SPECIAL REPORT. Kurdistan Regional Government, CIA, and China U.S. military blood for Iraqi oil for China - Wayne Madsen Report

July 2, 2009 -- SPECIAL REPORT. Kurdistan Regional Government, CIA, and China: U.S. military blood for Iraqi oil for China
publication date: Jul 1, 2009
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July 2, 2009 -- SPECIAL REPORT. Kurdistan Regional Government, CIA, and China: U.S. military blood for Iraqi oil for China

WMR has learned from a Western intelligence source who spent time in the Kurdish region of Iraq that various groups and contractors affiliated with the CIA conspired with high-ranking officers in the Chinese military and Kurdish Regional Government officials to protect Chinese financial interests in northern Iraq in return for lucrative contracts for American firms for major infrastructure projects in China.

According to WMR's intelligence sources, the CIA is also involved in a major weapons smuggling operation using the Kurdish cities of Irbil and Zakho, on the Iraqi Kurdistan-Turkish border.

WMR has learned from informed sources that there is a great deal of intrigue surrounding the Sandi Group, a major contractor for U.S.-funded Iraqi projects, which is owned by Iraqi businessman Rubar Sandi, a major proponent of U.S. military intervention in Iraq and who counted Washington's most influential Republicans as his friends. On May 1, 2005, Sandi, a fierce opponent of Saddam Hussein, said, "I do pray for President Bush, the Americans and specifically for the U.S. armed forces for their dedication and for them sacrificing their lives to defend freedom."

The Sandi Group, incorporated in the United States, maintains headquarters in Baghdad and Washington, DC. Sandi's hometown also happens to be Zakho.

Sandi is also chief of the Corporate Bank Business Group in Washington and the founder of the Iraq-U.S. Business Council. Earlier this month, TSG Asia, a Sandi Group affiliate, signed a contract for the building of 5,000 housing units in Libya. With the thaw in relations between Tripoli and Washington, foreign oil workers, including Americans, are, once again, flocking to Libya.

Sandi's chief of security at the firm's Baghdad headquarters allegedly ran off with $5 million in cash in 2006. Instead of being handed over to Iraqi authorities for prosecution, the ex-Sandi security chief was exfiltrated from Baghdad to Irbil by the CIA. Sandi had earlier landed a major sub-contract from the U.S. private security firm Dyncorp to provide training for the Iraqi police. Dyncorp's contract was worth $1.2 billion.

In 2007, journalist David Phinney reported that two Sandi employees, Nashat Y. Hamed and Sabah Abdul Waheed Bermos, were charged by Iraqi authorities with pocketing the salaries of hundreds, and perhaps thousands, of Sandi employees. The two Sandi employees happened to hail from Zakho and were considered close to Sandi himself.

Shortly after the exfiltration of the Sandi security chief in Baghdad, WMR has learned from an informed source that a senior Sandi official, several CIA agents, and a colonel in the Kurdistan army who worked for Zakho-based Aster Group flew to China where they were met by several top Chinese military officers. The Sandi/CIA team was, according to our source, working with the Chinese to develop a number of infrastructure projects in China.

In 2006, oil was discovered in the region of Zakho. The Kurdish Regional Government's bid for oil auctions in Kurdistan attracted the interest of China's state-owned oil group Sinopec. However, Iraq's central government awarded contracts for Iraqi-wide oil auctions to a consortium led by British Petroleum, which includes the China National Oil Company (CNOC). Ironically, because the Kurdish government does not recognize the Iraqi oil auctions, Sinopec is competing with CNOC. In any event, China is a major player in the Iraqi Kurdistan oil market.

According to Phinney, Sandi also once planned on partnering with Philip Bloom, co-founder of Global Business Group of Atlanta, to build the massive U.S. embassy complex in Baghdad. Global Business Group had been awarded US Agency for International Development (USAID) contracts in such "CIA playgrounds" as Romania, Armenia, and Moldova. In April 2006, Bloom, who spent most of his time in Romania, pleaded guilty to bribery, money laundering, and conspiracy charges related to his other contracts in Iraq. A U.S. Coalition Provisional Authority reconstruction official Robert Stein, a contract Defense Department employee, who was already a convicted felon who was put in charge of over $82 million worth of contracts in Iraq, pleaded guilty to contract fraud and accepting bribes. Stein steered lucrative Iraq reconstruction contracts to Bloom who, in return, bribed individuals with cash, fast cars, SUVs, liquor, first class airline tickets, jewelry, future employment, computers, and female prostitutes in return for contracts.

