WASHINGTON — The FBI has closed its investigation of a top Pentagon official accused by whistle-blowers of attempting to steer telecommunications contracts in Iraq to friends, according to U.S. officials.
The decision means that no criminal charges in the case will be filed against John A. "Jack" Shaw, a former deputy undersecretary of Defense, according to a Pentagon official who asked not to be named because he was not authorized to speak on the matter.
"It's closed," the Pentagon official said.
Neither the FBI nor the Department of Justice would comment on the decision. Shaw's attorney had no comment Friday. Shaw has denied any wrongdoing.
Shaw was among a few top U.S. officials who drew the scrutiny of investigators looking into how billions in taxpayer dollars were being spent to rebuild Iraq. No one has been criminally charged.
U.S. officials working for the Coalition Provisional Authority, which governed Iraq for more than a year after the United States invaded the country, told investigators that Shaw tried to direct a contract involving telecommunications to a company linked to a longtime friend.
Pentagon investigators opened an inquiry into the allegations but were quickly taken off the case by their boss, then-Inspector General Joseph E. Schmitz, according to documents. Schmitz told his investigators their office had a conflict of interest because he had signed an agreement giving Shaw limited investigatory powers in Iraq on technology issues. Schmitz referred the case to the FBI, Pentagon officials said.
Senior investigators in the inspector general's office expressed frustration at Schmitz's decision, saying the FBI was more focused on terrorism than public corruption. They saw it as a political move designed to impede the investigation.
Schmitz, an appointee of President Bush who resigned last month from his Pentagon post, is now the subject of a congressional inquiry into whether he stonewalled several politically sensitive investigations, including the Shaw case.
FBI spokesman Ed Cogswell declined to comment on specifics of the Shaw case but said the FBI vigorously investigated all reports of wrongdoing by public officials.
"The No. 1 priority in our criminal program is corruption," Cogswell said.
Shaw, who was ordered to leave the Pentagon late last year after refusing to resign his post, previously served in the White House under Republican Presidents Nixon, Ford and Reagan.
Shaw was appointed by Defense Secretary Donald H. Rumsfeld to head the newly created office of international technology security in October 2001. In that position as deputy undersecretary, Shaw was responsible for reforming controls over the export of sensitive technology to foreign countries.
As planning for the war in Iraq came to be a Pentagon focus, Shaw took an interest in conducting investigations in Iraq.
At one point, he attempted to become Coalition Provisional Authority inspector general, U.S. officials have said. He also signed the unusual agreement with Schmitz to provide recommendations on investigations into technology transfers.
In the end, Shaw and his investigations were at the center of several controversies concerning Iraq's reconstruction.
Shaw first raised concerns in fall 2003 about whether U.S. and Iraqi officials were bribed in the awarding of three licenses to private companies to provide cellphone service in Iraq. Each license was estimated to be worth several hundred million dollars.
At the same time, he began championing a company called Guardian Net, whose board included longtime friend Don DeMarino, to win a contract to provide a police and fire radio system to Iraq, according to current and former U.S. officials and government documents.
Shaw urged top Coalition Provisional Authority officials to award the contract to Nana Pacific, a small business run by Alaskan natives, which then planned to subcontract the work to Guardian Net, according to the officials and the documents.
Nana Pacific had no experience in the Middle East or in telecommunications networks. But under special federal contracting guidelines, Alaskan native firms can win contracts of any size without going through the government's competitive bidding process.
Nana Pacific and Guardian Net have denied any wrongdoing.
Shaw has said his motivation in recommending the firm was its ability to move quickly through the contracting process.
The plan fell apart after Shaw ordered Coalition Provisional Authority officials to modify language in the police radio portion of the contract to allow the Nana Pacific and Guardian Net team to construct an entire cellphone network for Iraq instead of a limited system, according to current and former U.S. officials and documents.