitution of the United States?
Benedict Arnold is rolling over in his grave from laughter. This administration should be imprisoned with no possibilty of parole!!!!
Kendpotter(4/16, 3:38pm) wrote :” Considering that the one consistency in this Administration is its ability to fuck up everything it does, that its “key competency” (a business term used to identify a competetive advantage) is incompetence, it is their most plausible defense. Since ideoligical purity is valued over competence it likely happened just the way they say.”
I would argue that the key competency of our current leadership is the cultivated appearance of incompetence used to mask the incredibly successful execution of their agenda . Here are a few examples that come to mind:
(1) The neoconservative think-tank Project for a New American Century (see http://www.newamericancentury.org/RebuildingAmericasDefenses.pdf ) opined that their plans for American full-spectrum dominance over the globe would take too long, “absent some catastrophic and catalyzing event – like a new Pearl Harbor. Domestic politics and industrial policy will shape the pace and content of transformation as much as the requirements of the [hegemonic] missions.” Despite the appearance of incompetence, the neo-cons have been amazingly skillful in, at the very least, exploiting the 9/11 attacks to shape domestic politics and industrial policy to facilitate the rapid militarization that they envisioned. (Furthermore, there is very compelling evidence that 9/11 was in fact orchestrated by highly placed domestic elements – I’ll be happy to elaborate if anyone is interested).
(2) They have created the “legal” framework for a unitary executive and the dissolution of constitutionally mandated protections of the rights of political dissidents and everyone else. For some reason, the opposition party, even when it has a majority in Congress, has been unable to reverse these gains made by such an “incompetent” administration and its allies.
(3) Middle East policy advisors Bernard Lewis and David Wurmser have long called for the fragmentation of the Middle East along ethnic and sectarian lines. (see http://www.tompaine.com/articles/2006/05/08/destroying_iraq_to_save_it.php ). This is precisely what the Bush administration is achieving in Iraq, in addition to building permanent military bases and generating the kind of violence that “necessitates” a long-term U.S. presence. However, much of what passes for political analysis in this country views Iraq policy as a failure “to bring about stability and democracy in the region,” when these were never the intent.
(4) Our leaders have demonstrated very skillful control of this nation’s media, despite widespread perception of Bush administration incompetence.
etc…
The mistake was letting people in Congress read it before it was passed. The mistake was they got caught. Would have worked better if they still had the Republican majorities in both Houses, ’cause then, they’d just add it to the bill at conference, after it had been argued on the floors. Tuck it into a 600 page behemoth, release it on Friday night, preferably of a long weekend and schedule the vote for the next business day.
That’s been their MO up to now.
Yeah, right. We are supposed to believe this was a mistake? I don’t think so. Bush and company were trying to get away with something once again. Great question, peoplefirst. If it was inadvertant, why DID there need to be a confidential tip?
As the Bushjunta’s years of fraud and deception wind down, more “mistakes,” schemes, errors, et al., will be brought to light.
Welch’s discovery was made possible, not only because of a valuable tip, but also because of the Repug thugs diminishing power to control freshmen lawmakers like him.
RLOL Drabkin’s weasily mea culpa was, yuk, melodramatic and ugh, repulsive!
“What at first was plunder assumed the softer name of revenue.” (Thomas Paine) It’s time to revert to the original title!!!!!!
If a KBR or Blackwater employee reported fraud, they would be waterboarded or worse.
It’s too bad there wasn’t some kind of watchdog group keeping an eye on this fraudulent administration and doing some kind of oversight. Oh yeah, I forgot - it’s called Congress.
Folks, this was no mistake. Back in Feb., 2008 the Office of Management and Budget was questioned about this loophole by Sen. Charles Grassley. He was told by an official at that time that it would be inappropriate to discuss how the loophole had been placed there until the regulation took effect[!!!!!].