[FoRK] $3B headache, and obstruction of justice

jbone at place.org jbone at place.org
Wed Feb 11 20:37:34 PST 2004

Two quick bits:



A $3 billion headache for Bush

National security and taxation are two of George W. Bush's favorite 
subjects, so he should take great interest in a new federal report that 
examines more than 27,000 Pentagon contractors and how they came to owe 
the federal government some $3 billion in unpaid taxes.

The report will be the topic of hearings Thursday before the Senate 
Governmental Affairs Committee. It also may be a focus for Bush's 
Democratic opponents, who will no doubt see the report's findings as 
new evidence the Bush Administration and its Department of Defense is 
too cozy with the defense industry.

The report is called "FINANCIAL MANAGEMENT: Some DOD Contractors Abuse 
the Federal Tax System with Little Consequence." In it, investigators 
from the non-partisan General Accounting Office cite "numerous 
instances of abusive or potentially criminal activities." In one 
example, a small Custodial Services contractor, which had received 
nearly $12 million in Pentagon money, proved to be almost a million 
dollars short in its tax filings; the business was also "linked to 
potential check fraud." Some contractors owed the government back taxes 
dating from the 1980s.

The tax abuses are apparently part of a pattern, documented by Salon in 
2002, that proves the Pentagon simply can't keep track of its money, 
its troop supplies or other critical resources. Over decades, the 
Pentagon accounting system has devolved into a morass, with 
inefficiency and corruption the inevitable result. As a result of 
accounting problems and "longstanding problems at IRS," the new report 
says, the Pentagon often makes "minimal or no actual [tax] 

The Defense Department controls nearly two-thirds of all federal 
contracts, but there is no law that explicitly bars the military from 
hiring deadbeats. Still, as the report notes, "paying billions of 
dollars to DOD contractors that at the same time have substantial 
unpaid taxes is not sound business practice."

-- Raffi Khatchadourian

[17:09 PST, Feb. 11, 2004]



Obstruction of justice?

As the Justice Department continues its probe into the White House leak 
of CIA agent Valerie Plame's identity, two senior congressional 
Democrats want to know why some Bush staffers are hindering that 
process -- and defying the president's direct order to cooperate with 
investigators. In a letter sent to the White House on Tuesday, Rep. 
Henry Waxman, D-Calif., and Rep. John Conyers, D-Mich., warn the 
president against any further actions that would compromise the 
investigation, and thereby U.S. national security. Noting that the 
Justice Department asked White House officials in January to sign 
waivers that would allow members of the media involved in the case to 
speak freely with investigators, Waxman and Conyers are troubled that 
most of those officials, according to a Washington Post report on 
Tuesday, declined to sign the form on the advice of their attorneys.

"These actions directly contradict your explicit direction to cooperate 
fully with the investigation," the congressmen wrote to President Bush. 
"When asked about this waiver issue on January 5, White House spokesman 
Scott McClellan affirmed eight different times that you instructed your 
staff to comply fully with the Justice Department requests."

While acknowledging an individual's Fifth Amendment protection against 
self-incrimination, the two legislators remind the president that 
national security is a unique matter: "There is no constitutional right 
to have access to classified information or to be entrusted with the 
nation's most sensitive security secrets. Individuals who receive 
access to the country's most critical and highly-guarded secrets have 
an obligation to cooperate fully in investigations into security 

And individuals who intentionally leak a covert agent's identity have 
an obligation to do jail time: Under the Intelligence Identities 
Protection Act, it's a felony to make such a disclosure.

For now, the Bush administration, with its penchant for secrecy, 
appears to be doing what it can to forestall a full uncovering of the 
Plame case -- just as it's scrambling to contain the Iraqi WMD scandal 
beginning to boil over. But the million-dollar question seems to be: To 
what degree does Bush's intelligence quagmire hurt his reelection 
prospects? While much anger has been aired over the administration's 
unethical if not illegal actions on the intelligence front -- much of 
it partisan criticism but plenty coming from Bush's own supporters -- 
polls consistently show that voters' biggest concerns, at least in the 
Democratic primaries, are domestic, with the economy and healthcare 
still topping the list.

-- Mark Follman

[05:37 PST, Feb. 11, 2004] 

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