[Congressional Record Volume 154, Number 49 (Monday, March 31, 2008)]
[Senate]
[Pages S2213-S2216]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                        WASTE, FRAUD, AND ABUSE

  Mr. DORGAN. Mr. President, 2 weeks ago, I had a chance to meet Herman 
Wouk, who is one of America's greatest authors. He wrote ``Caine 
Mutiny'' and he wrote ``War and Remembrance.'' He is 91 years old and a 
remarkable man, just a remarkable man. He was telling me something kind 
of in jest. He said:

[[Page S2214]]

You know, I don't know much about what happened after 1945, but I know 
everything that happened before 1945. He was talking about his body of 
work, his research on the Second World War and prior to that period of 
time. And he wrote wonderful books, as all of us know. He is one of 
America's greatest authors.
  Herman Wouk and I were talking about the Iraq war and talking about 
the stories about the Iraq war, and he said to me: Do you know anything 
about the Truman Committee? Do you know anything about what happened in 
the Second World War with President Harry Truman, then-Senator Harry 
Truman, who created a committee, a special committee in the United 
States Senate, bipartisan, to go after this issue of contract fraud 
that was going on with respect to defense contracting? I told him I 
certainly did know about the Truman committee, and we have had, I 
believe, four votes in the Senate that I offered as amendments to 
establish a Truman committee.
  At this point I want to show my colleagues a photograph of a man. I 
don't know this man personally. This comes from a Thursday, March 27, 
edition of the New York Times.
  I read an article about this man on an airplane, and I was struck by 
it because it is such an unbelievable story, and it is another chapter 
of, in my judgment, a shameful series of chapters of abuse of the 
American people by contractors with respect to the Iraq war.
  The New York Times published this article, and this is a picture of a 
22-year-old man from Miami Beach. He had gotten contracts worth over 
$300 million in U.S. taxpayers' dollars, and he had signed a contract 
with the U.S. Army to provide arms to Afghan soldiers.
  Apparently, we, as taxpayers, and the U.S. Army, were trying to 
provide additional arms for the Afghan Army with which to fight and 
defend itself. So this 22-year-old man got a $300 million contract from 
the Army Sustainment Command, through a company that had been a shell 
for a number of years established by this man's father. Mr. Diveroli is 
his name. This is a mug shot from the Miami Dade Police Department. He 
had allegedly assaulted a parking lot attendant and had a forged 
driver's license when he was arrested, which made him out to be 4 years 
older than he really was. He told police he had gotten the forged 
driver's license to buy alcohol, but now that he was over 21 he didn't 
need it any longer.
  So this is a 22-year-old man who was the CEO of a company called AEY 
based in Miami Beach. And this is a picture of the building that was 
headquarters for his company, but there was nothing on any door in the 
building. Apparently, in one part of this building an office was 
supposed to be his office, but there was nothing that identified his 
office.
  And here is a picture of his vice president, the vice president of 
this company, this company to which the U.S. Army gave a $300 million 
contract. The vice president is a 25-year-old masseur named David 
Packouz. He is the former vice president of the firm that got $300 
million. So you have a 22-year-old and a 25-year-old masseur who get 
$300 million from the U.S. Army.
  Now, what did they do with the $300 million? Well, the next 
photograph, again from the New York Times, shows outdated ammunition 
sold to Afghan forces, including 40-year-old Chinese-made cartridges. 
So these folks got $300 million and they were providing mid-1960s 
cartridges to the Afghan Army, which the Afghan Army was receiving in 
cardboard boxes that had not been properly taped and were falling 
apart. The Afghan Army described these armaments as junk. Here is an 
Afghan policeman surveying 42-year-old Chinese ammunition that arrived 
in crumbling boxes.
  Again, American taxpayers, through the Army Sustainment Command, paid 
hundreds of millions of dollars to a company that previously had been a 
shell company, a shell corporation, now run by a 22-year-old who says 
that he is the only employee of the corporation.
  Now, Mr. President, I have spent a lot of time on the floor of the 
Senate on these kinds of issues. It is pretty unbelievable when you 
think about it. I don't know Mr. Diveroli personally. Never met him. I 
do know that three reporters from the New York Times 
did some extraordinary work--C.J. Chivers, Eric Schmitt, and Nicholas 
Wood, to expose his activities. I don't know how long it took them to 
do this investigative piece, but it is two full pages inside the New 
York Times. They obviously traveled to Afghanistan and other countries 
to finish this investigative piece. We wouldn't know about this issue 
were it not for investigative reports by the New York Times.
  In January of 2007, that is just 14 months ago, the most recent 
award, which I believe was $150 million, was given by the Army 
Sustainment Command, and the Army Sustainment Command said:

       AEY's proposal represented the best value to the 
     government.

