Nana planned to subcontract the construction of the communications system to a company called Guardian Net. Guardian Net's board of directors was nearly identical to that of Liberty Mobile. It included DeMarino, Ganley and Julian Walker, who works for Shaw as a researcher, according to the documents.
Ganley and DeMarino have acknowledged participating in the attempt to win a cellphone license. Walker could not be reached for comment.
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.
When CPA officials reported their concerns about the Guardian Net plan to Pentagon investigators, Shaw stepped up his investigation of the role of the CPA officials in the licensing process, Pentagon sources said.
Even after the Pentagon canceled the agreement that Shaw had used to justify his probe, he unilaterally continued the investigation, Pentagon sources said.
On May 11, Shaw delivered his report, which concluded that there was "serious, credible evidence of criminal wrongdoing by U.S. government employees pertaining to taking official acts in exchange for bribes."
He acknowledged that the report "directly conflicts" with the December report by the inspector general, which he dismissed as "worthless."
Shaw's report, which The Times has reviewed, claims evidence of a conspiracy to take over Iraq's cellphone service led by Nadhmi Auchi, a British businessman who has been accused of links to Hussein and who was convicted last year in a French court in an unrelated kickback scheme. Auchi maintains his innocence and is appealing.
Auchi, according to the report, paid bribes through a series of surrogates to win the three cellphone licenses and gain control of Iraq's cellular system.
A spokesman for Auchi denied Shaw's claims. He acknowledged that Auchi has an indirect, minor stake in Orascom, one of the cellphone operators. He denied any ownership interest in the other phone companies.
Shaw's report relies mainly on newspaper articles, rumors and secondhand conversations reported by the losing bidders or anonymous sources and "the Arab street," which Shaw calls "a reasonable sounding board for accepted truth."
In the conclusion to his report, Shaw recommends that all the cellphone licenses be canceled and that the contract be awarded to one of the original bidders -- as long as the bidder uses a technology known as CDMA, which Shaw describes as superior to other cellular technologies.
Shaw sent his report to the inspector general's office, which turned it over for further investigation to the FBI. An FBI official confirmed that the agency had received the report and had just begun looking into the allegations of bribery.
"While some of the evidence in this report is fragmentary, the dots are connected in convincing and important ways," Shaw said in the report. "Below the deadly serious efforts to restore security and legitimacy to Iraq lies a muted gold rush mentality."
