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Stop the presses! When the U.S. gave Pervez Musharraf a dumptruck full of cash after 9/11 -- $10.58 billion and counting, mostly in untraceable cash transfers -- it didn't exactly care how he spent it, as long as he was sufficiently bought off as a U.S. ally for the war on terror. Lo and behold: Musharraf spent his cash how he pleased, and not on U.S. "priorities" for Pakistan!

A case in point: now that al-Qaeda's senior leadership has reconstituted itself in Pakistan's Northwest Frontier Province, U.S. officials fret that Musharraf didn't use his free money to build up a promised counterterrorist force for the FATA.

In interviews in Islamabad and Washington, Bush administration and military officials said they believed that much of the American money was not making its way to frontline Pakistani units. Money has been diverted to help finance weapons systems designed to counter India, not Al Qaeda or the Taliban, the officials said, adding that the United States has paid tens of millions of dollars in inflated Pakistani reimbursement claims for fuel, ammunition and other costs.

“I personally believe there is exaggeration and inflation,” said a senior American military official who has reviewed the program, referring to Pakistani requests for reimbursement. “Then, I point back to the United States and say we didn’t have to give them money this way.”

Pakistani officials say they are incensed at what they see as American ingratitude for Pakistani counterterrorism efforts that have left about 1,000 Pakistani soldiers and police officers dead. They deny that any overcharging has occurred.

There's a lot of back and forth between U.S. and Pakistani officials in the piece about whether the U.S. delivered all the military equipment it promised, which the Pakistanis cite as the reason for their FATA intransigence. But look: if the U.S. truly cared about Pakistan spending the money fastidiously, it wouldn't be paying Musharraf in untraceable cash transfers. Rather, the U.S. needs to buy off Musharraf so he'll let us dip our toes into the volatile FATA and occasionally kill some terrorists, and so his security services will share intelligence with us and snag us some al-Qaeda members hiding up in Rawalpindi or Karachi or Peshawar or wherever. And buying him off means buying him off. Corruption and diversion of money is part of the bargain -- a cost of doing business.

It's one thing for U.S. officials to ask what exactly it is they're purchasing for over $10 billion. But it's quite another the U.S. to turn around and complain that the cash we've given Musharraf doesn't come with strings.

(Via Yglesias, who, sources indicate, blogs on Christmas Eve day in a charcoal-gray Hugo Boss business suit.)

A top CIA official said the agency had “produced or made available for review” everything that the 9/11 Commission had requested regarding the interrogation of operatives of Al Qaeda, but the commission didn't receive the video tapes of interrogations that were still in existence at the time. The CIA says the agency would have handed over the tapes if the commission members had specifically asked for interrogation videos -- but, of course, the agency hadn't told anyone outside the administration that the tapes existed. A judge last week ordered the administration to speak under oath about the destruction of the tapes. (New York Times, AP)

A newly-declassified document shows that J. Edgar Hoover, the longtime director of the FBI, had a plan to suspend habeas corpus and imprison some 12,000 Americans he suspected of disloyalty. Hoover wanted President Harry S. Truman to proclaim the mass arrests necessary to “protect the country against treason, espionage and sabotage.” Truman didn't approve. (New York Times)

Firefighters on 9/11 were forced to use old radios that had malfunctioned eight years earlier, during the 1993 attacks on the World Trade Center. A New York City Council report on the fire department’s radio procurement process said the FDNY chose a radio that "representing an entirely new communications technology from Motorola rather than conduct a competitive review of products and prices." Giuliani told George Stephanopoulos that it would have been "impossible" to give them working radios. (CNN, Think Progress)

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For two years, military officials, defense experts, lawyers and Iraqi officials tried to warn the U.S. against relying so heavily on unaccountable private security contractors in Iraq. Until Blackwater's fateful September shooting at Nisour Square, the U.S. answer was always the same: meh. One reason the Pentagon didn't care: one of its chief advisers on security contractors was on the contractors' payroll.

Steve Fainaru of The Washington Post -- who's dogged Blackwater ever since the shooting -- delivers a taxonomy of unheeded warnings. The pattern is fairly simple, and rather Blackwater-specific. (The Blackwater brand has become a generic signifier for security contractors in Iraq -- the Q-Tip or Kleenex of contract security.) Blackwater's guards shoot someone. People complain. They warn that impunity for security contractors jeopardizes the U.S. mission. U.S. officials do nothing. Nothing changes. More Iraqis get shot. Repeat. T.X. Hammes, a top-shelf counterinsurgency expert and ex-adviser to the Iraqi army training mission, told Fainaru, "I still think, from a pure counterinsurgency standpoint, armed contractors are an inherently bad idea, because you cannot control the quality, you cannot control the action on the ground, but you're held responsible for everything they do."

