Tag Archives: Government corruption

General Mattis and Special Inspector General Sopko Agree on “Spoils of War”


Mattis and SIGAR


“When the head of an agency actually listens to the findings of an Inspector General (IG), great things can happen.

June 2017 report by the Special Inspector General for Afghanistan Reconstruction (SIGAR) prompted Secretary of Defense Jim Mattis to acknowledge and denounce the Department of Defense’s (DoD) dismissive attitude towards reigning in its overspending of taxpayer dollars, and to highlight the good work done by SIGAR.

The official memo to DoD leadership, dated July 21, discusses SIGAR’s report on camouflage uniform misspending in Afghanistan, while also pointing out and decrying DoD’s “complacent mode of thinking” when it comes to spending in general. Mattis found that SIGAR’s report highlighted two truths about DoD work:

1) Every action contributes to the larger missions of defending the country

2) Procurement decisions have a lasting impact on the larger defense budget

Mattis uses these truths to reinforce the importance of effective spending at DoD, and wants to use SIGAR’s report and the instances of misspending it found as a “catalyst to bring to light wasteful practices – and take aggressive steps to end waste in [DoD].”

While this is potentially great news and a marked shift in DoD rhetoric, it is important to note that stating a problem exists is not the same as taking concrete action to fix it. Just last year, DoD was working to discredit SIGAR over a report on a $43 million gas station in Afghanistan, rather than working to fix the problem. Moreover, the $28 million in misspending that this most recent SIGAR report focused on and that drew Mattis’s attention is nothing compared to the waste, fraud, and abuse occurring in the larger defense budget (over $300 billion of which was spent on goods and services in 2016). It is important to remember that DoD is not known for its willingness to proactively address its spending issues, but is rather known for actively resisting efforts to increase transparency and accountability. (See, for instance, POGO’s work on DoD’s reluctance to examine its contracts for improper payments & DoD still not being able to pass an audit.)

It will take more than this memo for DoD to change the way it spends taxpayer money, but publically acknowledging the truth of SIGAR’s findings and trying to leverage that work for change—rather than fighting against and resisting the IG at every turn—is an important first step.

It is even more important, however, that DoD truly works towards achieving effective spending on an agency-wide scale.”


The US Military’s Iran Connection?

Military and IRAN

(Photo: KGL Logistics logo, Iran rials by Serova / Flickr)


“The chairman of a key US military contractor in the Middle East was recently charged with multiple felonies in a major fraud, money laundering, and public corruption scheme.

Fraud and money laundering charges are only the latest in a string of KGL controversies in recent years.

There have been accusations of business ties to Iran in violation of US sanctions, and of systematic leaking of sealed and privileged federal court documents and other sensitive material to KGL’s Washington lawyers by the Defense Logistics Agency (DLA), the DoD component that oversees KGL’s US military contracts.

According to court papers in Kuwait, where the charges were filed, misappropriated investor money so far totals more than $160 million, a figure that could go higher, the Project On Government Oversight (POGO) has learned. The contractor, Kuwait and Gulf Link Transport, better known as KGL, is a publicly traded conglomerate with hundreds of millions of dollars in US military contracts. The criminal charges, together with other court documents and unreported revelations made by former executives of a KGL affiliate in a US lawsuit, involve KGL’s possible violation of US sanctions against Iran, and accusations of potentially illicit flows of cash from Russia, Iran, and Syria. Taken together, the allegations raise troubling questions about the American military’s heavy reliance on the firm.

The 2017 criminal indictment by Kuwaiti prosecutors points specifically to a KGL affiliate, called KGL Investments (KGLI), as the alleged nexus of fraud and money laundering inside company headquarters from 2007 to 2015.

Two former KGLI executives have also made related allegations in little-noticed 2013 sworn statements filed in a US lawsuit. One executive said he was told by his KGLI boss that Iran’s state-owned shipping company, sanctioned by the United States in 2008 as a nuclear proliferator, was “KGL’s vehicle to Iran and she further told me that…[it] made a lot of money for KGL.”

The executive also said, “Specifically, it appeared to me that KGLI was engaged in money laundering, and presenting false financial information to investors.”

A spokesperson for KGL told POGO that, “Notwithstanding the name, KGL Investments is neither owned nor controlled by any of the KGL group of companies. No KGL entity is a party to the legal proceedings in Kuwait. The Kuwait courts will address and resolve the disputed allegations.” KGL has long denied it has ever violated US sanctions in any way.

However, KGL Investments, KGL, and many of its subsidiaries are co-located in the same office building and directed, in part, by KGL’s just-indicted chairman, who is also a director of KGLI, according to court papers. The indictment says that a portion of the embezzled funds was channeled to KGL component companies.

Also targeted in the criminal complaint against KGL’s chairman is the Vice-Chairman of KGLI. Convictions could result in jail sentences. Court documents list victims of the alleged fraud as key government departments: Kuwait’s Public Institution for Social Security and its Ports Authority. The Ports Authority serves as a staging area for America’s ongoing military involvement in Iraq, and was indispensable to US Central Command (CENTCOM) in both the first and second Gulf Wars and occupation of Iraq.

According to an official in Kuwait, senior US military personnel at the American embassy and at Camp Arifjan, a large American base in Kuwait, were officially informed of the criminal indictment, and received written copies of the details. This was done, the official said, because the indictment targets executives related to a major US military contractor, allegedly involved in stealing from important Kuwaiti institutions. In a separate dispute, the Ports Authority recently banned KGL from operating in the port. It remained unclear what action, if any, the US military might take in response. Spokespersons at CENTCOM, the Department of Defense, and the US Army’s Contracting Command all declined to comment.

What Happens Next?