  I am telling you, this part of the U.S. Army has a lot of explaining 
to do to this Congress and to the American people. This is the same 
Army Sustainment Command and, incidentally, the same general in charge 
of the Army Sustainment Command who went to a hearing here in the 
Senate, and following my testimony before a hearing about the water 
problems in Iraq and about Halliburton Corporation providing water to 
the troops, nonpotable water that was twice as contaminated as raw 
water from the Euphrates River, we had the evidence, internal 
Halliburton memorandums, saying it was a near miss. It could have 
caused mass sickness or death. This is the same general who went to 
that Senate committee and said: Never happened.

  Well, now the inspector general has finished an investigation and 
said in fact it did happen. It did happen. This general has some 
explaining to do.
  I have asked Secretary Gates, the Defense Secretary, to ask this 
general to explain himself, and so should this Congress.
  But I don't understand, I just don't understand how even following 
information sent to this country, to the Army Sustainment Command by 
U.S. military officers in Afghanistan, saying what they are sending 
over here in the form of armaments under this contract is junk and it 
needs to stop, even following that it continued. It is an unbelievable 
amount of government waste.
  This is but one issue. And we wouldn't know about it if it were not 
for the New York Times. This has been going on for years. We have been 
fighting in Iraq longer than we were fighting in the Second World War.
  Now, let me go back to something they did in the Second World War. 
Harry Truman, in this Chamber, stood up and offered a proposal to 
create the Truman Committee, bipartisan. For $15,000, they created a 
committee, and it worked for 7 years and saved $15 billion 
investigating waste, fraud, and abuse in defense spending during the 
Second World War. Now, Mr. President, I have been trying for 4 years to 
get this Congress to empower a committee and to impanel a bipartisan 
committee to go after this kind of waste, fraud, and abuse.
  Let me go over just a few of the things. I have held, I believe, 
about 12 hearings in the Policy Committee, but the Democratic Policy 
Committee does not have subpoena power, and I have only held these 
hearings because other committees have not. Oversight is a 
responsibility of this Congress.
  Mr. President, I want to show a photograph of Bunnatine Greenhouse. I 
have done it on many occasions. But the reason I wanted to show the 
photograph is because Bunnatine Greenhouse is a very courageous woman. 
This woman rose to become the highest civilian official at the U.S. 
Army Corps of Engineers. This is a remarkable woman. By all accounts, 
according to people outside of government, she was the finest 
purchasing agent and an unbelievable public servant. But she blew the 
whistle on abusive Halliburton contracts. She said it was the most 
significant abuse of contracting authority she had seen in her career.
  Guess what happened to her. It is what happens to too many 
whistleblowers. She got demoted and lost her job. She got demoted 
because she had the guts to speak out.
  This whole issue has now been subsumed behind the wall in the Defense 
Department. We can't talk about it now because it is under 
investigation. This woman lost her job nearly 4 years

[[Page S2215]]