Although it did not win the embassy project, Sandi was awarded a lucrative indefinite delivery/indefinite quantity (IDIQ) contract for projects in Iraq.

In April 2008, Barry Halley, a former contractor for Sandi Group and Marine Corps veteran who also worked as a consultant for Halliburton/KBR, Anadarko Petroleum, and Shell Oil, told the Senate Democratic Policy Committee that when he "reported discrepancies in billing or questioned illegal activity in Iraq by DynCorp, CAPE [Environmental Management] or other contractors, I was told not to worry about it or it would be taken care of by others." After he pointed out discrepancies with contracts in Iraq to his superiors at CAPE, Haley said, "I was locked in a room for days, held at gunpoint by private security guards, and physically beaten."

Halley then told the committee about what was the rule rather than the exception in U.S.-occupied Iraq [from CQ Congressional Testimony, April 28, 2008):

"I arrived in Iraq with WWNS [Worldwide Network Services] in early Fall 2003. I was based in the Red Zone in Baghdad as a Project Manager for WWNS under the direction of DynCorp. WWNS had a subcontract with DynCorp to provide communications and technology support for the DASM contract. I later learned that a DynCorp Vice President was a silent partner in WWNS. . .

During my attendance at staff meetings, I became aware that armored cars, weapons, and medical supplies did not exist even though DynCorp had been paid for these items . . .

While I was working with this same defense contractor, the site manager was involved in bringing prostitutes into hotels operated by the contractor. A co-worker unrelated to the ring was killed when he was traveling in an unsecure car and shot performing a high-risk mission. I believe that my co-worker could have survived if he had been riding in an armored car. At the time, the armored car that he would otherwise have been riding in was being used by a manager to transport prostitutes from Kuwait to Baghdad. There were other employees involved in the prostitution ring as well.

I left WWNS in March 2004 to work as the Vice President of IT and Telecommunications for The Sandi Group. The Sandi Group was a subcontractor for DynCorp and other companies in Iraq providing housing, security, and life support for contractors. During the course of my work with The Sandi Group, I met a Vice President at CAPE Environmental, who was trying to win contracts in Iraq. I was hired by CAPE in June 2004 as the Operations and Security Manager.. .When I began working for CAPE, the company was new to Iraq. . ..



When a disagreement occurred between CAPE management and the leadership of OSG, the business relationship between the two ended. Within only a few days of the mobilization of OSG into Iraq, the management of CAPE's Iraq team threatened the life of my co-worker if he did not remove himself from the security contract. . .

I became especially alarmed when the contract was shuffled over to a new security company, Edinburgh Risk, because this company had procured weapons on the black market and had not registered as a security company in Iraq. Edinburgh did not have the proper weapons permits and as the person responsible for security at CAPE, I was concerned that CAPE would be held responsible for Edinburgh's illegal weapons activity.

Near the end of my time in Iraq, I became aware of threats against the life of one my co-workers by security forces working for CAPE. My friend was literally held at gunpoint when he stopped by the house where CAPE management lived. I was able to intervene and my friend was able to leave.... A written complaint about this incident was submitted to the U.S. Embassy Regional Security Officer (RSO). However, this threat was not investigated because the RSO had a working relationship with the security workers who threatened my friend.

My numerous complaints to CAPE management about operations in Iraq finally came to a head in August 2004. As I tried to leave my room on a Friday night, I encountered an armed guard outside my door who told me that I had to remain in my room. I woke up on Saturday morning and saw OSG/Edinburgh Risk armed security personnel standing in my room pointing their weapons at me under the direction of CAPE's in-country manager. They told me that I was under guard... After this incident I was fired by CAPE. I notified the U.S. Embassy that I was stranded and had no way to leave Iraq. The Embassy did not provide me with assistance. While I was planning my return to the United States, I received death threats and a picture of my family which I took to be a threat against my family. . . .