Further revelations about KGL or its subsidiaries, or a conviction of one or both of the indicted executives, could call into question the conglomerate’s grip on sizable US military contracts, and its eligibility to receive future awards. Beyond the large contracts it already has, KGL is currently in line for a sizable share of the new so-called Heavy Lift VIII (HL8), a $200 million transportation-services deal that the US military could assign by August. But there is the possibility the award could run afoul of federal contracting rules, which require ethical conduct and the avoidance of serious crimes.

According to contracting rules, officially known as the Federal Acquisition Regulation (FAR): “Purchases shall be made from, and contracts shall be awarded to, responsible prospective contractors only.” The FAR goes on to specify that, “… To be determined responsible, a prospective contractor must … have a satisfactory record of integrity and business ethics.” The regulation notes that contractors may be subject to debarment, suspension, or ineligibility if they are convicted or face a civil judgment for fraud, embezzlement, or “any other offense indicating a lack of business integrity or business honesty that seriously and directly affects the present responsibility of a Government contractor or subcontractor.”

In December, the Iran Sanctions Act was extended by 10 years on a 99-0 vote in the Senate, and a 419-1 vote in the House of Representations. The law states that the federal government “shall terminate a contract with such person or debar or suspend such person from eligibility for Federal contracts for a period of not less than 2 years” if they are found to have falsely certified to be in compliance with US sanctions against Iran.

KGL has repeatedly said it complied with provisions of the FAR.

A Hearing in Court

The criminal charges against KGL executives are the result of a four-year probe by Kuwait’s national security police. A court hearing on the matter in Kuwait was held on May 21, and another is scheduled for June 11. Among other records, POGO obtained a 21-page copy of a charge sheet dated May 9, 2017 (in Arabic).

The document names three defendants. Saed Dashti, 61, is chairman of KGL. Maria [Marsha] Lazareva, 44, is Vice-Chairman and Managing Director of KGLI, where Saed Dashti also serves as a director. A third defendant, Mohamed Al-Asfour, 71, is a senior public official: the executive vice-chairman of Kuwait’s Ports Authority.

Documents describe Lazareva as a Russian national. She was educated at the Wharton business school and public records associate her with real estate ownership in the Philadelphia area. According to news accounts, she showed up in court for the May 21 hearing, protesting her innocence.

The indictment says Dashti and Lazareva transferred large sums of investors’ money to their own private accounts and to a variety of KGL subsidiaries or related companies between 2007 and 2015. They did this, court documents say, partly using a network of financial institutions including the Hong Kong and Shanghai Banking Corporation (HSBC) and one of its branches in the Cayman Islands. The bank also has branches in the United States, Kuwait, Asia, and other parts of the world. It’s unclear whether any of the allegedly embezzled funds passed at some point through the American financial system, which could trigger a US investigation.

A civil lawsuit involving KGL in Pennsylvania has brought to light accusations that could bear directly on the alleged fraud and money laundering scheme in Kuwait. The lawsuit, brought by KGL, charges the firm’s principal competitor, Agility Public Warehousing Co., with defaming KGL’s reputation by falsely claiming it had ties to Iran.

Saed Dashti and Marsha Lazareva

Saed Dashti and Marsha Lazareva (Source: Instagram)


Testimony in the Pennsylvania case—which is ongoing—includes declarations sworn in 2013 by a pair of former executives of KGL Investments, as part of Agility’s defense. Both said Dashti and Lazareva misinformed investors about KGLI’s financial condition, and one of the executives reported they had made repeated trips to Russia, Iran, and Syria in an apparent attempt to shore up KGLI’s faltering finances.

The two former KGLI executives testified that Dashti and Lazareva occupied offices on the same floors and hallways at KGL’s headquarters in Kuwait along with other subsidiaries.

One of the executives who testified, Ahmed Mabrouk, is an American citizen currently employed in the US financial industry. Court records identify him as former KGLI Vice-President Investments, a job where he testified he spent 18 months in 2008 and 2009 (a period covered by the 2017 criminal indictment) helping to analyze KGLI’s so-called “Port Fund,” an entity that invested in marine facilities around the Middle East and elsewhere. Under oath, Mabrouk said:

“Ms. Lazareva described to me the Islamic Republic of Iran Shipping Lines (IRISL) as KGL’s vehicle to Iran and she further told me that IRISL made a lot of money for KGL. When I was employed at KGLI, I observed Ms. Lazareva in her office reviewing documents related to IRISL, which bore the logo of IRISL, as well as the Iranian emblem.”

The declaration of Mabrouk, who could not be reached for comment, did not include documentary or other evidence to support his statement.

The United States, European Union (EU), and United Nations (UN) have all imposed sanctions on IRISL, Iran’s state-owned shipping company and a former joint-venture partner with KGL. Referring to US sanctions, applied in 2008, then-Treasury Under Secretary for Terrorism and Financial Intelligence Stuart Levey explained:

“Not only does IRISL facilitate the transport of cargo for U.N. designated proliferators, it also falsifies documents and uses deceptive schemes to shroud its involvement in illicit commerce. IRISL’s actions are part of a broader pattern of deception and fabrication that Iran uses to advance its nuclear and missile programs.”

In his declaration, Mabrouk said, “I reviewed KGLI’s internal financial statements and observed that KGLI consistently had a negative cash flow.” Mabrouk also testified that he looked at “…financial statements that had been provided to investors. The financial statements provided to investors consistently, and in bad faith, misrepresented financial data regarding KGLI and its portfolio companies’ actual financial condition.”

Concern about KGLI’s financial condition, according to Mabrouk, caused KGLI’s banks to stop lending it money, creating a cash squeeze. And that led to “fundraising” trips by Dashti and Lazareva, he said:

“I understood that Ms. Lazareva and Saeeed (sic) Dashti took a number of trips on private planes to, among other places, Iran, Syria and Russia. Following each trip, I observed in KGLI’s internal financial statements an influx of funds into KGLI’s accounts. Ms. Lazareva told me and others at KGLI that these trips were for ‘fundraising;’ however, to my knowledge, such fundraising was not tied to any formalized investment process.”