ago and was replaced, by the way, by someone who had no experience, not 
a day's worth of experience in contracting authority. That is the way 
it works over there. You blow the whistle, you pay for it with your 
career.
  I called the person that hired Bunnatine Greenhouse one night at his 
home--LTG Joe Ballard. He had since retired from the military. And I 
said: General Ballard, Bunnatine Greenhouse spoke out about the 
billions of dollars given the Halliburton Corporation and the abuse and 
the way those contracts were let and she was demoted. Tell me about 
Bunnatine Greenhouse. You hired her.
  He said: She is the best. She got a raw deal.
  This is from General Ballard, since retired. Well, the Pentagon 
decided to award a big no-bid, sole-source contract to the Halliburton 
Corporation. It is called Restore Iraqi Oil, the RIO-C, and then they 
had other contracts--the LOGCAP contract. The waivers that were 
required were not given. This was short-circuited, and we have seen the 
result of this now for a long period of time.
  Mr. President, I have been to the floor a good many times to talk 
about the hearings I have held, and I don't mean to single out 
Halliburton, it is just the company that has gotten the biggest 
contracts. But when a company gets hundreds of millions of dollars, or 
billions of dollars and then, in my judgment, is not performing and is 
taking all the money, we have a right to ask questions. We had $85,000 
brand new trucks left beside the road in a zone that was not considered 
hostile at all, to be torched and set on fire because they didn't have 
enough equipment, or didn't have a wrench to fix a tire; $85,000 brand 
new trucks left to be torched beside the road in safe areas because 
they had a plugged fuel tank. The attitude is that it doesn't matter, 
the taxpayers will pay for that. It doesn't matter, it is a cost-plus 
contract. A cost-plus contract, taxpayers will pay for that.
  Let me show a towel. It is sometimes the smallest issues that make 
the biggest points. Henry Bunting came and testified for the 
Halliburton Corporation. He worked in Kuwait. He was the purchasing 
agent for our troops in Iraq.
  One of his jobs was to purchase towels, so he wrote out a purchase 
order for towels for the troops and his supervisor looked at that and 
said no, you can't buy those towels. Bunting wanted to buy plain white 
towels. He was told that he needed to buy a towel that has KBR's logo, 
Kellogg Brown & Root, a subsidiary of Halliburton, embroidered on it. 
He said the problem is that will triple the cost of the towels they are 
buying for the troops. His supervisor said you don't understand, it 
doesn't matter. These are cost-plus contracts. It doesn't matter.
  Henry Bunting told us about tripling or quadrupling the cost of 
towels, about paying $45 for a case of Coca-Cola, about $7,600 for a 1-
month lease of an SUV, about 25 tons of nails sitting on the ground, on 
the sand of Iraq, because somebody ordered 50,000 pounds of nails and 
ordered them too short. It doesn't matter, the taxpayer pays for all 
that. Throw them on the sand and reorder.
  How about charging for 42,000 meals for the soldiers, a day, and 
serving only 14,000 meals a day? Missing, 28,000 meals. It doesn't look 
like an innocent mistake to me. Rory Mayberry came to testify at a 
hearing I held. He was a supervisor of food service for the Halliburton 
subsidiary. He said we were told that when an auditor came by, don't 
you dare talk to an auditor. We forbid you to speak to a government 
auditor. He said they were routinely charging for more food for 
soldiers than solders existed--routinely. He said they were routinely 
serving expired, date-stamped food. The supervisor said it doesn't 
matter, serve it to the troops.
  I mentioned the issue of water quality; again, the issue of 
requirement in the contract to provide water to our troops at the 
military bases in Iraq. That was a Halliburton contract. A couple of 
whistleblowers came to me and gave me the internal memorandum in the 
company. They were providing water that was twice as contaminated as 
raw water from the Euphrates River. I had it in writing. Yet 
Halliburton denied it and so did the U.S. Army. Only when the inspector 
general did the investigation I requested did we find out Halliburton 
was not telling the truth, nor was the U.S. Army. That is a sad 
comment.
  I want to show a picture of some money. The fellow who was holding 
this cash came to testify. I believe I have a chart that shows the 
money. These are one-hundred dollar bills, in bricks, wrapped with 
Saran Wrap. This guy, named Frank--this was in a building in Baghdad. 
Down below in the vault of that building were several billion dollars.
  By the way, $18 billion of cash was loaded on C-130s, from this 
country, to go to Iraq--$18 billion in cash. It was not accounted for.
  There was a man who was contracted to be able to do the accounting. 
His name was Howell. His address was a residential home in San Diego, 
CA, and his company allegedly was NorthStar Consulting. No one has ever 
been able to find anything NorthStar Consulting did, except we know 
they got $1.4 million and there is no evidence they had any accounting 
on staff, any accountant at all. There is no evidence that any of the 
$18 billion in cash that was moved by C-130 airplanes to Iraq was 
accounted for.
  This is $2 million. This $2 million.
  By the way, Frank said from time to time they would throw these 
around as footballs in the office because there was a lot of cash 
around there. He said the refrain in their office was: You bring a bag 
because we pay in cash. He said it was like the Wild West.
  This belonged to Custer Battles, by the way, this cash. They showed 
up in Iraq with no experience, a new company. They got $100 million in 
new contracts very quickly and then a whistleblower--at least the 
whistleblower says they threatened to kill him. He said you can't do 
this. They took forklift trucks that belonged to the Baghdad Airport, 
allegedly painted them blue, and then sold them back to the Coalition 
Provisional Authority. That was us, by the way. We were paying for all 
of that. Custer Battles, this was one of their payments. I expect they 
have been under criminal investigation now for some while--and if they 
have not, they should be. That was only $2 million, but they got $100 
million.
  There is so much to say about these issues. The Parsons Corporation 
is a company that was to build health clinics in Iraq. The Parsons 
Corporation was provided $243 million in a contract by us to build or 
repair 142 health clinics in the country of Iraq. Three years later the 
$200 million was gone, but there were only 20 health clinics and those 
that existed were of shoddy construction. A man who was an Iraqi 
physician, a doctor, came and talked to me about it. He said he went to 
the Iraqi health minister because he knew this money was supposed to go 
to address health issues in Iraq. He said to the Iraqi health minister, 
I understand an American company got $200-plus million. I want to tour 
all these healthcare facilities that were supposed to be built. The 
Iraqi health minister said you don't understand. Many of these were 
imaginary clinics.
  The money is gone. The American taxpayer got fleeced again. The money 
is all gone, but the clinics don't exist.
  We have shoveled money out the door here in this Congress. This 
President has said I want to send soldiers to war but I do not intend 
to pay for it. Not a cent of it has been paid for. Since the war 
started, every single dollar has been requested as an emergency by the 
President, emergency spending. It is unbelievable; nearly two-thirds of 
a trillion dollars emergency spending. A substantial amount of money 
has been shoveled out the door here for contracting, very big contracts 
in Iraq--some reconstruction, some replenishment of military accounts, 
but very large contracts with almost no oversight. The American 
taxpayer has been stolen blind. This is easy to say, in my judgment, 
the largest amount of waste, fraud, and abuse in the history of this 
country.
  It has gone on for over 5 years. There is no excuse, none, for this 
Congress not creating a Truman committee with subpoena power, 
bipartisan, to investigate and bring justice and provide the oversight 
necessary on this kind of contract abuse. There is no excuse.
  I know some over the years have made excuses. I have offered the 
amendment three times, perhaps four, but we voted on it three times. I 
have people stand up in the Senate and say

