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U.S. Contractor Slain in Iraq Had Alleged Graft

The weapons dealer had accused officials in the Defense Ministry of a kickback scheme.

January 20, 2005|Ken Silverstein, T. Christian Miller and Patrick J. McDonnell | Times Staff Writers

WASHINGTON — An American contractor gunned down last month in Iraq had accused Iraqi Defense Ministry officials of corruption days before his death, according to documents and U.S. officials.

Dale Stoffel, 43, was shot to death Dec. 8 shortly after leaving an Iraqi military base north of Baghdad, an attack attributed at the time to Iraqi insurgents. Also killed was a business associate, Joseph Wemple, 49.

The killings came after Stoffel alerted senior U.S. officials in Washington that he believed Iraqi Defense Ministry officials were part of a kickback scheme involving a multimillion-dollar contract awarded to his company, Wye Oak Technology, to refurbish old Iraqi military equipment.

The FBI has launched an investigation into the killings and whether they might have been retaliation for Stoffel's whistle-blowing activities, according to people familiar with the inquiry. The FBI declined to comment.

For The Record
Los Angeles Times Tuesday January 25, 2005 Home Edition Main News Part A Page 2 National Desk 1 inches; 43 words Type of Material: Correction
Slain contractor -- An article in Thursday's Section A about the killing of an American contractor in Iraq identified Nick Hutchinson as senior U.S. advisor to the Iraqi Defense Ministry. He is an advisor to the ministry but is not the senior advisor.

Stoffel, of Monongahela, Pa., made his allegations in a Dec. 3 letter to a senior Pentagon official and in a meeting with aides to Sen. Rick Santorum (R-Pa.). Soon after, Stoffel was summoned to the Taji military base in Iraq by coalition military officials to discuss his concerns about his contract. He complained about payment problems with a mysterious Lebanese businessman designated by the Iraqis as a middleman, sources said.

As Stoffel, Wemple and an Iraqi interpreter left the Taji base in a car Dec. 8, another vehicle rammed theirs head-on. Two masked men jumped out and executed the two Americans in a fusillade of bullets, according to news accounts at the time. Their interpreter fled and is missing.

Stoffel's death has prompted new worries about the integrity of the reconstruction effort in Iraq, which has been plagued by accusations of corruption and cronyism almost from the start.

One U.S. official said that corruption problems involving middlemen and kickbacks were become increasingly widespread as the Iraqis began to exercise more control over the contracting process.

Stoffel's killing drew scrutiny from investigators not only because of his whistle-blowing activities but also because of his mysterious and controversial past. Stoffel worked on a top secret U.S. program in the 1990s to buy Russian, Chinese and other foreign-made weapons for testing by the U.S. military, according to documents and interviews.

Stoffel's Iraq deal was the first large-scale contract issued and funded directly by the Iraqi government for military purposes, and was crucial for training and equipping the Iraqi army, considered a key component of the U.S. strategy for exiting Iraq.

Failing to stop the alleged corruption "will set a very negative precedent for subsequent dealings with the Iraqi military, harm U.S. companies seeking to do business according to U.S. law, and be the source of embarrassment and political tension to the Bush administration with respect to the effort in Iraq," said Stoffel's letter to the Pentagon, which was obtained by The Times.

According to the letter, Stoffel's Pennsylvania-based firm was awarded a contract last year by the Iraqi Ministry of Defense to help overhaul its aging Soviet-era military equipment, mostly T-55 tanks and artillery. Wye Oak Technology delivered some refurbished tanks in November to Iraq's 1st Mechanized Brigade.

As part of the contract, senior Defense Ministry officials required Stoffel's payments to be processed through a Lebanese middleman appointed by the ministry, according to the Dec. 3 letter.

By November, Stoffel was seeking a payment of $24.7 million, submitting invoices directly to the Defense Ministry. The ministry, in turn, cut three separate checks, sending each of them to the Lebanese businessman for "processing," people familiar with the contract said.

The middleman's role was to act as a sort of escrow account for the financial transactions, reconciling invoices and dispensing the payments, sources said.

But after the businessman failed to send him the money, Stoffel complained to U.S. officials in Washington that he suspected that the middleman's true role was to route payments back to Iraqi officials in the form of kickbacks, people familiar with the contract said.

He also told the Pentagon in his letter that the middleman was withholding payments in an attempt to force him to use subcontractors linked to the middleman and to Defense Ministry officials.

Stoffel spoke about his concerns with representatives from Santorum's office. Santorum, in turn, wrote Defense Secretary Donald H. Rumsfeld on Dec. 3 asking him to raise the issue with Iraqi Defense Minister Hazem Shaalan.

"I would appreciate comment on how the Department of Defense can assist" Wye Oak Technology in recovering payment for services provided, Santorum wrote.

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