In Part One of David Phinney's report he investigated the trail from taxpayer to Iraqi and finds multiple layers of profit and waste. In Part Two he takes a closer look at how something as simple as sandbags can line the pockets of corporations before it gets to the Iraqis the funds were intended to benefit.

Part Two: War and Waste

Louis Brown, who ran Sandi’s Iraq operation until autumn 2005 but is now vice president of special projects, took over where Crawley left off in discussing the arrangement. He explained that Sandi’s extra padding was necessary because the subcontractors hired by Corporate Bank would regularly fail to perform as Sandi had hoped. “The government wanted DynCorp to build product as if it were in the United States,” he said. “We couldn’t just go out to Home Depot.”

But there is no lack of sand in Iraq. And DynCorp requested Sandi to provide filled burlap sandbags or a “reasonable substitute” to fortify most of its police camps, including a 17-trailer installation in the town of Najaf, a hotbed of Shiite insurgency and bombings and the site of one of Islam's holiest shrines. Sandi determined that 24,990 sandbags were needed at $1.89 a piece, according to a December 23, 2004 agreement.

DynCorp agreed to pay $67,397 for the work. The tab included, among other things, a $10,050 charge for an onsite project manager to guide the sandbagging with the proviso: “The contractor shall have a superintendent on site at all times during the course of work.”

Sandi then hired an Iraqi company, Al-Kahirat, to do the work. The $23,000 contract with Al-Kahirat reads very much the same as the one DynCorp agreed to, including the requirement that Al-Kahirat “shall have a superintendent on site at all times during the course of work.”

Why did Sandi plan on paying itself more than $44,000 while hiring Al-Kahirat for $23,000 to perform the actual work? To cover unforeseen contingencies, Brown explains. At Najaf, the sandbags turned out to be useless, he said. The job had to be redone. But that was after contracts had been written.

Sandi itemized the exact same sandbagging fee at other camps it built for DynCorp.

“They Liked Staying There While Throwing Darts and Drinking Beer.”

The threat of roadside bombs and insurgency threats also frequently delayed projects, said Brown, a towering man who once worked as a security adviser to high-level government officials and celebrities such as James Brown, Janet Jackson, Elizabeth Taylor and Michael Jackson before joining Sandi in Iraq.

Jobs scheduled to be completed in 45 days could drag out to 155 days, Brown recalls, and Sandi provided security details at its own expense to travel with subcontractors and convoys carrying materials to work sites located at US military camps. One American security supervisor for low-paid Iraqi guards could cost $450 to $700 a run, Brown said.

For all of its Iraq contracts, which include a variety of work ranging from perimeter security of hotels operated by Sandi to the guarding of U.S. government agencies and contractors to intelligence gathering, Sandi’s security force, which has numbered as many as 7,500, has paid a heavy price. The company has suffered 186 casualties, including one American. The US Department of Labor recently fined Sandi $40,000 for not reporting the deaths as part of a US-required insurance program known as the Defense Base Act, Brown acknowledged.

The most savage deaths occurred in December 2004 when eight Iraqi security guards were executed after being kidnapped west of Baghdad. The event cast a chill of fear among Sandi’s subcontractors.

Any news of a bomb or mortar attack around Baghdad put the subcontractors on edge. Workers with the Italian firm, Cogim, refused to leave their villa, according to Donald Vance, a Navy veteran from Chicago who worked as a Sandi security supervisor in 2004 and 2005. “They would tell us we couldn’t make them go out even for a 30-minute ride,” Vance said. “I would be at meetings and just sit back and laugh. They were afraid of being kidnapped.”

Sandi provided subcontractors with the best body armor and factory armored GMC sports utility vehicles available. Vance assured them they would be safe, but the Cogim team frequently wouldn’t budge. “They had everything they needed in their villa,” Vance claimed. “They liked staying there while throwing darts and drinking beer.”

Even worse, at some of the project sites, supervisors were nowhere to be found and workers for the subcontractors preferred spending time enjoying the stores, food courts, recreational facilities and other amenities at the military camps.

“I remember going to Camp Victory and there was no equipment or staff on the project site,” Vance said. “We would take a Sandi supervisor out and he would blow a gasket. People weren’t working. It was 130 degree heat. Everyone preferred jumping into the pool.”

Cogim declined to comment on its work for Corporate Bank in Iraq. In 2005 several top executives with Cogim were investigated and charged for bribes paid to UN officials on deals to provide prefabricated building to peacekeeping missions unrelated to Iraq. Cogim’s name no longer appears on the U.N. vendors’ list as an approved supplier. The relationship beween DynCorp, Corporate Bank and Cogim is also featured in a SIGIR report06_029.pdf

‘All Bad’

Brian Evancho, a 14-year Marine veteran from western New York who worked in aviation quality assurance, had a job as a Sandi project supervisor in Iraq for seven months after working other Iraq projects with the US Army Corps of Engineers. A few of Sandi’s camps worked out well. Others had serious problems, Evancho recalled during an interview last year before returning to Iraq for another contractor.

Iraqi police camps in Bakubah, Victory, Ramadi, Fallujah, and Najaf “were all bad,” he said. “Sandi was overcharging and didn’t perform. I’d say half of the reason for the nonperformance by the sub-contractors was because they didn’t get paid so they didn’t show up for work.”

One project at Camp Diamond Back in the northern Iraq town of Mosul apparently ran through three subcontractors before it was finished. DynCorp apparently agreed to pay $2,157,823 for a camp that included 52 living containers and support structures along with 85,000 sandbags itemized at $160,650.

“Mosul should have cost $600,000 to build,” Evancho said, suggesting that such a sum would include a “reasonable profit” of 28 percent.

The camp took a year to finish and when a State Department representative looked the place over, “he was laughing.” Evancho said that the air conditioning didn’t work, the furniture was “corrugated garbage” from China, and the mattresses were made of foam so thin that they “wouldn’t last two weeks” if an adult slept on them.

As far as the Adnan Palace police camp is concerned, the State Department dropped the project after spending $43.8 million for the uncompleted camp. But while that project was planned right under the nose of government contract officers, the dozens of camps DynCorp built with Sandi in Iraq didn’t come close to that degree of government “visibility” or scrutiny.

Of the seven major regional training camps costing a total of $17.9 million, none were visited by the State Department. The government contracting officer who authorized the spending on the projects told Bowen’s investigators that he “never visited the sites” because of security concerns and that he relied on reports from others regarding the status of the camps.

The inspector general’s investigators intend to visit the other police camps sometime in the future, says the report. Perhaps the visibility will be better.

Meanwhile, DynCorp and Sandi parted ways last August. The two will no longer be pursuing further construction projects together, said DynCorp’s spokesman, Greg Lagana. “The company reviewed its strategic partnerships and it was determined the company could perform the work on its own.”

David Phinney is a journalist and broadcaster based in Washington, DC, whose work has appeared in The Los Angeles Times, New York Times and on ABC and PBS. He can be contacted at: phinneydavid@yahoo.com www.davidphinney.com