WAR PROFITEERING AND OTHER CONTRACTOR CRIMES COMMITTED OVERSEAS HEARING BEFORE THE SUBCOMMITTEE ON CRIME, TERRORISM, AND HOMELAND SECURITY OF THE COMMITTEE ON THE JUDICIARY HOUSE OF REPRESENTATIVES ONE HUNDRED TENTH CONGRESS FIRST SESSION JUNE 19, 2007 Serial No. 110–103 Printed for the use of the Committee on the Judiciary ( Available via the World Wide Web: http://judiciary.house.gov U.S. GOVERNMENT PRINTING OFFICE 36–173 PDF WASHINGTON : 2007 For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800 Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001 VerDate Aug 31 2005 11:46 Aug 20, 2008 Jkt 000000 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 H:\WORK\CRIME\061907\36173.000 HJUD1 PsN: 36173 COMMITTEE ON THE JUDICIARY JOHN CONYERS, JR., Michigan, Chairman HOWARD L. BERMAN, California LAMAR SMITH, Texas RICK BOUCHER, Virginia F. JAMES SENSENBRENNER, JR., JERROLD NADLER, New York Wisconsin ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia HOWARD COBLE, North Carolina MELVIN L. WATT, North Carolina ELTON GALLEGLY, California ZOE LOFGREN, California BOB GOODLATTE, Virginia SHEILA JACKSON LEE, Texas STEVE CHABOT, Ohio MAXINE WATERS, California DANIEL E. LUNGREN, California MARTIN T. MEEHAN, Massachusetts CHRIS CANNON, Utah WILLIAM D. DELAHUNT, Massachusetts RIC KELLER, Florida ROBERT WEXLER, Florida DARRELL ISSA, California LINDA T. SA´ NCHEZ, California MIKE PENCE, Indiana STEVE COHEN, Tennessee J. RANDY FORBES, Virginia HANK JOHNSON, Georgia STEVE KING, Iowa LUIS V. GUTIERREZ, Illinois TOM FEENEY, Florida BRAD SHERMAN, California TRENT FRANKS, Arizona TAMMY BALDWIN, Wisconsin LOUIE GOHMERT, Texas ANTHONY D. WEINER, New York JIM JORDAN, Ohio ADAM B. SCHIFF, California ARTUR DAVIS, Alabama DEBBIE WASSERMAN SCHULTZ, Florida KEITH ELLISON, Minnesota PERRY APELBAUM, Staff Director and Chief Counsel JOSEPH GIBSON, Minority Chief Counsel SUBCOMMITTEE ON CRIME, TERRORISM, AND HOMELAND SECURITY ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia, Chairman MAXINE WATERS, California J. RANDY FORBES, Virginia WILLIAM D. DELAHUNT, Massachusetts LOUIE GOHMERT, Texas JERROLD NADLER, New York F. JAMES SENSENBRENNER, JR., HANK JOHNSON, Georgia Wisconsin ANTHONY D. WEINER, New York HOWARD COBLE, North Carolina SHEILA JACKSON LEE, Texas STEVE CHABOT, Ohio MARTIN T. MEEHAN, Massachusetts DANIEL E. LUNGREN, California ARTUR DAVIS, Alabama TAMMY BALDWIN, Wisconsin BOBBY VASSAR, Chief Counsel MICHAEL VOLKOV, Minority Counsel (II) VerDate Aug 31 2005 11:46 Aug 20, 2008 Jkt 000000 PO 00000 Frm 00002 Fmt 5904 Sfmt 0486 H:\WORK\CRIME\061907\36173.000 HJUD1 PsN: 36173 C O N T E N T S JUNE 19, 2007 Page OPENING STATEMENTS The Honorable Robert C. ‘‘Bobby’’ Scott, a Representative in Congress from the State of Virginia, and Chairman, Subcommittee on Crime, Terrorism, and Homeland Security ....................................................................................... 1 The Honorable J. Randy Forbes, a Representative in Congress from the State of Virginia, and Ranking Member, Subcommittee on Crime, Ter- rorism, and Homeland Security .......................................................................... 3 WITNESSES The Honorable Stuart W. Bowen, Jr., Special Inspector General for Iraq Reconstruction, Arlington, VA Oral Testimony ..................................................................................................... 7 Prepared Statement ............................................................................................. 8 Mr. Thomas F. Gimble, Principal Deputy Inspector General, U.S. Department of Defense, Washington, DC Oral Testimony ..................................................................................................... 11 Prepared Statement ............................................................................................. 13 Mr. Barry M. Sabin, Deputy Assistant Attorney General, U.S. Department of Justice, Washington, DC Oral Testimony ..................................................................................................... 27 Prepared Statement ............................................................................................. 29 Mr. Alan Grayson, Grayson & Kubli, P.C., McLean, VA Oral Testimony ..................................................................................................... 40 Prepared Statement ............................................................................................. 42 Ms. Erica Razook, Legal Advisor to the Business and HuMAN Rights Pro- gram, Amnesty International, New York, NY Oral Testimony ..................................................................................................... 44 Prepared Statement ............................................................................................. 