I have spoken with investigators from the DoD, USAID [USAID's administrator, Randall Tobias, was a client of sex escorts from the late Deborah Jeane Palfrey's Pamela Martin & Associates escort service in Washington, DC. Palfrey attempted to invoke the Classified Information Procedures Act during her subsequent trial but was overuled by US Judge James Robertson] and the FBI about my experience in Iraq, but nothing has resulted from these investigations. I have also directly contacted the contract officers handling CAPE's bridge contracts. I was told not to call back. There is an interesting matrix of affiliations between people working in Iraq.

***

In December 2004, three Iraqi insurgent groups -- the Mujahedeen Army, The Black Banner Brigade and the Mutassim Bellah Brigade -- kidnapped and threatened to kill ten Iraqi employees of the Sandi Group. Calling Sandi a "devious group," the insurgents' communique stated: "We warn the director of Sandi Group ... to close the company completely and all its branches and to leave Iraq. Otherwise those (hostages) who are in our grasp will be killed." In January 2005, the Ansar al-Sunnah Army released a video that showed the execution of an Iraqi employee of Sandi.

In 2006, two U.S. employees of Iraqi-owned Shield Security Group in Iraq, Navy veteran Donald Vance and Nathan Ertel, were held in custody and incommunicado by U.S. forces. Ertel was held for a month and Vance for three months. Both were charged with aiding terrorists but, in fact, they were informants for the FBI on fraud and weapons smuggling involving the U.S. government and contractors in Iraq. Shield Security's secret arms caches included rifles, ammunition, rocket launchers, bomb material, and land mines. Vance called Shield Security Group a "Wal-Mart for guns" in Iraq. Among the incidents charged in the Vance-Ertel law suit was that Shield was involved in the smugging of AK-47 rifles from Iraq to South Korean forces in the country. According to the law suit, Shield Security's executives enjoyed a close relationship with Iraqi Kurdish President Jalal Talabani and U.S. Army Iraq Multinational Force commander, General George Casey, now the Army Chief of Staff.

Both were subjected to "enhanced interrogation" tactics, which is Bushspeak and Obamaspeak for torture. The tactics included sleep deprivation, solitary confinement, constant bright lights, loud music, and deprivation of food and water. Both Vance and Ertel later sued former Secretary of Defense Donald Rumsfeld and and "unidentified agents" of the U.S government over their incarceration in Iraq. They accused the U.S. government of subjecting them to psychological torture.

The Vance-Ertel law suit states: "while working as civilians with privately-owned companies operating in Baghdad, Plaintiffs came into contact with political, financial, and operational information that they considered to be suspicious and potentially indicative of corruption. Fulfilling what they believed to be their patriotic duties as American citizens, Mr. Vance and Mr. Ertel reported these irregularities to employees of the Federal Bureau of Investigation (“FBI”), the State Department, and other federal government officials. Both Mr. Vance and Mr. Ertel undertook this reporting for their country, even though they knew full well that the disclosures could result in serious, if not deadly, retaliation by those on whom they were informing. . .After they took these selfless actions, certain low-level bureaucrats in the federal government apparently came to believe, quite incorrectly, that Mr. Vance and Mr. Ertel might have even more information, and they set out to extract it from them."

Vance, who was given prisoner number 200343 by his military jailers, later revealed that several other individuals were also held without charge in Iraq and other countries around the world by U.S. military authorities. Vance and Ertel were accused by their U.S. captors of being "Al Qaeda" and "Taliban" fighters.

Vance and Ertel told the FBI that they believed Shield Security Group was smuggling weapons on the Iraqi black market and was also involved in attacks on Iraqi civilians. After entering the Green Zone in Baghdad, the two were bound and blindfolded by U.S. troops. They were then transferred to confinement at Camp Cropper outside of Baghdad. Vance, an unpaid informant for the FBI, would regularly share information with FBI agent Travis Carlisle in Chicago who was assigned to his case. Vance was held for two months after the U.S. military confirmed he was an FBI informant.

Rather than disbar Shield Security Group from U.S. government contracts, the firm continued to reap U.S. contracts under a new name -- National Shield Security. No officials of the firm were ever criminally charged by the United States.

Only a few perpetrators of fraud, weapons smuggling, and terrorism at the U.S. taxpayers' expense have been brought to justice. The government, on the other hand, has made life miserable for whistleblowers like Halley, Vance, Ertel and countless others who continue to suffer for shining the disinfectant of sunlight on the massive corrupt contrivance that is called "Operation Iraqi Freedom."

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