Custer’s Last (profitable) stand
“Managers of a security firm that won large contracts in Iraq warned their bosses in February of what they called a pattern of fraudulent billing practices, internal company memorandums suggest.
The memorandums, written primarily by two company managers, charged that the security firm, Custer Battles, repeatedly billed the occupation authorities for nonexistent services or at grossly inflated prices.
The company, which quickly grew to garner security contracts worth $100 million in little more than a year, denies the charges. It argues that the managers confused sincere attempts to document jobs done in a hurry, in a war zone, with deliberate deception and that the company provided all contracted services for the agreed-upon price.
The memos and a lawsuit filed by former employees cite several specific instances, including billing the Coalition Provisional Authority $157,000 for a helicopter pad that in fact cost $95,000, and repainting forklifts abandoned by Baghdad Airways and then charging the authority thousands of dollars a month, claiming that the forklifts were leased.
One of the managers was later fired by the company and is part of a lawsuit charging Custer Battles with defrauding the federal government of tens of millions of dollars. The other manager, who has since been appointed to a high-level position with the company, recently declared that after further research, he believed that any questionable practices were the fault of a few individuals and had not been condoned by the owners.
On Sept. 30, the Pentagon, concerned by the allegations raised by the employees, barred Custer Battles from receiving further military contracts, and it has withheld at least $10 million in payments to the company. The company is appealing the ban.”