Operation Iraqi free ride: thanks to administration stonewalling, only one crooked contractor in Iraq has been brought to justice. And there's even more to that story.

• Author: Starkman, Dean

Last March, Custer Battles, a McLean, Virginia-based security contractor run by Scott Custer, a former Army Ranger, and Mike Battles, an occasional Fox News commentator and one-time Republican candidate for Congress, was found by a federal jury to have defrauded the government of $3 million in contracting services in Iraq. Its crime was brought to light by whistleblowers within the company. Among many other tricks, the firm had issued fake invoices and created sham companies to fool its employer into paying for services not provided. Sometimes, Custer Battles was less devious: In one case, according to the trial testimony of retired Brigadier General Hugh Tant III, the company was hired to provide trucks to the military, but the vehicles it procured didn't run, and had to be towed from the site. When confronted, Mike Battles replied: "You asked for trucks ... it is immaterial whether the trucks were operational." Tant, who oversaw the contract, called Custer Battles's work "probably the worst I've seen in my 30 years in the army."

Custer Battles is the only CPA-era whistieblower case to go to trial, but a slew of evidence has now emerged pointing to widespread waste, fraud, abuse, and negligence in the awarding and oversight of Iraq reconstruction contracts. Smart W. Bowen Jr., the Special Inspector General for Iraq Reconstruction, wrote in a report that the authority's "less than adequate" financial controls left "no assurance" that $8.8 billion in seized Iraqi funds was used properly. But the Bush administration and its allies have blocked most other high-profile efforts to gather more information about further instances of abuse. The administration has invoked an obscure part of the False Claims Act to prevent all but one of more than 50 whistleblower suits brought by employees of U.S. contractors in Iraq from moving forward to trial. And the Republican Congress has held only cursory hearings on the contracting process.

That essentially means that we'll get little new information on Iraq's reconstruction-contracting disaster unless Congress changes hands in November. But Custer Battles itself may not be so lucky. This summer will likely see the start of the second phase of the company's trial, which will focus on allegations that, on a contract to provide security for Baghdad International Airport (BIAP), Custer Battles short-changed the Coalition Provisional Authority (CPA) by diverting airport guards to other jobs. Whatever the result of that trial, an investigation by The Washington Monthly into Custer Battles's handling of the airport job makes clear that the firm played by its own rules--quickly setting out to expand the size of the area under its control, and resisting, with striking success, attempts by CPA and military...