Mabrouk did not say what, if anything, KGL Investments did in exchange for the money it allegedly received, or that he knew specifically that inflows had come from Iran, Syria, and Russia, even though he said the pair had travelled there.

Mabrouk did specify that Lazareva at one point asked him to travel to Syria to “review a potential investment in a port,” but he refused because that country was under US sanctions. Because Mabrouk also holds an Egyptian passport, he said Lazareva told him to use that travel document instead of an American passport. When he refused a second time, it set off a chain of events which, he said, led to his departure from the company.

Another KGLI executive also offered testimony in the same Pennsylvania court case. Wael Salam, an American citizen who worked for KGLI both in Kuwait and in Atlanta, said he was the firm’s Chief Investment Officer. He said both Dashti and Lazareva were directly and deeply involved in decision-making at the firm. He also reported that KGL funded KGLI with money from its subsidiaries as well as seeking contributions from outside investors.

Salam said that, from his perspective as an insider at the company, making profits did not appear to be KGLI’s principal goal, at least given its decision to sink its money and assets from its “Port Fund” into a variety of failing or near-bankrupt facilities in Egypt, Pakistan, and other countries.

Four years before the criminal indictments in Kuwait, Salam testified that he wanted to leave KGLI “…because I believed it was engaging in illicit activities … Specifically, it appeared to me that KGLI was engaged in money laundering, and presenting false financial information to investors.” His statements also show that Salam was trying to raise money to start his own investment fund after he left KGLI, which the company cited as one of the grounds for his dismissal. He could not be reached for comment.

Salam said Lazareva asked him on multiple occasions to visit Iran, sometimes without explanation and at other times to evaluate a port investment. When he refused because Iran was under US sanctions, she suggested that he, too, use his Egyptian passport. He again refused to go and, following a series of disputes and alleged high-pressure tactics by the company, was fired.

A KGL representative declined to comment to POGO on the testimony of Mabrouk or Salam.

More Ties to Iran

The Pennsylvania court case recently provided additional information about KGL’s relationship with Iran, a controversy that stretches back into the Obama Administration. As evidence emerged indicating possible sanctions violations by KGL in its joint ownership of ships with IRISL, Ashton Carter, then Under Secretary of Defense for Acquisition, Technology and Logistics and later Secretary of Defense, wrote to US lawmakers who had inquired about the situation.

In letters to Senators Claire McCaskill, Robert Menendez, Mark Kirk, Robert Bennett, and others in 2011, Carter wrote that DoD could find “no substantial information” that KGL had continuing ties to Iran that would prevent it from holding US military contracts. By that time, the company had publicly announced its decision to end all business dealings with Iran in compliance with US law.

Since then, however, as part of legal discovery in the Pennsylvania court case, KGL has divulged emails and documents, and offered testimony from one of its former executives that appear to show it did have business with IRISL—at a time when Under Secretary Carter was telling Congress just the opposite. At least that is the argument set forth in an extensively documented summary of KGL’s own internal records filed by KGL’s adversary in the Pennsylvania case. Among other things, the summary cites those KGL records showing that its joint venture with IRISL made “at least 63 financial transactions” with the Iranian shipper after US sanctions had been imposed. In another example from the summary, a former KGL executive, Allan Rosenberg, gave the court a statement describing how he set up a “ghost structure” email system that resulted in the concealment of KGL’s continuing business with the Iranian-owned company.

A KGL spokesperson declined to comment on the summary or on Rosenberg’s statement.

Airplane Parts for Iran?

In May last year, Fuad Dashti, a brother of the recently indicted Saed Dashti—both members of the wealthy Kuwaiti family that controls KGL—was arrested at San Francisco International Airport. He was charged with involvement in illegally selling aircraft parts to Iran, according to a senior US official, and brought to Washington, DC, apparently for questioning by the FBI. One official at the time described him as, “singing like a bird” while in US custody. Fuad Dashti has since been allowed to leave the United States and was photographed some months ago in Doha, Qatar. At the time of his arrest, a KGL spokesman told POGO that “the alleged conduct [of Fuad Dashti] does not involve KGL or any of its affiliates and that Mr. Fuad Dashti was not acting as a KGL employee or representative.”

However, Fuad Dashti maintains ongoing financial ties to KGL, and has been listed as a top executive and part owner of National Cleaning Company, which is partly owned by KGL. According to the recent indictment in Kuwait, Saed Dashti also owns a share of National Cleaning, though it is unclear whether misappropriated funds were diverted to the company. There was no reply to POGO’s repeated attempts to reach Fuad Dashti, including a message left at a California house where he is listed as owner.

Key Questions Remain

The criminal indictment of KGL’s chairman adds to a growing roster of unresolved issues swirling around the company and its role as a contractor with hundreds of millions of dollars in business with the US military. Questions surrounding the company’s possible financial ties to Iran, and even Syria and Russia, raise national security concerns at a time when those countries are actively engaged in confronting American interests.

America’s federal acquisition regulations require ethical conduct from companies and their leaders. The large body of evidence in Kuwait’s extensively documented fraud and money laundering case raises doubts whether that requirement is being met.

So, too, does the arrest of Fuad Dashti, long a key figure in KGL’s controlling dynasty, on charges of commercial dealings with Iran. Yet the US government has made virtually no public statements about the matter. The fact that KGL, as long ago as 2011 and perhaps earlier, has been the focus of a probe led by the FBI into its ties with Iran only adds to the doubts. Again, no result of that investigation has ever been made public. And the same is true of the US official response to a well-documented pattern of leaks to KGL’s Washington lawyers by the Defense Logistics Agency. Senior US officials have told POGO that the DoD’s Office of General Counsel and its Defense Criminal Investigative Service have looked at or been made aware of the matter. Yet neither has made a public statement about the issues.

