The FBI is conducting a preliminary inquiry into whether a businessman linked to Saddam Hussein’s regime bribed U.S. and Iraqi officials to fix bids for Iraqi cell-phone contracts worth hundreds of millions of dollars, U.S. officials said.
The inquiry, referred to the FBI by the Pentagon inspector general earlier this month, focuses on Nadhmi Auchi, an Iraqi-born Briton who is suspected of orchestrating the cell-phone scheme to benefit three companies with which he is affiliated or owns, said the officials, who spoke on the condition of anonymity.
“Significant and credible evidence was developed that a conspiracy was organized by Nadhmi Auchi to offer bribes to ‘fix’ the awarding of cellular-licensing contracts covering three geographic areas of Iraq,” a Pentagon report said.
The report by the Pentagon’s International Armament and Technology Trade Directorate identifies cash payments made to two Iraqi officials, two British contractors and two Americans, totaling as much as $11.5 million. The contracts are worth an estimated $500 million annually.
It describes Auchi as a billionaire who has “served as Saddam Hussein’s principle international financial manipulator and bag man” and says he was involved in European arms sales to Iraq for more than two decades. Auchi was convicted in November by a French court in an illegal oil company payment scheme. He received a 15-month suspended sentence and was ordered to pay a $2.4 million fine.
The report also says access to Iraq’s cell-phone network “could allow [Auchi] to compromise the entire Iraqi telecommunications system and undermine the Iraqi security system on an ongoing basis.”
A law-enforcement official said the FBI is conducting the preliminary inquiry to determine whether U.S. laws were violated by U.S. officials and foreign contractors working for the Coalition Provisional Authority (CPA) in the awarding of the cell-phone contracts.
“To the casual observer, this may look like it is an unimportant internal Iraqi problem,” said John A. Shaw, deputy undersecretary of defense for International Technology Security, whose office produced the report.
“But in point of fact, it reflects the hijacking of the entire Iraqi communications system and everything that that implies by a central figure of the previous regime.”
The report shows “a level of scandal done under American aegis that is appalling,” Mr. Shaw said.
He said the Pentagon is asking L. Paul Bremer, the U.S. administrator in Iraq, to revoke the cell-phone contracts.
According to the report, the Iraqi minister of communications, Haider al Abadi, was paid $5 million by an associate of Auchi’s during a visit to London in September.
A month later, the three cell-phone contracts were awarded to Orascom, which was described in the report as “Auchi’s principal corporate vehicle”; Atheer, a Kuwaiti enterprise; and AsiaCell, a Kuwait-based consortium made up of U.S., German and Chinese companies. The report stated that Atheer and AsiaCell had links to Auchi or his businesses.
Auchi could not be reached for comment.
The report also identifies Daniel Sudnick, former CPA official in charge of telecommunications issues, as one of several contract decision-makers who might have received “payoffs and kickbacks.” Mr. Sudnick has resigned, along with a second U.S. official involved in telecommunications in Iraq.
Mr. Sudnick said he has not seen the report but has heard some of its contents. He denied taking any payoffs while in Iraq.
“There’s no merit to any of these allegations,” he said.
Mr. Sudnick said the Pentagon inspector general investigated similar accusations against two British nationals last year and cleared both of wrongdoing.
The report also names Ibrahim al-Jafferi, a member of the recently disbanded Iraqi Governing Council, as involved in the contracting improprieties.