So why did it take widespread Iraqi outrage over the Nisour Square debacle for anything to change? One reason, Fainaru reports, is a man named Lawrence W. Peter. The Pentagon allowed the security contractors to regulate and police themselves. Peter, a Pentagon consultant, helped keep it that way. Only while he delivered that advice, he worked for a security contractors' lobby.

U.S. officials often turned to the Private Security Company Association of Iraq, a trade group funded by the security companies. Lawrence T. Peter, a retired Navy intelligence officer, served as the association's director while also working as a consultant to the Pentagon's Defense Reconstruction Support Office, which administers contracts in Iraq and Afghanistan. Whitman, the Pentagon spokesman, said Peter earned "a few thousand dollars a year" as a consultant.

The association operated out of an office inside the U.S. Army Corps of Engineers Logistics Directorate in the Green Zone. Jack Holly, a retired Marine colonel who heads corps logistics in Iraq, said that Peter and the association play "a critical role to help the private security community improve and regulate itself," adding, "They tried to fill a void that had been left by the U.S. government's failure to recognize the problem."

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Last year ex-GOPer Paul Morrison decided he'd rather party with the Democrats if it meant he could defeat his arch-nemesis in the Kansas attorney general election. After his party switch, Morrison was elected Kansas attorney general but last week a torrid sex-and-politics scandal caused him to announce his resignation, effective January 31, 2008. Name sound familiar? A few weeks ago we wrote about how the former Kansas Attorney General, Phill Kline, had been skipping work and living outside of the county he was supposed to be prosecutor for. Sprinkled throughout the story were mentions of Kline's political rival Paul Morrison, who had essentially switched jobs with Kline, stepping up to Attorney General and leaving the post of Johnson County District Attorney.

Now Morrison's in the muck. It started with a quickie at the courthouse with a female employee of his office. Many more quickies followed, in county offices and motels throughout Kansas and in at least three other states, in what became a two-year long extramarital affair between Morrison and Linda Carter, the longtime Johnson County District Attorney's Office director of administration.

Morrison won the attorney general election in August 2006, one year after the couple's first tryst. In December 2006, he bought her a $16,000 engagement ring, although they were both still married. Around the same time, Phill Kline became Johnson County District Attorney, and Carter's new boss.

By November 2007, the illicit romance had seriously soured. Carter filed a sexual harassment complaint with the Equal Employment Opportunity Commission on November 8, resigning three weeks later. (She wasn't the first person to accuse Morrison of indiscretion -- a different female employee of the Johnson County's DA's office filed two lawsuits accusing him of inappropriate conduct fifteen years ago, but dropped them.)

Amid the sexual harassment claims, the suit alleges that Morrison tried to have his girlfriend spy on the enemy. Carter retained her position in the DA's office when Kline came in to head it, and her suit says Morrison tried to have her snoop into Kline's ongoing criminal investigation of Planned Parenthood, and regularly questioned her about its progress. She also says Morrison repeatedly tried to coerce her into advocating for the eight former Morrison colleagues who Kline fired. Then, when the relationship began to fall apart, Morrison called her 22 times in one day, threatening to ruin her career.

Morrison has admitted to the affair but denies the allegations in Carter's lawsuit. He has said that Carter and Kline are trying to smear him for their own benefit.

Carter's statements portray Morrison as a man haunted by the twin obsessions of love and hate. Consumed by passion:

...According to Carter's statement, Morrison also made five back-to-back telephone calls from Lenexa to her at about 4 a.m. In part, Morrison wanted to know whether Carter had obtained a tattoo to demonstrate her commitment to him. She hadn't, her statement said, despite Morrison's acquisition of a tattoo.

Yet possessed by loathing:
In the twilight of their extramarital affair, Linda Carter urged Paul Morrison to let her go, repair his shattered marriage and resolve his hatred of Phill Kline.

If not, Carter said, Morrison's life would remain a powder keg. A destructive fireball, when eventually triggered, would consume all in his wake: wife, children, friends, colleagues — even Carter.