Indeed, years of requests for information about KGL from agencies ranging from DoD to the Treasury’s Office of Foreign Assets Control have been met with incomplete answers and, on occasion, with apparently inaccurate information. Given that result, Congress needs to clear up what is going on with KGL and its huge government contracts, because federal agencies appear unable or unwilling to shed light on the issue, or credibly resolve it.

Given the new criminal charges lodged against KGL’s chairman, the American public needs to know whether the company is a responsible and deserving recipient of US taxpayer funds. To find out, Congress should look into what the FBI and other agencies have learned after years of investigating the company’s conduct, and inform the public of what it learns.

Of course KGL is not the only logistics contractor the US military could rely on. Its principal competitor, and one of the largest single US contractors in the Iraq war, is Agility Public Warehousing Company. Yet Agility, too, has faced its share legal problems: the Department of Justice recently settled criminal, civil, and administrative charges against it. In the criminal case, which began in 2009, DOJ sought hundreds of millions of dollars in compensation for alleged overcharging.  In the end, Agility was only required to “pay a maximum of $551…in restitution.” In the civil case, the company agreed to pay $95 million, ending its suspension and allowing it to bid once again on US government contracts.

Taken together, Agility’s recently resolved legal problems and the new criminal charges against KGL’s chairman highlight the need for Congress and the Defense Department to reevaluate a contracting framework that has made America’s military the captive of two giant companies in one of the most strategic parts of the globe, an area where US forces cannot operate without extensive logistical support. As an alternative to this dysfunctional system, Congress and the Defense Department should examine how to foster more competition by explicitly encouraging the Pentagon to make deals with a wider variety of market participants.”



Army Colonel, Wife and Defense Contractor Accused – $20 Million Bribery and Kickback Scheme

Gavel and law books

(Photo Credit: BrianAJackson/Getty Images via iStockphoto)

“Col. Anthony Roper conspired with his wife and others to seek and accept bribes in exchange for rigging more than $20 million in Army contracts to individuals and companies, prosecutors said Thursday.

The scheme began in 2008 and lasted nearly a decade, prosecutors said.

Roper was stationed at Fort Gordon near Augusta, Georgia. His duties included oversight of the Army’s efforts to build and modernize its information and communication networks, an indictment said.

Roper, 55, is charged with conspiracy, bribery, obstruction and making false statements. He faces up to 85 years in prison if convicted.

The colonel’s wife, Audra Roper, 49, is charged with conspiracy, false statements and obstruction.
Dwayne Oswald Fulton, 58, is charged with conspiracy and obstruction. Fulton was an officer for “a large defense contracting company.” The firm is not named in the court records.

Audra Roper operated Quadar Group, which prosecutors said was a shell company used to funnel bribe payments to her husband, the indictment states. It was one of multiple shell companies used to defraud the government, prosecutors said.

Court records filed this week do not list any attorneys for the defendants.

A spokesman at Fort Gordon did not immediately respond Thursday.”

Revolving Door Picking Up Speed at the Pentagon and Homeland Security


Pentagon Revolving Door


“Defense firms have eagerly watched as Trump recently unveiled a budget calling for $54 billion in additional military spending next year.

President Trump has weaponized the revolving door by appointing defense contractors and their lobbyists to key government positions as he seeks to rapidly expand the military budget and homeland security programs.”

“The spending spree will provide a brand new opportunity for defense lobbyists to get business for their clients. And the most effective lobbying generally involves contacting former colleagues in positions of power.

Two Department of Homeland Security appointments Trump announced Tuesday morning are perfect examples.

Benjamin Cassidy, installed by Trump as assistant secretary for legislative affairs, previously worked as a senior executive at Boeing’s international business sector, marketing Boeing military products abroad. Jonathan Rath Hoffman, named assistant secretary for public affairs, previously worked as a consultant to the Chertoff Group, the sprawling homeland security consulting firm founded by former Secretary of Homeland Security Michael Chertoff. The firm has come under fire for advising a variety of firms seeking government contracts, including for full-body scanners deemed invasive by privacy activists. Hoffman also led a state chapter of a neoconservative military-contractor advocacy organization during the 2016 presidential campaign. Neither position requires Senate confirmation.

Personnel from major defense companies now occupy the highest ranks of the administration including cabinet members and political appointees charged with implementing the Trump agenda. At least 15 officials with financial ties to defense contractors have been either nominated or appointed so far, with potentially more industry names on the way as Trump has yet to nominate a variety of roles in the government, including Army and Navy secretaries.

Before their confirmations, Jim Mattis and John Kelly, the secretaries of the departments of Defense and Homeland Security, were primarily paid by defense firms.

Mattis was paid $242,000, along with up to $500,000 in vested stock options, as director of General Dynamics, a company that produces submarines, tanks, and a range of munitions for the military. Mattis also received speaking fees from several firms, including Northrop Grumman. Kelly previously served in a number of roles at defense contracting consulting and lobbying firms and worked directly as an adviser to Dyncorp, a company that contracts with the Immigrations and Customs Enforcement.

Major lobbying groups for the arms companies, including the National Defense Industrial Association and the Aerospace Industries Association, welcomed the selection of Secretary Mattis, who has already scheduled meetings with industry executives. Secretary Kelly has pledged to work more closely with the private sector, promising greater collaboration with private firms to accomplish his agency’s goals.

To carry out this private-sector friendly agenda, defense officials have taken major roles throughout Trump’s administration.

