Last year, I noted that the CPA identity was more ambigious than... [insert transgender joke here] . Congressional researchers couldn't figure whether it was an international entity or a federal agency, meaning just coincidentally, it got to bypass all sorts of accountability rules.
The issue was mostly hypothetical when I wrote about it. Not anymore.
Newsweek looks at how two whistleblowers are suing one contractor under the anti-fraud False Claims Act. The law allows government to join in the suit if it agrees that there's been fleecing going on. In the case of the contractor, Custer Battles, there's little doubt about the fleecing. The Air Force wanted the company banished from Iraq after it "created sham companies, whereby [it] fraudulently increased profits by inflating its claimed costs." The Army's inspector general and told his superiors, "What we saw horrified us."
But turns out the administration has decided that none of that matters, since, of course, the CPA wasn't really a part of the U.S. government.
There are only a few small problems with that fine logic. For one thing, the CPA, was, ahem, fully funded by the U.S. It was refered to in legislation as a "U.S. entity." And contracts with Custer Battles refer to the buyer as "the United States of America."
This is more than a one-off case. As Newsweek puts it:
Even an administration ally, Sen. Charles Grassley, demanded to know in a Feb. 17 letter to Attorney General Alberto Gonzales why the government wasn't backing up the lawsuit. Because this is a "seminal" case—the first to be unsealed against an Iraq contractor—"billions of taxpayer dollars are at stake" based on the precedent it could set, the Iowa Republican said.
Finally, Newsweek's kicker:
The administration's seemingly detached approach to these cases could have other implications. NEWSWEEK has learned that federal prosecutors plan to indict several U.S. contractors in Iraq on criminal charges but that these could be undercut if the court rules in the Custer Battles case that the CPA was not a U.S. government arm. "If you make the CPA a U.S. entity, you open the door to all sorts of liability claims. But if it's not a U.S. entity, then you can't parade these people through the court," says Jim Mitchell of the CPA inspector general's office. And that could mean Custer Battles and other companies will ultimately answer to no one.
