WASHINGTON — A senior Defense Department official conducted unauthorized investigations of Iraq reconstruction efforts and used their results to push for lucrative contracts for friends and their business clients, according to current and former Pentagon officials and documents.
John A. "Jack" Shaw, deputy undersecretary for international technology security, represented himself as an agent of the Pentagon's inspector general in conducting the investigations, sources said.
For The Record
Los Angeles Times Wednesday August 11, 2004 Home Edition Main News Part A Page 2 National Desk 2 inches; 66 words Type of Material: Correction
Iraq reconstruction -- An article in Section A on July 7 about reconstruction contracting practices in Iraq quoted a former Coalition Provisional Authority official as saying that Deputy Defense Undersecretary John A. "Jack" Shaw was in Iraq illegally. As stated elsewhere in the article, Shaw had obtained permission to visit Iraq. The official was referring to Shaw's visit to the Iraqi port of Umm al Qasr.
In one case, Shaw disguised himself as an employee of Halliburton Co. and gained access to a port in southern Iraq after he was denied entry by the U.S. military, the sources said.
In that investigation, Shaw found problems with operations at the port of Umm al Qasr, Pentagon sources said. In another, he criticized a competition sponsored by the U.S.-led Coalition Provisional Authority to award cellphone licenses in Iraq.
In both cases, Shaw urged government officials to fix the alleged problems by directing multimillion-dollar contracts to companies linked to his friends, without competitive bidding, according to the Pentagon sources and documents. In the case of the port, the clients of a lobbyist friend won a no-bid contract for dredging.
Shaw's actions are the latest to raise concerns that senior Republican officials working in Washington and Iraq have used the rebuilding effort in Iraq to reward associates and political allies. One of Shaw's close friends, the former top U.S. transportation official in Iraq, is under investigation for his role in promoting an Iraqi national airline with a company linked to the Saddam Hussein regime.
The inspector general's office -- which investigates waste, fraud and abuse at the Pentagon -- has turned over its inquiry into Shaw's actions to the FBI to avoid the appearance of a conflict of interest, the sources said.
The FBI also is looking into allegations, first reported by the Los Angeles Times, that Shaw tried to steer a contract to create an emergency phone network for Iraq's security forces to a company whose board of directors included a friend and one of Shaw's employees.
Shaw, who held top positions in the Reagan and George H.W. Bush administrations, declined to comment for this article. In previous interviews, he has denied any financial links to the companies involved or receiving any promises of future employment or other benefit.
Shaw justified his investigations under a special agreement with the Pentagon inspector general, Joseph E. Schmitz. The August agreement created a temporary office headed by Shaw called the International Armament and Technology Trade Directorate. Its mission was to cooperate with the inspector general on issues related to the transfer of sensitive U.S. technologies or arms to foreign countries.
Shaw frequently cited the agreement in his dealings with reporters and the military, telling them it allowed him to "wear an IG hat" to conduct investigations. In a recent letter to the inspector general, he said the agreement gave him "broad investigatory authority."
That contention is the subject of dispute, however. The agreement states that Shaw "may recommend" that the inspector general initiate audits, evaluations, investigations and inquiries, but it does not appear to give him investigative powers.
"Jack Shaw was never authorized to do any kind of investigation or auditing on his own," said one source close to Schmitz. "The agreement was not for that. He's trying to cram more authority into that agreement than it gives him."
Schmitz canceled the agreement two weeks after Shaw was first accused of tampering with the emergency phone network contract. Schmitz declined to comment, but in his letter canceling the arrangement, he praised Shaw for "outstanding leadership."
Shaw used the agreement to win permission to visit Iraq last fall. In an Oct. 28 letter to Army Gen. John P. Abizaid, head of the U.S. Central Command, Shaw said he wanted to "investigate those who threatened the national security of the United States through the transfer of advanced technologies to Iraq."
Specifically, Shaw said he planned to identify countries that had smuggled contraband weapons into Iraq and catalog existing conventional weapons stockpiles.
Although he did not mention it in the letter, Shaw also was interested in investigating operations at the port of Umm al Qasr.
Last summer, Shaw was visited by Richard E. Powers, a longtime friend and lobbyist. Powers was representing SSA Marine, a Seattle-based port operations company that had won a controversial limited-bid contract in the early days of the war to manage the troubled port.
He also was representing a small business owned by Alaskan natives called Nana Pacific. Under federal regulations, small companies owned by Alaskan Native Americans can bypass the normal process and receive unlimited, no-bid contracts.