Pat Shanahan, nominated last week by Trump to serve as deputy secretary of defense, is a vice president at Boeing who formerly led the company’s missile defense subsidiary. Disclosures show that Elaine Duke, the nominee for deputy secretary of homeland security, previously consulted for Booz Allen Hamilton, General Dynamics, and the Columbia Group, a small contractor that builds unmanned naval drones.

The nominee to lead the Air Force, former New Mexico Congresswoman Heather Wilson, worked as a consultant to a Lockheed Martin subsidiary after retiring from public office. The company sought Wilson’s help to maintain a $2.4 billion a year contract to manage Sandia National Laboratories, the premiere nuclear weapons research facility, and to keep the contract closed to competition. “Lockheed Martin should aggressively lobby Congress, but keep a low profile,” Wilson urged the company in a memo revealed later by an inspector general report.

Trump’s pick for national security council chief of staff, retired Lt. Gen. Keith Kellogg, has worked at a variety of defense contracting companies. After serving in senior roles in Iraq’s provisional government after the 2003 invasion, Kellogg left the government for the private sector. He told the Washington Post in 2005 that he joined Oracle to “establish a homeland security business unit” at the firm, and later joined CACI International, a company with major contracts in the wars in Iraq and Afghanistan. Following CACI, Kellogg joined Cubic Defense in 2009 to develop the company’s combat training business.

A list of temporary political appointees recently published by ProPublica reveals a number of less-known influence peddlers who have taken senior roles in the administration.

Chad Wolf and Lora Ries, two recently appointed advisers at the Department of Homeland Security, are formerly registered defense lobbyists. Wolf lobbied for Harris Corp. and the United Launch Alliance, a partnership between Boeing and Lockheed Martin. Ries previously lobbied for a range of defense and homeland security contractors, including Altegrity, Boeing, Implant Sciences Corp., General Dynamics, L1 Identity Solutions, and TASC Inc.

In the White House, one of the newest members of the National Economic Council staff is Michael Catanzaro, formerly a registered lobbyist working for both Boeing and Halliburton.

Palanatir Technology’s Justin Mikolay, formerly a chief in-house lobbyist for the company who worked to win over billions of dollars in Army contracts, was quietly appointed to serve as a special assistant in the Office of the Secretary of Defense.

Several appointees are associated with SBD Advisors, a consulting that firm that advertises its ability to facilitate “engagements between the technology and defense sectors,” and is advised by a high profile team of former government leaders, including former Chairman of the Joint Chiefs of Staff retired Adm. Mike Mullen and former National Security Agency Director of Operations Ron Moultrie.

SBD Advisors’d Sally Donnelly and Tony DeMartino work as temporary political appointees at the Office of the Defense Secretary, according to the list assembled by ProPublica. Kristan King Nevins, recently appointed as chief of staff to Second Lady Karen Pence, also previously worked at SBD Advisors as the director of communications.

The Trump administration is the “military-industrial complex personified,” said William Hartung, director of the Arms & Security Project at the Center for International Policy. Hartung noted that while the administration is bringing arms industry officials into government, it is also demanding a massive increase in military spending and appears to be escalating conflicts in Syria and Yemen.

In short, the Trump proposals are an armsmaker’s dream come true,” he said. “




Explaining the Foreign Lobbying Revolving Door



“Former government employees doing any kind of work for foreign clients should be held to a higher level of accountability, as they could be putting foreign interests and goals first, regardless of how it may affect US citizens.

To increase accountability of government employees who pass through the revolving door to lobby for foreign clients, we need more transparency.


POGO Investigator Lydia Dennett explains the loopholes in the Foreign Agents Registration Act (FARA) and the Lobbying Disclosure Act (LDA) that could allow lobbying agents with foreign clients to get around President Trump’s foreign lobbying ban. When President Trump issued his Ethics Executive Order, Dennett wrote:

“By restricting this lobbying ban only to those who would go on to register under FARA, several other areas where administration officials could trade on their public experience for the benefit of foreign companies and governments are left out. The full extent of foreign influence will remain in the dark.

If President Trump truly wants to drain the swamp he must work toward closing the loopholes between FARA and the LDA and encourage Congress to initiate its own effort to stop the revolving door between those in Congress and foreign lobbying firms.”

Read Dennett’s full explanation of the foreign lobbying revolving door and President Trump’s Ethics Executive Order here.

By: Iulia Gheorghiu
Beth Daley Impact Fellow, POGO

Photo of Iulia Gheorghiu Iulia is the Beth Daley Impact fellow at the Project On Government Oversight.”

Unmuzzle the Ethics Watchdog




“The Office of Government Ethics (OGE) in guarding the integrity of government. For there to be true accountability, ethics investigations and enforcement should be conducted by an entity other than the agencies involved in the alleged violations.

OGE is uniquely qualified to fill this role.

The controversial confirmation process and related concerns about conflicts of interest have brought to light the essential role of the Office of Government Ethics (OGE) in guarding the integrity of government. It’s also brought to light just how much that office lacks needed authority to be more effective.  The Project On Government Oversight was recently asked to submit ideas and proposals on how Congress can better uphold and protect the independence and vital role of the OGE and to strengthen ethics in the executive branch.

OGE’s reviews of incoming nominees’ potential personal and financial conflicts of interest significantly aid the Senate’s oversight of the ethical conduct of appointees. Both this office and ethics compliance across the federal government could be further strengthened, however. One of the biggest shortfalls, we found, is that OGE lacks the authority to investigate complaints of ethics noncompliance and to issue binding recommendations for disciplinary action.

We believe that for OGE to be effective, Congress should expand the law to ensure OGE has clear, independent authority to investigate complaints and to issue binding corrective and disciplinary actions when there is an ethics violation. Currently, the laws and regulations governing OGE are murky and hard to parse. Once you do however, they paint a puzzling picture.