46 Mr. Scott Horton, Adjunct Professor of Law, Columbia University School of Law, New York, NY Oral Testimony ..................................................................................................... 48 Prepared Statement ............................................................................................. 51 APPENDIX Material Submitted for the Hearing Record .......................................................... 79 (III) VerDate Aug 31 2005 11:46 Aug 20, 2008 Jkt 000000 PO 00000 Frm 00003 Fmt 5904 Sfmt 5904 H:\WORK\CRIME\061907\36173.000 HJUD1 PsN: 36173 VerDate Aug 31 2005 11:46 Aug 20, 2008 Jkt 000000 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 H:\WORK\CRIME\061907\36173.000 HJUD1 PsN: 36173 WAR PROFITEERING AND OTHER CONTRACTOR CRIMES COMMITTED OVERSEAS TUESDAY, JUNE 19, 2007 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON CRIME, TERRORISM, AND HOMELAND SECURITY COMMITTEE ON THE JUDICIARY, Washington, DC. The Subcommittee met, pursuant to notice, at 2:05 p.m., in Room 2141, Rayburn House Office Building, the Honorable Robert C. ‘‘Bobby’’ Scott (Chairman of the Subcommittee) presiding. Present: Representatives Scott, Delahunt, Johnson, Forbes, Coble, and Chabot. Staff Present: Bobby Vassar, Subcommittee Chief Counsel; Ameer Gopalani, Majority Counsel; Veronica Eligan, Professional Staff Member; Caroline Lynch, Minority Counsel; and Kelsey Whitlock, Minority Staff Assistant. Mr. SCOTT. The Subcommittee will come to order. I am pleased to welcome you today to the hearing before the Sub- committee on Crime, Terrorism, and Homeland Security on ‘‘War Profiteering and Other Contractor Crimes Committed Overseas.’’ Over the last 4 years, reconstruction fraud has run rampant dur- ing the engagement of U.S. forces in Iraq and Afghanistan. The United States has devoted more than $50 billion to relief and re- construction activities in Iraq and Afghanistan, and the inspectors general that are here before us today have reported that millions of these dollars still are unaccounted for. Millions may have been lost to fraud and other misconduct, and these inspectors general have opened hundreds of investigations into fraud, waste and abuse in Iraq, Kuwait and Afghanistan in- volving illegal kickbacks, bid rigging, embezzlements and fraudu- lent overbilling. In addition to the fraud, there is well-documented evidence of de- tainee abuse perpetrated by contractors as well as evidence of un- justified shootings and killings by private security contractors. Private contractors have been used to a greater extent that at any other time in our history. With the exponential use of contrac- tors comes the greater scrutiny of which laws, if any, they are ex- posed to, and we currently have a situation in which many contrac- tors act with impunity and no accountability because they operate (1) VerDate Aug 31 2005 11:46 Aug 20, 2008 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6601 H:\WORK\CRIME\061907\36173.000 HJUD1 PsN: 36173 2 outside of the physical jurisdiction of the United States and, there- fore, outside of the jurisdiction of the U.S. Criminal Code. I hope at this hearing we will be able to explore the following questions: What is the extent of the problem, why are there so few prosecutions, what are the reasons for the lack of transparency in investigations and prosecutions, and are the existing laws adequate to address these problems? With respect to the first point, considering the vast amount of evidence and investigations, there have been relatively few pros- ecutions for fraud or detainee abuse. Inspectors general before us have more than 70 open and active investigations in contracting fraud and abuse in the war. In addition, private whistleblowers have filed numerous civil claims involving Iraq fraud under the False Claims Act. Despite the breadth of all of these investigations and cases, the Department of Justice has pursued only a relatively small number of the cases, and it has not even participated at all in the whistle- blower cases. With respect to detainee abuse in Iraq, there has only been one successful prosecution of a civilian contractor, and that was for the conviction of a CIA contractor for beating a detainee who later died. Another question that arises with respect to prosecutions and in- vestigations is a lack of transparency. For example, 17 pending cases of detainee abuse, including the abuse at Abu Ghraib prison by contractors, have remained on the docket of the U.S. attorney’s office in the Eastern District of Virginia for 3 years. In some of these cases, the Army has investigated the cir- cumstances behind them and found probable cause that a crime has been committed and referred these cases to the Department of Justice