It appears her prediction that Morrison's "hatred of Kline was going to destroy" him may be coming true. Kline has secured the power to handpick the special prosecutor who will investigation Morrison.

Another interesting morsel from State's 2005 inspector-general audit of Blackwater. Apparently the company billed the State Department for five armored vehicles that the contracting officer said were unnecessary -- and then double-billed State for the cost of the drivers.

As part of its proposed equipment costs, Blackwater included costs equating to [redacted] to purchase five armored vehicles plus operating expenses to be used to transport personnel to and from Baghdad Airport in Iraq. ... We discussed this with the contracting officer, who indicated that the contractor was not required to purchase these vehicles as they are not called for in the statement of work. Our review of the statement of work also did not disclose a requirement for these vehicles. ...

Blackwater also included costs equating to [redacted] operate these vehicles. Our review disclosed that these "drivers" are the protective security specialists deployed in Iraq. The cost for these personnel is already being recovered in the daily rates being proposed. As a result, inclusion of additional costs for drivers in dedicated overhead is, in effect, a duplication of labor costs.

That's bureaucratese for "Dude! They're ripping you off! Are you just going to take that?" And the State Department, like an abused child, just shrugs and hands over its lunch money.

Unfortunately, the 2005 audit does not indicate whether Blackwater threw any D's on its new vehicles.

So State wasn't thrilled about issuing Blackwater a no-bid contract in 2004 to protect its diplomats in Iraq. It turns out, in State's telling, that the audit conducted of the contract in January 2005 helped with one thing, at least: it pushed the cost of the contract down. However, State still re-upped with Blackwater later in 2005.

State Department logistics official William Moser explained in a House oversight committee hearing in October that State requested the audit because it feared Blackwater took advantage of the hectic circumstances under which the contract was issued. (State was rushing to set up its embassy, and so it hired Blackwater on a no-bid basis, since the company was already in Baghdad.) And, sure, it found massive problems. But on the bright side, Moser told an incredulous Rep. Elijah Cummings (D-MD) in that hearing, the audit allowed State to knock off $25 million from the contract!

CUMMINGS: So the audit is done when?

MOSER: The audit was done, actually, in January of 2005. In other words, with the current contract award. And we actually negotiated down the cost of that contract by about $25 million.

The exchange isn't 100 percent clear, despite Cummings' repeated attempts at clarification. But according to Cummings, and confirmed by Moser, the 2004 contract was worth $300 million. (That's confusing to me: not only is the total redacted in the document released to me under FOIA, but a House oversight committee report found that Blackwater's contracts were worth only $48 million in 2004. Maybe it's wrong?) So figure that State saved a cool $25 million. But when? There are only two options: either the State Department renegotiated the 2004 contract, post-audit, and got a refund; or it scaled down Blackwater's subsequent bid -- on a competed contract issued in 2005 -- by $25 million.

Either way, if State got Blackwater to knock off $25 million, then Blackwater still pocketed 90 percent of what it sought from State. And all that came after an audit pointed out serious flaws in how Blackwater billed the government. Clearly it pays to be caught bilking the State Department.

According to an audit performed for the State Department inspector general of Blackwater's 2004 Iraq contract, it paid to be a guard for the private security firm. Page seven of the report -- excuse my handwritten notes in the margins -- shows that Blackwater charged the government for seven days' pay per week, even though the guards only had to work six. That method of accounting "is considered acceptable," the report says, if Blackwater properly accounted for its employees' actual work. And, wouldn't you know it: the company didn't.

The proposed "daily" labor rates are computed to recover the seven days pay over six "billing" days. This method is considered acceptable as long as these individuals only actually work six days and Blackwater bills for the six out of seven days actually worked. Our review of timekeeping procedures (Appendix 1), however, disclosed that, at present, Blackwater only accounts for the number of days these individuals are physically present while deployed at their duty station and not the days actually worked.

Let's look at that Appendix, shall we? It found that the company doesn't believe in such encumbrances as time sheets:

The contractor does not employ the use of individual employee "time sheets" for labor performed in Iraq. Rather, the contractor uses a system whereby a "muster" sheet is prepared by the agent in charge (AIC), (detail leader) simply indicating whether the individuals are physically present at their duty station or in travel or in other status on a daily basis. At the end of every pay period, the muster sheet is transmitted to the assistant program manager at Blackwater in Moyock, NC. ... The assistant program manager indicated that there have been instances where an individual was reported as being in-country at the duty station but was in fact in a travel status or otherwise not physically present at the duty station.