OGE is tasked with providing “overall leadership and oversight of the executive branch ethics program.” However, that oversight is limited as the office lacks the necessary authority to investigate the complaints of ethics noncompliance it receives and to issue binding recommendations for disciplinary action. Currently, investigations, determinations, and disciplinary actions, including reprimand, suspension, demotion, or dismissal, are primarily left to the employing agency in noncriminal cases, as in the case of Kellyanne Conway’s potential violations during her February 9 appearance on Fox and Friends. This means that when White House Press Secretary Sean Spicer says Conway “has been counseled… that’s all,” that is the end of the matter.

The Director of OGE may currently investigate and make findings and orders when he or she is prescribing recommendations of corrective action for ongoing conflicts of interest but not when recommending disciplinary action for ethics violations. In the case of an ongoing violation, this power is useful, as the Director can instruct the employee to cease the ongoing violation and offer recommendations on how to do so, such as putting one’s conflicting assets in a blind trust. However, in the case of a one-time violation where the damage is already done, the Director is essentially powerless to hold the employee accountable for the wrongdoing, which is where disciplinary actions such as suspension or demotion should come into the picture.

POGO’s other suggestions to Congress for improving the effectiveness of OGE were to insulate the office from political pressure by specifying that the President can only remove the Director for cause, to require that OGE publicly post final submissions of ethics paperwork, and that Congress work with civil society experts to identify and codify the gold standard of ethics pledges for incoming officials.

Our full letter can be found here.”



The $ Price for Transformational New Technologies




“This week, the Navy finally announced a delivery date for the long-delayed and $2.4 billion over-budget aircraft carrier, the Gerald Ford (CVN-78).

‘In hindsight,” said Adm. Thomas Moore, head of Naval Sea Systems Command, the Navy should have tested the Ford’s ambitious new systems more extensively on shore before installing them aboard ship.

But building a new class of ship with “leap-ahead” technology is always risky, Moore told theSurface Navy Association: “We don’t build toasters. These are complex pieces of machinery.’

Given the problems the Ford has faced, we asked retired Navy commander Bryan Clark for an outside perspective on those problems and how to mitigate them. A career submariner,Clark has served at every level from enlisted man to head of the Chief of Naval Operations‘ Commander’s Action Group. He’s now with the Center for Strategic & Budgetary Assessments.

The Navy is paying the price for attempting to incorporate too many new technologies at once into a new class of ship. The Ford is an example of how short-lived strategic themes such as “transformation” can create long-term problems. The Ford carrier, Zumwalt destroyer, and F-35 Joint Strike Fighter were all shaped in large part by services’ need to get them approved by the Bush administration, which was only interested in pursuing transformational new technologies at the time.

This is not history we want to repeat. In our quest to pursue “Third Offset Strategy” technologies today, we will need to be judicious in how we incorporate them into new programs. The current Defense Department leadership has done a good job of refining these technologies in R&D programs until they mature, but sometimes these lessons eventually get forgotten.

As for the carrier program specifically, the Navy now is building parts of the next two carriers (the Kennedy, CVN-79, and Enterprise, CVN-80) and is buying some equipment for CVN-81 (as yet unnamed). Shipbuilder Huntington Ingalls has done some good work to get costs down, and has more to do. Many of the techniques they use for building nuclear-powered submarines, for example, can be applied to nuclear carriers, although it will require more investment and time due to the greater scale of carrier construction.

The Navy may be able to get costs for future carriers down further through multiyear procurement, essentially contracting for two carriers at a time and paying for them over multiple years. There are many pumps, valves, and other pieces of equipment on a carrier, and buying them in bulk for two ships can enable making them or buying them at a lower price. The Navy should start thinking about whether CVN-82, which hasn’t been started yet, should incorporate all the features of the first three Ford-class carriers. Some systems may be downscaled or removed to lower costs. (The Navy has already decided to install a more modest radar on CVN-79). Other options some have raised, such as shifting to a smaller carrier, would add more expense to develop and test the new designs.

It will be about three years before Fordconducts a deployment, since after delivery it will enter the Fleet Response Plan training and preparation cycle. To address the continued shortfall in carriers and begin developing a more effective Amphibious Readiness Group, the Navy and Marine Corps should start deploying USS America(LHA-6) and other big-deck amphibious assault ships (LHAs and LHDs) as F-35Bcarriers. (This is something CSBA recommended in our fleet architecture and amphibious warfare studies; F-35Bs are “jump jets” capable of operating off the shorter flight decks of amphibs, rather than requiring a full-sized carrier). This would make the ARG able to provide fire support to Marines over the long ranges at which their MV-22 Osprey tilt-rotors can operate. It could also provide fighter support to support some of the small-scale operations, such as those in Syria, that are currently being supported part-time by aircraft carriers. The Navy has repeatedly tested such amphib-based air operations over Libya with its existing AV-8 Harrier jump jets, and the F-35B would be far more capable.”



Government Fraud Recovery Bounces Back in 2016




“It is  a substantial increase over last year’s total.

A large number of recoveries came from contract fraud cases involving some of Uncle Sam’s most prominent suppliers of goods and services.

The Justice Department announced on Wednesday it had recovered for taxpayers more than $4.7 billion through settlements and judgments from False Claims Act cases in fiscal year 2016. According to the announcement, it is the third highest annual recovery in False Claims Act history. It is also a substantial increase over last year’s total.

Of the $4.7 billion recovered, $2.5 billion came from health care fraud cases. An additional $1.7 billion came from settlements and judgments in cases alleging false claims in connection with federally insured residential mortgages.

