Pay Any Price (21 page)

Later, Bayes created a joint venture between Jerash Air Cargo and another air cargo company that he ran, LSM-Star. But while he worked with Jerash, he continued to pursue other business opportunities including a highly questionable deal involving the movement of a large amount of cash on behalf of his unidentified clients. One source involved in the Alarbus/JACO program said that Bayes discussed with him a plan in which Bayes would fly $1 billion in cash on behalf of clients from an African country through the Dubai airport to be laundered. The source allowed me to listen in to a telephone conversation in which Bayes discussed his plans on how he would transport the cash through the airport, and then move it into either real estate or the banking systems in the United Arab Emirates and Saudi Arabia. It is unclear whether he ever followed through with the plan.

 

The biggest mystery surrounding Jerash is how the group managed to operate a top-secret program for the Special Operations Command while attempting to do so many questionable side deals. The FBI secretly struggled for years to answer that question.

Stunned by the questionable activities they saw being conducted with the protection of the Pentagon, at least two Americans affiliated with the Alarbus/Jerash intelligence operation went to the FBI. They said they provided FBI agents with internal documents and statements detailing how Special Operation Command's intelligence platform had been compromised by attempts at money laundering, arms dealing, and sanctions busting.

FBI counterintelligence agents began a secret criminal investigation of the Special Operations Command program. The agents even considered conducting an undercover sting of Alarbus/JACO, setting up FBI agents as arms dealers or money launderers in order to uncover the full extent of the potential criminal activities under way, according to one of the Americans involved in Alarbus who met with the FBI. The FBI agents hoped that the sting operation would catch members of the Alarbus/Jerash crew in one of their illegal side deals, according to the American.

Over the course of two or three years, FBI agents repeatedly told the informants from within Alarbus that they were conducting a highly sensitive investigation of how Special Operations Command's intelligence operation had gone so far off the rails. The FBI agents vowed that the investigation would go “up the chain of command,” and that they would make presentations to the senior leaders at Special Operations Command that would “have their complete attention by the second slide,” recalled one of the Americans involved in Alarbus who met with the FBI.

And yet, in the end, the FBI did not move aggressively, apparently reluctant to delve too deeply into the secret world of Special Operations Command. Sources say that the investigation was stymied and eventually put on hold. It is possible that the FBI could never find enough evidence to corroborate what the informants and others had revealed about Alarbus and Jerash. It is also possible that the case was so complicated, so difficult to untangle, and so potentially embarrassing for the government that the FBI decided not to proceed with its investigation.

The FBI did not conduct a sting operation, sources said, in part because it would have required a lengthy and costly undercover operation overseas. Instead, they relied on informants. But that left their informants vulnerable, with little protection if something went wrong. Eventually, the FBI seemed to be searching for ways to conduct a narrower inquiry. Frustrated by the slow pace of the FBI's inquiry, sources involved in the program began to talk to me about the case, hoping that the public disclosure of the activities of the contractors would force the FBI or Pentagon to take action to clean up the mess. Those sources provided documents and a detailed understanding of the program and the side businesses of those connected to it. They also introduced me to some of the key figures involved in the operation, including Nazem Houchaimi and Malcolm Bayes. In an effort to get Houchaimi and Bayes to talk with me, I did not identify myself as a journalist or author; instead, I simply told them I was an investor interested in what they were doing. My sources vouched for me, and that allowed me to get them to open up and discuss their business dealings. They talked far more openly than I had expected. When I subsequently e-mailed them and explained that I was a reporter writing this book, Houchaimi and Bayes did not respond to requests for comment.

Eventually, I had so much information about the operation that I approached the FBI to ask about its own investigation. I told the FBI's press office the details of what I was working on, and within days an FBI spokesman said that agents from the bureau's counterintelligence division wanted to meet with me. The press officer said that the agents might be willing to corroborate some of the things I had already uncovered.