[[Page S2216]]

we are doing the oversight hearings, we are doing hearings. We are not. 
That is not true. The Appropriations Committee did one a month ago 
after I pushed and pushed. I appreciate the Appropriations Committee 
doing it. We will do another one in about a month, a little less than a 
month. That is fine. That is not a substitute for doing 60 hearings a 
year for 7 years, as the Truman committee did.
  American taxpayers deserve better than they have gotten from this 
President and from the Congress for the last 5 years.
  Senator Reid and I have talked about this a great deal. Senator Reid 
has aggressively supported the creation of a special committee, a 
bipartisan committee to investigate this kind of waste, fraud, and 
abuse. It is long past the time we do it.
  I come back to the point I made originally. When I pick up a New York 
Times and see that $300 million of contracts is given to a shell 
corporation in Miami, FL, with no name on the door of the building, a 
corporation headed by a 22-year-old as president, a 26-year-old masseur 
as vice president, I ask the question: Who makes those judgments? Who 
is responsible? Who is accountable?
  From that several hundred million dollars, 50-year-old weaponry is 
sent to Afghanistan in the name of American taxpayers, in boxes that 
are not taped up properly, weaponry that comes, in some cases, from the 
1960s, in China.
  That is unbelievable to me. Some might be able to read the New York 
Times piece and say that is all right, I have read this before. I have 
read we were double charged for gasoline for our American troops in 
Iraq. I have read we were overcharged for meals. I read we paid for 
health clinics that did not get built. I read all these things. You 
know what, it is not such a big deal.
  It is a big deal with me. It ought to be a big deal with this 
Congress. The American people, I think, are sick and tired of this and 
they deserve a Congress that is going to do something about it.
  I obviously wish I didn't have to come to the floor to talk about 
this. I wish instead my energy was devoted to a committee that had 
subpoena power. The very first thing we should do--and, by the way, I 
am writing a letter to the appropriate subcommittee saying I want you 
to subpoena the principals in this contract and I want you to subpoena 
the general in charge of the Army Sustainment Command and I want them 
to come to testify and explain to the American people and explain to us 
how is it during wartime that we seem to blink and turn our head to 
what is, I believe, war profiteering. Who has allowed us be that immune 
to the interests of the American troops? This undermines and disserves 
the American soldiers. It certainly disserves the American taxpayers 
and does not represent the best interests of this country.
  In the coming days I intend to come to the floor a good many times to 
speak about this and be a general burr under the saddle--which is a 
term that people are perhaps more acquainted with in my home State 
because we raise a lot of horses. But it seems to me the only way to 
get this sort of thing done is to be a problem and to embarrass those 
who do not want to do it, and I am prepared to do that. I think it is 
long past the time to say to the American people: You don't have to 
read it anymore in the newspaper. The newspaper is not going to be 
required to do oversight for this Congress. The Congress finally, at 
long last, will do its own oversight and will do a good job and tell 
the American people you can count on us. That has not been the case 
earlier when this war started because no one wanted to do the necessary 
kind of oversight because it was the kind of oversight that would 
probably raise some hackles and embarrass some folks.
  I might also say, there was a piece of legislation passed--in fact, 
the Presiding Officer, Senator Webb, and Senator McCaskill and others 
put it together last year, which I supported--which deals with a Truman 
commission. It is not the equivalent of a Truman committee. A Truman 
committee is a standing committee with subpoena power, but the Truman 
Commission is a step forward and I supported it. It will be a 
commission that operates on a one-time basis to develop recommendations 
and take a look at what is happening.
  The Wartime Contracting Commission has a 2-year sunset, and I commend 
my colleagues for trying to put together and for successfully putting 
together a commission, but I do say that we need in this Congress a 
committee, a bipartisan select committee, with subpoena power and we 
need it now.
  I yield the floor. I suggest the absence of a quorum.
  The ACTING PRESIDENT pro tempore. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. KYL. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Cardin). Without objection, it is so 
ordered.
  Mr. KYL. Mr. President, I ask unanimous consent that I may speak for 
such time as I might consume.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Arizona is recognized.

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