  • Boeing: $18 million to settle allegations that it overcharged the US Air Force for aircraft maintenance services at Boeing’s Long Beach, California, depot. (In 2014, Boeing paid $23 million for allegedly overcharging maintenance work at its depot in San Antonio, Texas.)
  • Centerra Services International: $7.4 million to resolve a lawsuit accusing the company of overbilling the Army for firefighting services in the Middle East
  • Computer Sciences Corporation: $1.35 million for billing the Defense Information Systems Agency for subcontract workers who lacked the required security clearances
  • Deloitte Consulting LLP: $11.38 million to resolve overbilling claims on a General Services Administration contract
  • DRS Technical Services: $1 million to settle charges that employees billed the Army for hours they did not work
  • L-3 Communications: $25.6 million to settle claims of selling the government defective weapon sights
  • Lockheed Martin: $5 million for allegedly misleading federal and state regulators about noncompliance with environmental regulations at the Paducah Gaseous Diffusion Plant in Kentucky
  • SRA International: $1.1 million for alleged false billing on military contracts
  • United Technologies: $11 million in penalties, interest, and disgorgement of profits for overcharging the Air Force for jet engines in the 1980s
  • URS Corporation: $9 million to settle allegations that a subsidiary defrauded the government into awarding it construction contracts that it was not eligible to receive. In a different case, URS paid $580,000 for allegedly overbilling labor rates on a bridge reconstruction project.

The False Claims Act is the government’s primary tool to redress fraud in the areas of health care, defense and national security, food safety and inspection, federally insured loans and mortgages, highway funds, small business contracts, agricultural subsidies, disaster assistance, and import tariffs. In 1986, Congress strengthened the Act by increasing incentives for whistleblowers to come forward with allegations of fraud. Most false claims actions are filed by whistleblowers in qui tam lawsuits. Since 1986, the government has recovered slightly over $53 billion, awarding more than $6.3 billion of that to the whistleblowers who filed the lawsuits—often at great risk to their careers.

On the same day the Justice Department announced its annual fraud recoveries, it also announced it had collected nearly $15.4 billion in civil and criminal cases in FY 2016, one-third less than last year’s total. This amount includes recoveries in all civil and criminal enforcement cases (including those involving the False Claims Act), fines imposed on individuals and corporations for violations of federal financial, health, safety, civil rights, and environmental laws, and collected debts owed to the federal government.

How will the False Claims Act fare under the Trump administration? At least one expert foresees very little change.

Taxpayers Against Fraud acting president Patrick Burns recently observed that Senator Jeff Sessions (R-AL), President-elect Trump’s choice for Attorney General, “has never winked at companies that harm American workers and consumers” and “understand[s] the value of whistleblowers and whistleblower laws when it comes to fighting corporate theft and crony capitalism.” He noted that Sessions has supported strengthening the False Claims Act and has a good relationship with Senator Chuck Grassley (R-IA), the law’s key champion in the Senate.

Burns’ prediction gives us hope that active enforcement of the False Claims Act—and billions of dollars in annual recoveries—will continue for years to come.”


Strengthening Government Accountability and Transparency




“People tend not to trust what is hidden.

Use transparency to rebuild confidence in government.  The new President should build a government that is open and honest with the public.”

“The next President will likely assume office with a unique set of governing challenges. First, confidence in government is at one of its lowest levels in history, although the most intense disapproval and lack of trust is reserved for Congress. Second, it is unlikely that Congressional gridlock will change much, meaning that the Administration will need to rely on executive powers to advance many of the President’s policies and priorities. And third, the next President will have trouble claiming a mandate for action since he or she will take office at a time when a large percentage of Americans do not trust the person.

We believe that accountability and transparency reforms can help address some of these challenges. For more than 35 years, the Project On Government Oversight (POGO) has championed good government reforms as a nonpartisan, independent watchdog. Implementing the following recommendations will help the country achieve a more effective, accountable, open, and ethical government—one that is truly responsive to the needs of its citizens.

Usher in a new era of accountability in government. The federal government is a large and complex organization that is vulnerable to mismanagement or undue influence. The new President must establish proper checks and balances to ensure that effective and ethical operations are the norm and to identify and correct any problems:

1) Set and enforce a new high standard of ethics. President Obama’s Ethics Executive Order played a key role in reducing corruption in government. That Order should be extended. In addition, the focus on restricting lobbyists from political appointments should be expanded and refocused to limit those with financial conflicts of interest from working as political appointees. The Order should also establish tough restrictions on those leaving government to prevent quid pro quo employment deals and stop former Administration appointees from misusing their government contacts. In practice, waivers should be used sparingly and should be constructed to protect the integrity and independence of executive branch authority.

2) Improve whistleblower protections. Employees at the Federal Bureau of Investigations and the Department of Defense, as well as Intelligence Community contractors across multiple agencies, have some of the weakest whistleblower protections. Despite the success of whistleblowers in deterring taxpayer waste and contractor abuse we have seen their protections stripped away. For instance, new authority granted to agencies to designate jobs as “sensitive” could be used to entirely negate existing due process for whistleblowers.

  • Ensure responsible implementation of the Insider Threat program, an effort to identify employees who could pose security risks, and guarantee that it is not being used to target whistleblowers. Whistleblowing should not be categorized as an inside threat, as espionage and sabotage is. Additionally stop the abusive practice of prosecuting whistleblowers under the Espionage Act.
  • Work to expand whistleblower protections to cover any disclosure made by a federal employee or contractor to a supervisor, Member of Congress, or an Inspector General. And immediately extend all the protections of Presidential Policy Directive 19 to Intelligence Community contractors.
  • Stay proceedings to remove workers found ineligible to occupy jobs designated “sensitive” until the Government Accountability Office (GAO) can review the internal agency appeal processes and the impact of limiting employees’ rights to appeal to the Merit Systems Protection Board. Also restore due process rights for employees who were removed from their positions due to a change in “sensitive” status.