As a result, there is no individual employee certification of actual days worked or the hours actually worked. There is no approval of employees' time other than, as the contractor explained, the muster sheet is e-mailed to Blackwater by the AIC.

Hey Josh, can we switch TPM to that style of bookkeeping?

Just out from the AP:

A federal judge appeared reluctant Friday to investigate the destruction of CIA interrogation videotapes while the Justice Department is conducting its own inquiry.

U.S. District Judge Henry H. Kennedy is considering whether to delve into the matter and, if so, how deeply. The Bush administration is urging him to back off while it investigates.

"Why should the court not permit the Department of Justice to do just that?" Kennedy asked at a court hearing.

The hearing marked the first time that administration lawyers spoke in public and under oath about the matter since the CIA disclosed this month it destroyed the tapes of officers using tough interrogation methods while questioning two al-Qaida suspects.

Now here's an interesting development in the CIA tapes case. Yesterday, the James Madison Project -- a good-government, anti-secrecy non-profit -- filed suit in federal court to get the CIA to disclose documents related to the 2005 destruction of the interrogation videotapes. Apparently the JMP recently filed a Freedom of Information Act request for the documents, and the lawsuit is to expedite the processing of that FOIA.

Here's a statement from JMP's executive director:

The public deserves to know the truth underlying the CIA’s questionable conduct in destroying the interrogation videotapes of terrorist suspects, and that those responsible are held accountable for any improper or unlawful activities.

Par for the course from a goo-goo lawyer, right? Well, here's the interesting thing. JMP's executive director is Mark Zaid. Zaid is the attorney for John Kiriakou, who led the 2002 interrogation of Abu Zubaydah, and who also told ABC News that Abu Zubaydah was tortured by his interrogators. Kiriakou is currently under criminal investigation by the Justice Department to determine whether he illegally disclosed classified information in his ABC News interview. So if the CIA ends up executing the FOIA in any expeditious way, it might be handing those documents over to the lawyer for a man it sought to have prosecuted -- though, if they suggest illegality in the actual interrogation, they might prove problematic down the road for Kiriakou.

However, Zaid tells us, the lawsuit has nothing to do with his representation of Kiriakou. He filed the FOIA before Kiriakou retained him, he says.

A report prepared for the State Department's inspector general in January 2005, and obtained by TPMmuckraker, shows Blackwater's accounting system for its no-bid, multimillion dollar Iraq contract was "not considered adequate for accumulating costs on government contracts."

The report is an audit of Blackwater's contract prepared by the accounting firm of Leonard H. Birnbaum. It has been referred to by the House Oversight and Government Reform Committee (pdf) and in a 2006 story in The Nation, but has not been made publicly available until now. It was obtained by TPMmuckraker after we filed a Freedom of Information Act request in October with the State Department for Blackwater-related documents. You can read the 2005 State Department report in our Documents Collection here.

Much of the document is redacted -- including any description of how Blackwater's accounting system in Iraq operated, as well as any numerical figure for the size of the contract. (In 2004, the year that the report covers, Blackwater held contracts from the federal government totaling $48 million, of which the State Department contract was a portion.) But the unredacted portion of the report finds problems with how Blackwater tallied its labor costs, its overhead-expense costs, and its indirect costs. It also found that Blackwater cited its profit from the contract as a cost it incurred, and billed the government for it -- resulting in what the report called "a pyramiding of profit."

The State Department was under a massive time-crunch in mid-2004 to stand up its new Baghdad embassy as the Coalition Provisional Authority went out of business that June. As a result, State Department logistics official William Moser explained to Congress, State opted to sign a no-bid contract for diplomatic security services with the company already on the ground: Blackwater. "We did not like doing a sole source award for Blackwater," Moser told the House oversight committee in October. No wonder: Blackwater, apparently, took advantage of the opportunity.

Yet despite its own internal watchdog's finding of fraudulence in Blackwater's Iraq contract, months later, the State Department re-signed a deal with the company to provide security for U.S. diplomats.

We'll bring you more from this report throughout the day. And in the coming days, we'll be bringing you more documents on Blackwater that we've acquired through the Freedom of Information Act. I know that's what I wanted for Christmas!