[Robert Stein, a] former civilian contractor for the Defense Department was sentenced ... to nine years in prison and ordered to forfeit $3.6 million for his role in a bribery and fraud scheme involving contracts to reconstruct Iraq.
- LA Times, January 30, 2007
Robert Stein, along with an Army Reserve Lieutenant Colonel named Bruce Hopfengardner, steered Iraqi reconstruction money to an American contractor named Phillip Bloom. Stein and Hopfengardner worked in the Coalition Provisional Authority (CPA) South Central headquarters in Hilla during late 2003 and early 2004, the time when I also served there. The service of all of those men and women who were there during that time was besmirched by the actions of these men.
Two additional Army reserve lieutenant colonels have been charged but not yet convicted of crimes related to the actions of Stein, Hopfengardner and Bloom during that time. One of the those lieutenant colonels, a major at the time of the incident, worked directly for me. This is one thing about my service in Iraq of which I am not very proud.
I departed Iraq in February 2004 and the officer in question remained in Hilla until June 2004. According to news accounts, this officer allegedly received money for unspecified actions performed. I don't want to reveal the officer's name because of a presumption of innocence until proven guilty. My strong suspicion that the officer's alleged illegal actions took place after my departure is small consolation. Yet in the end my association with this scandal, however indirect, is painful to me.
Mike Gfeller, a State Department officer with experience in the Middle East and a fluency in Arabic, was the man in charge of CPA South Central at the time and, of course, must accept some responsibility. In my judgment he is a good and honorable man who worked long hours and achieved many notable accomplishments during his service in Iraq. His mistake was that he trusted the wrong people.
The big question to the outside observer is: How could something like this happen? I can give some reasons, but these points can by no means excuse the crimes that were committed.
I interacted with Stein and Hopfengardner almost every day but I had no supervisory responsibility over them, nor did I play any role in the process or oversight of the millions of dollars that were spent by CPA South Central for Iraqi reconstruction. The money being spent came from the hoards of cash hidden throughout Iraq by the former regime and seized by the Coalition forces during the invasion. None of these funds were provided by the U.S. taxpayer, yet the CPA had a responsibility for oversight and wise use of these monies.
The money was allocated by Ambassador Bremer to Mr. Gfeller with the objective of keeping the Shia dominated south central region of Iraq peaceful and content. All transactions in Iraq at that time were on a cash basis and CPA South Central had to literally drive to Baghdad, load up the cash in a vehicle and drive it back to Hilla, where it was kept in a safe at the former Babylon Hotel, the headquarters for South Central.
I observed some of the administrative procedures that were used to control the dispersal of this money. Project worksheets were prepared and approved and money was signed for when it was received. The money was paid to the contractors on a % completion basis and a U.S. Army Corps of engineers team was assigned to oversee the projects to verify that the work was done.
A lieutenant who worked for me was a project officer for some of the smaller projects in the Hilla area and I traveled with her as she inspected the projects to verify that the work was being completed. I also traveled with the Corps of Engineers Team as they inspected projects and I could see with my own eyes that work was being done.
There was considerable pressure to get these projects funded, worked and completed. I even felt the pressure because I knew the situation in Iraq. Electrical power was intermittent, gas lines were long and there was very little employment. We couldn't fix the electrical grid or the gas lines so we needed to demonstrate that we were doing something constructive for the long suffering Iraqi populace. To achieve this end, I saw no problem in approving the use of a lieutenant assigned to me on a part time basis to help get the money spent.
At the time (Fall 2003) we were all very frustrated at the progress of the reconstruction. In fact, the institution of spending controls by CPA in Baghdad seemed an unnecessary aggravation. They required that the proposed projects be publicly posted and that at least three bids be received. One source of my aggravation was that some local Iraqi contractors, not fully understanding the bidding process (a radical concept in Iraq at the time) were losing out to more savvy contractors in Baghdad. The results of the spending requirements appeared to be having an effect contrary to our goals.
Why all the rules, why the bids? we asked. We need to put these people to work before they start shooting at us. Someone shooting at us was on our mind every time we left the compound. The fact that I wasn't getting shot at, but others in my area were, was small consolation to me. As the number of attacks progressively increased I knew that the danger was increasing. So the pressure to get the money spent, to put the Iraqis to work and show them that something in their miserable lives, however small, was improving, came not only from my sense of duty in seeing the mission succeed but from a personal sense of increasing danger to myself and my soldiers.
No system or process, however complex, will prevent misappropriation of funds if the persons responsible are unethical. The rules governing oversight of public corporations in the United States would fill volumes but the corporate officers at Enron were able to get around them. Something else in Iraq, I believe, was one source of the problem. Seeing $50,000 or $100,000 written on a ledger is quite different than seeing the cash, in stacks of wrapped $100 bills, stacked on a table before you.
And there were numerous opportunities to see large amounts of cash. One morning, for example, my lieutenant project officer mentioned that she had $60,000 in cash in her bag. To me this was an astounding amount of money, more cash by many orders of magnitude than I had ever seen or handled. I didn't ask to her to open her bag so that I could look because I sensed that that much money displayed in the open was an unnecessary temptation for the others in the room.
I suspect, but not do not know, that the amount of fraud in Hilla increased after I left in February 2004 for several reasons. First, people began rotating out and weren't replaced. Unfortunately, some of these people leaving were involved in the oversight process and therefore weren't there for the plotters to worry about. Secondly, as CPA saw the June deadline approach for the transfer of sovereignty to an interim Iraqi government, the CPA employees began to frantically spend money on as many projects as they could. They did not have enough people to properly supervise such a large number of contracts. They saw their ability to influence the course of events slipping away and they had to compress their objectives into a unmanageable period of time.
I wasn't ever worried that my lieutenant would steal any of the money. In fact, at the time, I remember feeling a sense of pride that we were doing such a good job of using this money for its intended purpose. Little did I know.
Little did I know. Should I have known? Should I have done something about this? If I had known then I would have done something to correct the matter. If I had suspected something then I would have investigated. I truly believe that. But I didn't know. I didn't even suspect. I had many jobs in Iraq but auditing the expenditures of CPA South Central was not one of them.
Does any of that make me feel any better? No. Stein, Bloom and Hopfengardner have tainted me. Forever. And there's not anything that I can do about it.