3)    Establish a new position in the White House that focuses exclusively on transparency and accountability. The person hired for this position must be part of the President’s inner circle and have adequate staff support—the clout this person has derives from the understanding that he or she speaks for the President. The person should report to the President and senior staff on what is being done to strengthen accountability and transparency, and about what is working and not working when it comes to strengthening government accountability.

4) Fill Inspector General vacancies. Inspectors General (IGs) serve as independent watchdogs within federal agencies, conducting audits and investigations that identify waste, fraud, and misconduct. They are essential to a well-functioning federal government. Unfortunately, it has become too common that IG positions are left vacant for months or even years, robbing their offices of leadership. Promptly work to appoint and maintain strong independent IGs across the federal government and ensure that their offices have sufficient resources to conduct their investigations.

Use transparency to rebuild confidence in government. People tend not to trust what is hidden. The new President should build a government that is open and honest with the public:

1) Put an end to secret law. An increasing number of binding governmental rules have not been disclosed to the public or even to other branches of government. They come in the form of opinions, memos, and letters, many of which deal with interrogation, detention, surveillance, and other national security issues. Secret law is also used to address a wide range of non-security issues including establishing what government grantees are permitted to do with federal funds, and governing how international agreements are negotiated and ratified. In a democracy, the public should always know what the laws are.

2) Use proactive disclosure to shed a light on government activities and decisions. Despite being more than 20 years into the internet age, we still rely too much on the passive request-and-respond process of FOIA. Proactive disclosure is faster, gets the information out to everyone, and demonstrates that government welcomes oversight.

  • Establish a standard of disclosed records for all agencies, starting with the calendars of senior agency staff, visitor logs, communications with Congress, and directories (including contact information) for government employees. Some agencies already post these types of documents, so there is no major technical or policy barrier, but such disclosure is inconsistent across the federal government.
  • Create a collaborative process for agencies to move beyond the disclosure floor and identify other categories of records the public would find most useful based on stakeholder input, and schedule them to be processed for proactive disclosure.
  • Expand sub-recipient reporting to follow federal money all the way to final users. Also disclose more data about tax-expenditures (which now accounts for more than $1 trillion annually). Little engenders bipartisan agreement more than the desire to know how the federal government is spending our money.
  • Address the perception that the government is stacked in favor of powerful special interests by requiring disclosure of political contributions by federal contractors and publicly held companies. Additionally, the Federal Communications Commission should disclose in a searchable format information about who is funding political ads and for how much.

3) Improve regulatory transparency. There are growing concerns about federal rulemaking—that there is a lack of accountability for those overseeing the process, that the public doesn’t get all of the information, and that enforcement of the resulting regulations has become lax:

  • Improve disclosure during the regulatory review process. The rulemaking process should require disclosure of all documents and communication between agencies and the Office of Information and Regulatory Affairs related to a proposed or final rule, as well as documents received from outside parties. All substantive changes made to rules should be identified, and agencies should indicate which entities requested the changes.
  • Establish clear standards across all agencies for management of rulemaking records, including the location and format of data about the regulations’ positive and negative effects. The data on the positive effects of regulations (benefits) should be prominently displayed. Currently it is relatively easy to obtain data about the negative impact of regulations (costs), but much harder to obtain benefit data.
  • Increase disclosure about enforcement of regulations. There is a perception that large companies get special treatment when it comes to enforcement, including reduced penalties, deduction of negotiated penalties from taxes, and deferred prosecutions. Agencies should be required to make information about their regulatory compliance and enforcement activities accessible, downloadable, and searchable online.

4) Strengthen the Freedom of Information Act (FOIA). FOIA has been the foundation of transparency for the federal government for 50 years now, but it has numerous weaknesses—it’s slow, costly, contentious, and confusing. As agencies work to implement the newly passed FOIA Improvement Act, the President should seize the moment and place an emphasis on making FOIA work more effectively, starting with reducing (and eventually eliminating) backlogs of requests, and improving response rates. Additionally, the President should voluntarily expand the scope of FOIA to cover emails of his or her Administration related to government work sent through private servers. These improvements will likely require investments in staff, technology, and training.”


Taxpayer-Funded Research Now Available Free at New Web Site




“Through ” EveryCRSReport.com,” the public can access Congressional Research Service Reports.

The public can access the same unbiased and unredacted research and analysis that Members of Congress read. As a resource, it is a great boon for journalists, students, and any taxpayer seeking insight on issues of public debate.

The Congressional Research Service (CRS) acts as an arm of the legislative branch, researching and reporting on topics of interest to Congress. Its work, funded by the taxpayers, is high quality non-partisan research and analysis, but has never been readily available to the public.

Through the site EveryCRSReport.com, the public can access the same unbiased and unredacted research and analysis that Members of Congress read. As a resource, it is a great boon for journalists, students, and any taxpayer seeking insight on issues of public debate. The site has over 8,200 downloadable and searchable reports, and shares its code through GitHub. By becoming open source, the site increases access to developers that can build in more features and help make CRS reports even more accessible.

EveryCRSReport.com sorts everything into 31 subjects, and each subject has an RSS feed that will update anyone interested in following specific policy research published by the Congressional think tank.

The push to get CRS itself to release the reports isn’t over. This year, Senators Patrick Leahy (D-VT) and John McCain (R-AZ) and Representatives Leonard Lance (R-NJ) and Mike Quigley (D-IL) introduced bipartisan bicameral legislation as the most recent Congressional effort to grant public access to these reports.

In the meantime, EveryCRSReport.com may send visitors on a deep dive into US relations with Venezuela or on a coding spree to help improve access and add features to the site. For the bipartisan coalition of groups that advocated for this public release and online access, it may send us into a victory dance to culminate over 20 years of advocating for free taxpayer access to CRS reports. The most important reaction, though, should be to take advantage of the same unredacted high-quality research that has been informing Members of Congress for decades.”