I went to FBI headquarters in Washington for the meeting. I was ushered into a windowless conference room where seven FBI agents were waiting. None of them would give me their names. I told them what I had learned, providing names and details, hoping that they would in turn also provide confirmation that they were looking into the same things. After finishing, I looked up and asked for a response to what I had learned about the program. The seven FBI agents just sat and stared at me, not saying a word, refusing to comment or answer any questions. In a follow-up meeting, another counterintelligence agent also refused to say anything when I told him what I was reporting. But a senior official subsequently confirmed the existence of the FBI investigation.

The Americans who had become informants for the FBI said that they believed that the Pentagon may have intervened with the FBI to try to convince the bureau to drop its investigation while the Defense Department conducted its own internal examination of the program. The sources said that it appeared that Special Operations Command finally was forced to drop its secret contract with Alarbus and Jerash Air Cargo. Corporate records show that Alarbus Transportation was dissolved in 2012.

For its part, Special Operations Command acts as if it has never heard of Alarbus or Jerash. Press officers for Special Operations Command say that they do not know of any contracts with Alarbus or Jerash Air Cargo, and add that they cannot find anyone at Special Operations Command who says they have ever heard of either company. But when given the name of Special Operation Command's first program manager for the Alarbus operation, a spokesman for the command told me that Special Operations Command had nothing more to say. One Pentagon official contacted me while I was doing reporting on Alarbus/JACO and confided that my reporting was “making people at SOCOM nervous.”

Asimos declined to discuss the operation other than to warn that writing about him would put him and his family at risk. His New York lawyer, Kelly Moore, also declined repeated requests to respond to questions.

6

Far more than any other conflict in American history, the global war on terror has been waged along free-market principles. In Iraq and Afghanistan, American soldiers actually on the payroll of the U.S. Army were outnumbered by independent contractors working for private companies hired to provide services from meals to base security. From Pakistan to Yemen to Somalia, American counterterror operations have relied heavily on outside contractors to provide intelligence and logistics. As a result, the tenets of twenty-first-century American capitalism have become the bywords of twenty-first-century American combat. That includes the most infamous catch phrase of the global financial crisis—“too big to fail.”

When applied to banks, “too big to fail” referred to financial institutions that were so large and critical to the economy that they had to be bailed out by the government, no matter how execrable their past behavior or how badly they had been mismanaged. Letting them fail, refusing to bail them out, would only sink the American economy.

In the global war on terror as well, Washington has treated some of its biggest military and intelligence contractors as if they are too big to fail. The American enterprise in the Middle East has been so heavily outsourced, and the Pentagon, CIA, and other agencies have become so dependent on a handful of large corporations, that the government has been reluctant to ever hold those firms accountable for their actions.

And if any one contractor has attained the status of “too big to fail” in the war on terror, it is KBR.

KBR, a Houston-based firm that has been the military's largest single contractor for war-zone services, has helped to define the post-9/11 age. KBR and Blackwater became the two iconic corporate names of the war in Iraq. Both gained riches and infamy. Blackwater followed a more violent path in Iraq. But KBR was much larger and generated far more money.

KBR was the company that allowed America to go to war without a draft. The United States did not have to send tens of thousands of soldiers to Iraq or Afghanistan to perform the traditional supply and rear echelon work of an army, like building bases, cooking food, or finding clean water. KBR contractors did all of that instead. Napoleon famously said that an army travels on its stomach. Well, then, the American army traveled on KBR. It was the company that made it possible to prosecute wars of choice.

It was so big and so influential—so necessary to the Iraq enterprise—that KBR was repeatedly able to survive controversies and investigations and a lengthy series of allegations of wrongdoing in its operations in Iraq. (Its standing as a central player in the war on terror even survived a bribery scandal that ultimately led to a former KBR chief executive being jailed for his part in a plot to bribe Nigerian officials.)

