No Comment — July 23, 2010, 1:56 pm

Those Slippery Fuel Contracts

At his SpyTalk blog at the Washington Post, Jeff Stein reports on why the congressional probe into the Manas fuel contracts has been stagnant. It seems that Red Star/Mina Corp., the shadowy London-based companies who are beneficiaries of roughly $1½ billion in Pentagon fuel contracts, were using their overseas registries to avoid complying with congressional queries—ultimately leading the Oversight Committee to issue formal subpoenas and involve the U.S. Marshalls. Now, Stein reports, the congressional investigators have a compliance agreement:

After weeks of tense negotiations, a House oversight subcommittee has gotten promises of cooperation from two secretive companies at the center of allegations regarding corruption in aviation fuel contracts at the big U.S. air base in Kyrgyzstan. The objects of the panel’s attention are Douglas Edelman, a Californian with extensive business experience in Moscow and Central Asia, and Erkin Bekbolotov, a Kyrgyz national. The men are partners in Red Star Enterprises and Mina Corp. Ltd, firms that were awarded sole-source, classified, $1.4 billion Defense Department contracts to supply fuel to Manas in 2002.

The companies’ dance with congressional investigators seems to have been motivated by their desire to avoid disclosing their beneficial ownership. In a press release, the companies have their lawyer state that their objective is “preserving the confidentiality of the companies’ operations and the privacy of its personnel.” The identity of the companies’ beneficial owners and the qualifications and experience of their key personnel would be right at the heart of any congressional probe.

Stein’s report marks the first appearance of Douglas Edelman in press accounts of the matter. He is tagged as a “Californian with extensive business experience in Moscow and Central Asia,” but the accuracy of that description must be tested by congressional investigators. Just exactly what are the commercial experience and credentials of Mr. Edelman and the rest of the Red Star/Mina Corp. team? What is their experience dealing with energy industry and fuel supply arrangements prior to these contracts? What was it about the Red Star/Mina Corp. team that justified this extraordinary series of DOD contract awards, in which the normal prime concern—an established track record—was completely disregarded? Neither the Pentagon nor the State Department has offered a plausible answer to that question.

There seems little doubt that these contracts as structured and implemented by DOD would have been exceptionally profitable to those who received them. DOD, with strong State Department backing, insisted on exemption from all taxes, customs, duties, and other government charges, not only for themselves but also for Red Star/Mina Corp. The holders of such contracts therefore figured to sweep in staggering profits at little risk. What is the relationship between the principals of these companies, and the beneficial owners of these companies, and the U.S. Government? Congress must nail this down with certitude. And it’s hard to understand why the answers to such questions should be concealed from the American public.

One of the major issues hanging over the government contracting process now is “capture”—the revolving door between government service and contractors, which leads to the writing of contracts that are unnecessary or commercially unfavorable to the taxpayer. In this case, a number of figures at Red Star/Mina Corp. appear to have been in government service just before Red Star/Mina Corp. emerged in this business line with a healthy portfolio of government fuel-supply contracts. These details need to be flushed out.

Jeff Stein’s source identifies for him the other obvious issue for Congress: “’The heart of the investigation,’ the source said, ‘is why Red Star and Mina Corp. were not investigated under’ the Foreign Corrupt Practices Act, which forbids U.S. companies from paying bribes or kickbacks to foreign officials.” As I noted in congressional testimony, the Justice Department was fully informed about the contracts in 2005–06, established the links between those contracts and entities controlled by former President Akayev, and even froze his U.S. bank accounts. But it evaded all queries about Red Star/Mina Corp. when investigators for Kyrgyzstan asked about their role. This points to something very screwy in the Justice Department’s interpretation and application of the FCPA.

Share
Single Page

More from Scott Horton:

Six Questions October 18, 2014, 8:00 pm

The APA Grapples with Its Torture Demons: Six Questions for Nathaniel Raymond

Nathaniel Raymond on CIA interrogation techniques.

No Comment, Six Questions June 4, 2014, 8:00 am

Uncovering the Cover Ups: Death Camp in Delta

Mark Denbeaux on the NCIS cover-up of three “suicides” at Guantánamo Bay Detention Camp

From the June 2014 issue

The Guantánamo “Suicides,” Revisited

A missing document suggests a possible CIA cover-up

Get access to 164 years of
Harper’s for only $39.99

United States Canada

CATEGORIES

THE CURRENT ISSUE

February 2015

The War of the World

= Subscribers only.
Sign in here.
Subscribe here.

The Sharp Edge of Life

= Subscribers only.
Sign in here.
Subscribe here.

The Great Republican Land Heist

= Subscribers only.
Sign in here.
Subscribe here.

Captive Market

= Subscribers only.
Sign in here.
Subscribe here.

The Day of the Sea

= Subscribers only.
Sign in here.
Subscribe here.

view Table Content

FEATURED ON HARPERS.ORG

Article
The Great Republican Land Heist·

= Subscribers only.
Sign in here.
Subscribe here.

“The wholesale transfer of public lands to state control may never be achieved. But the goal might be more subtle: to attack the value of public lands.”
Photograph by Chad Ress
Article
The Sharp Edge of Life·

= Subscribers only.
Sign in here.
Subscribe here.

“The struggle of the novelist has been to establish a measure, a view of human nature, and usually, though not always, as large a view as belief and imagination can wring from observable facts.”
Photo by Eddie Adams/Associated Press
Article
Captive Market·

= Subscribers only.
Sign in here.
Subscribe here.

"Fear of random violence lives on, but the reality is that violent-crime rates have dropped to levels not seen since the early Seventies."
Photograph by Richard Ross
Article
The Day of the Sea·

= Subscribers only.
Sign in here.
Subscribe here.

“Fifteen judges will then sit together in a wood-paneled room, in a city thousands of miles from the Andes, and decide whether the ocean Bolivia claims as its right will at last be returned to it.”
Photo by Fabio Cuttica/Contrasto/Redux
Post
The Art of Outrage·

= Subscribers only.
Sign in here.
Subscribe here.

Illustration by Art Spiegelman

Estimated total calories members of Congress burned giving Bush’s 2002 State of the Union standing ovations:

22,000

A fertility scientist named Panayiotis Zavos announced that he had created human-cow embryos that were theoretically viable, but denied that he planned to allow such a hybrid to be implanted in a woman’s womb. “We are not trying to create monsters,” he said.

A statistician determined that the five most common first names among New York City taxi drivers are Md, Mohammad, Mohammed, Muhammad, and Mohamed.

Subscribe to the Weekly Review newsletter. Don’t worry, we won’t sell your email address!

HARPER’S FINEST

In Praise of Idleness

By

I hope that after reading the following pages the leaders of the Y. M. C. A. will start a campaign to induce good young men to do nothing. If so, I shall not have lived in vain.

Subscribe Today