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Posted at 6:30 AM ET, 07/26/2010

Pentagon agency quizzed in Kyrgyz kickback probe

By Jeff Stein

The Pentagon says it is “cooperating fully” with investigations into allegations of corruption related to aviation fuel contracts at a U.S. air base in Kyrgyzstan, a major staging area for the war in Afghanistan.

It’s the first time evidence has surfaced that the Defense Logistics Agency officials may be of interest to investigators, who are already looking into relationships between a supplier of aviation fuel to the base and the last two U.S.-backed ruling families of Kyrgyzstan.

The DLA's response to a SpyTalk inquiry, moreover, suggests there may be more than one investigation into those classified contracts beyond a probe opened by a House Oversight and Government Reform subcommittee in April.

“DoD takes all allegations of illegal activity seriously, and we are cooperating fully with all investigations into these allegations,” the DLA said in a statement.

The agency’s reference to “all investigations” suggests that at least one other federal probe of the aviation fuel contracts is underway.

Following Kygyzstan's so-called Tulip Revolution in 2005, the FBI, at the invitation of the new government of Kurmanbek Bakiyev, investigated earlier allegations of corruption in contracts the base.

The FBI handed Bakiyev its report, which described a "vast international criminal network that stretched all the way to a series of shell companies in the United States," according to NBC news, which obtained a copy, but it otherwise did not release it. Bakiyev was ousted in April.

Rep. John Tierney (D-Mass.), chairman of the subcommittee on national security and foreign affairs, in April opened his own investigation into aviation fuel contracts at the Manas airbase, which was secured by the Bush administration in December 2002.

"Two overthrows of the government there have been linked to corrupt dealings at Manas airbase," Tierney said. “That’s what we’re looking into.”

During his initial hearing, Tierney heard allegations from expert witnesses that the aviation fuel supply operations of Mina Corp. Ltd. and Red Star Enterprises, two closely connected, privately held firms registered in Gibraltar, involved back-door payments to Bakiyev's family.

On July 1 the House Oversight Committee subpoenaed the leaders of the firms: Douglas Edelman, described by industry sources as a Californian with extensive business experience in Moscow and Central Asia; Erkin Bekbolotov, a Kyrgyz national; and retired U.S. Army Lt. Col. Charles "Chuck" Squires, a former U.S. military attaché at the American embassy in Bishkek.

As SpyTalk reported last Wednesday, the firms agreed to cooperate with the Tierney panel’s investigation on the eve of their depositions.

Edelman did not respond to a request for comment. Bekbolotov could not be located. Squires has turned down interview requests from SpyTalk via a public relations firm hired by the companies.

But in May, Squires told The Washington Post's Walter Pincus that, "to our knowledge, Maksim Bakiyev [the son of the former president] did not hold any interest in any of the companies." Ownership could have changed later, he said.

The Defense Logistics Agency, meanwhile, says nothing that it knew about Mina Corp. and the recently ousted Kyrgyz ruling family would have prohibited it from awarding the firm its $730.9 million sole-source contract.

“DLA did not have any information about Mina Corp Ltd., family ties with the Bakiyev family that would have precluded a contract to that company,” the agency told SpyTalk. “DLA awards contracts in accordance with the appropriate Federal Acquisition Regulations and agency supplements.”

But last month the agency opted not to exercise an option to extend its contract with Mina for another year. It briefly opened a window for competing bids, which closed July 20.

One potential competitor for the contract told SpyTalk that the deal seemed constructed in a manner that only Mina Corp. could win it. It declined to bid.

Mina Corp's current deal will continue month-to-month “for up to six months," the DLA said, "in order to ensure an uninterrupted supply of fuel to the [Manas] Transit Center.”

By Jeff Stein  | July 26, 2010; 6:30 AM ET
Categories:  Financial/business, Foreign policy, Intelligence, Justice/FBI, Lawandcourts  
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