Firms misled Russia in fuel deals for US: probe

21st December 2010, Comments 0 comments

Two companies hired by the Pentagon misled Russia for years about jet fuel deliveries to a key US air base in Kyrgyzstan, in a fraud that caused serious diplomatic fallout, said a congressional report issued Tuesday.

The investigation found the two firms, Mina and Red Star, created false documents with the help of Kyrgyz authorities to portray fuel shipments as purely for civil aviation and not for use by the US military, the investigation said.

Under the "deception scheme" designed to avoid possible tariff charges, the report said vast amounts of jet fuel were ferried to the Manas air base in Kyrgyzstan, a vital strategic hub that sustains the US-led war effort in Afghanistan.

The Defense Logistics Agency, the Defense Department and the State Department "all turned a blind eye to the fuel contracts' serious political, diplomatic, and geopolitical collateral consequences," the report said.

Company officials defended how they handled the deals, boasting about duping the Russians, the report said.

"We got one over on 'em. I am an old 'Cold Warrior,' I'm proud of it, we beat the Russians, and we did it for four or five years," company official Chuck Squires was quoted as saying in the report.

But he said some officials in Russia knew exactly what was going on, given the huge volumes of fuel being delivered.

"Obviously it was not without their knowledge. If they looked at the volumes, they had to know where this was all going. But they were making money and they were all happy," Squires said.

When asked about the report, the Pentagon said Tuesday staff members were reviewing the findings but did not comment directly on the report's scathing criticism.

"As we've said in the past, those contracts followed the federal acquisition regulations. The entire process is done in accordance with the law," Pentagon spokesman Colonel Dave Lapan told reporters.

The report, titled "Mystery at Manas: Strategic Blind Spots in the Department of Defense's Contracts in Kyrgyzstan," was issued by the House Subcommittee on National Security and Foreign Affairs.

The investigation found the contractors had a reckless attitude towards the impact of their scheme and accused the US government of failing to carefully monitor the deals.

As a result, the US fuel contracts at Manas have become a political issue in Kyrgyzstan, fed suspicion's about Washington's intentions and forced US commanders to build up alternative supply routes and sources for the war in land-locked Afghanistan, the report said.

"The lack of transparency in the fuel contracts has engendered Kyrgyz public perceptions of corruption at Manas and resulted in seriously strained diplomatic relations," it said.

Since 2002, US government officials have signed off on at least two billion dollars' worth of contracts for Mina and Red Star to deliver fuel at Manas. Last month, the Defense Logistics Agency gave Mina Corporation a 600 million dollar contract to supply fuel to the Manas base, it said.

The companies are registered in Gibraltar and managed by retired US military officers, the report said.

© 2010 AFP

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