Top GOP Fund-Raiser Tied to Iraq Fuel Contract

Friday, 17 October 2008 06:38 By James Glanz and Michael Luo, The New York Times | name.

Top GOP Fund-Raiser Tied to Iraq Fuel Contract
Rep. Henry Waxman released documents on Thursday alleging that a top McCain fund-raiser has been overcharging the military for fuel deliveries in Iraq. (Photo: Sam Hurd)

    The Democratic chairman of a House investigative committee presented documents to the Pentagon on Thursday alleging that a top Republican fund-raiser, Harry Sargeant III, has made tens of millions of dollars in profits over the last four years because his contracting company vastly overcharged for deliveries of fuel to American air bases in Iraq.

    Mr. Sargeant, who is the finance chairman of the Florida Republican Party and a major fund-raiser for Senator John McCain, did not immediately return several messages left for him on Thursday, but in the past he has denied any improprieties on the part of the the company, International Oil Trading Company, known as I.O.T.C.

    The company was briefly in the news over the summer when a former partner filed a lawsuit against Mr. Sargeant in a Florida circuit court. The former partner, a Jordanian named Mohammad al-Saleh, is the brother-in-law of the King of Jordan, and the court papers laid out what Mr. Saleh claimed was a seamy tale in which he obtained special governmental authorizations for the company to transport the fuel through Jordan and was then unlawfully forced out by Mr. Sargeant, who strongly disputed those allegations.

    But the latest claims of impropriety by the company go much further. In a letter addressed to Defense Secretary Robert M. Gates, by Henry A. Waxman, the California Democrat who is chairman of the House Committee on Oversight and Government Reform, Mr. Waxman uses emails, company documents, Pentagon reports and other information to make the case that Mr. Sargeant repeatedly received contracts to deliver the fuel even though his company was never the lowest bidder for the work.

    In one case, Mr. Waxman's letter asserts, Mr. Sargeant's company was actually the highest of six bids but received the contract anyway. In fact, Pentagon contracting officers complained that the company's prices were unreasonably high and initially said they could not justify giving the work to Mr. Sargeant. But for reasons the company was never able to explain, Mr. Waxman's letter indicates, no other American company was given an authorization to transport the fuel through Jordan. And when United States Central Command declared that the need for the fuel was urgent, the Pentagon was forced to award the contract to Mr. Sargeant's company.

    Nothing in the documents Mr. Waxman's staff assembled indicates that there was any attempt by Mr. McCain, the Republican presidential nominee, or his staff to influence the granting of the contracts.According to the documents , the Pentagon attempted to negotiate a lower price with Mr. Sargeant, but he held firm, saying the prices were reasonable given his expenses. But as a result, Mr. Waxman's letter says, the company has been paid $1.4 billion for the fuel deliveries and made a profit of $210 million after expenses. The letter and other documents indicate that Mr. Sargeant currently has just one other partner in the venture, suggesting that they would largely divide those profits.

    A spokesman for Mr. Gates, Chris Isleib, said that Pentagon had supplied all the documents that Mr. Waxman, in June, had requested in the case. "As a result of these documents and subsequent discussions with the Committee, Congressman Waxman asked the Secretary of Defense to investigate allegations that IOTC has overcharged for the delivery of fuel," Mr. Isleib said in an email message. The Pentagon will respond to that request directly to the committee, Mr. Isleib said.

    Jim Greer, the chairman of the Republican Party of Florida, said, "Since Harry Sargeant has been the finance chairman, he has always demonstrated the highest degree of ethics and integrity and has always served the party well." Mr. Greer added, "Every dealing that I've had with Harry Sargeant, I've always found him to be a man of character, and someone who has always been willing to help when asked."

    A spokesman for the McCain campaign said on Thursday afternoon that campaign officials would read the letter and decide whether to respond to it.Ryan Alexander, president of Taxpayers for Common Sense in Washington, said that further investigation was warranted even though the initial inquiry did not turn up direct evidence of political meddling. Mr. Waxman estimated that if the lowest bidder had been awarded the contracts, taxpayers would have saved $180 million.

    "The fact that the contracting officer warned them lends credence to the general allegation that this is profiteering and that this is an unfair contract," Ms. Alexander said. "To allow that high of a profit to deliver fuel to the troops is not the kind of mnanagement we need right now."

    Mr. Sargeant is one of several dozen people who are listed on Senator McCain's web site as raising $500,000 or more for him. He was the host of a fundraiser for Mr. McCain at his mansion in Delray Beach, Fla., this year.

    Mr. Sargeant came under scrutiny in August when media reports highlighted a cluster of more than $50,000 in unusual campaign contributions bundled together by Mr. Sargeant from a single extended family in California and a few of their friends. The donations sparked questions of whether they might have been made by donors in name only who were reimbursed by someone trying to skirt contribution limits.

    It turned out that the donations were not actually solicited by Mr. Sargeant but another Jordanian business partner, Mustafa Abu Naba'a. The McCain campaign later said it would return all contributions solicited by Mr. Abu Naba'a and review all donations collected by Mr. Sargeant.

    The conclusions from Mr. Waxman's committee are sure to be wielded by Democrats as a cudgel against Mr. McCain.

Last modified on Friday, 12 December 2008 20:36