Blackwater was eventually humbled, especially after the infamous 2007 shooting incident in Baghdad's Nisour Square that left at least seventeen Iraqis dead. But KBR was in Iraq until the end—even though a Pentagon auditor said that the company had been connected to the “vast majority” of war-zone fraud cases referred to investigators, according to the
Washington Post.
(A KBR spokesman disputed the auditor's assertions.)

It flourished under George Bush, and then it flourished under Barack Obama. Near the Iraq war's close, the chairman of the largely toothless commission that was supposed to investigate wartime contracting threw up his hands and wondered aloud whether KBR was “too big to fail” in Iraq.

KBR won its coveted role in Iraq while it was a subsidiary of Halliburton, the company Vice President Dick Cheney ran before the 2000 presidential campaign. KBR was later spun off from Halliburton, but by then, it was well entrenched with a virtual monopoly over basic services for American troops in Iraq. At the height of the war, KBR had more than fifty thousand personnel and subcontractors working for it in Iraq, making the company's presence in Iraq larger than that of the British Army.

After KBR lost Cheney's protection, it still had strong bureaucratic insulation. Every general in the military hoped to cash out by going to work for a major defense contractor as soon as he or she retired from active duty. Many feared that if they took any actions against those contractors while they were still in the military, their postretirement employment prospects would dim. It was much more rewarding to give the contractors what they wanted. KBR's dominant position in Iraq—its money, its power, and its close ties to the Pentagon and the White House—meant that KBR was hard to stop.

Indeed, fighting KBR was an uphill struggle. In 2014, Harry Barko, a former KBR employee, filed a complaint with the Justice Department and the Securities and Exchange Commission that claimed to reveal the lengths to which KBR has gone to try to suppress whistleblowers. Barko charged that KBR forces its employees to sign a confidentiality agreement that restricts their ability to report fraud at the company—even to government investigators or prosecutors. KBR “has engaged in a systemic tactic of instructing employees to keep information they possess regarding fraud ‘confidential' and to withhold disclosure of this information to anyone without the prior consent of KBR general counsel,” stated a letter from Barko's attorney to Attorney General Eric Holder and Mary Jo White, the chairman of the Securities and Exchange Commission. (A KBR spokesman denied that the confidentiality agreements were designed to block employees from reporting fraud.)

But some people have tried to fight back. When the health and safety of American troops and veterans were threatened or taxpayer money was at stake, a few Americans took a stand. They fought back against KBR and the government bureaucrats who directly or indirectly protected it. They often lost. But they kept trying, and in the process transformed themselves.

 

After the U.S. invasion of Iraq in 2003, Joint Base Balad became one of the largest American military facilities in the country and one of the busiest airports operated by the U.S. Air Force anywhere in the world. At its peak in the midst of the war, Balad was staffed by a combined total of approximately 36,000 troops and contractors. It was home to F-16 fighters, Predator drones, and other aircraft, as well as the largest U.S. military hospital in Iraq.

Balad also hosted the largest burn pit in Iraq, a 10-acre open-air waste site. Operated by KBR, the Balad pit burned as much as 250 tons of waste a day from 2003 until 2009.

At Balad, KBR burned everything, from plastic bottles and food trash to computers, ammunition, oil, paint, medical waste, solvents, dead animals, batteries, appliances, and reportedly even amputated human body parts—all consumed with heavy doses of jet fuel. Thick plumes of black smoke rose from the pit each day, casting a pall filled with a toxic brew of particulates over the base.

The Balad burn pit was just the largest of hundreds of such pits used at American bases throughout Iraq and Afghanistan during the two wars, exposing hundreds of thousands of American troops to their smoke. KBR operated the burn pits for years—despite Pentagon requirements that they were only to be used in short-term, emergency situations. They were supposed to eventually be replaced by incinerators or other more environmentally sound waste management practices, but the Defense Department provided virtually no oversight. Living under the haze of smoke from burn pits became a fact of life for American soldiers.