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U.S. official accused of rigging Iraq contracts

Charles R. Babcock and Renae Merle Washington Post

WASHINGTON – A U.S. official working in Iraq accepted $546,000 in illegal payments for steering more than $13 million in contracts last year to an American businessman, the Justice Department alleged in the first criminal corruption case arising from Iraq reconstruction.

Robert J. Stein Jr., who worked for the U.S.-led Coalition Provisional Authority, and Philip H. Bloom, who ran several companies from a base in Romania, were arrested earlier this week on the basis of criminal complaints citing fraud, money-laundering and conspiracy charges. The allegations were outlined in affidavits unsealed in federal court.

The rebuilding of Iraq has been controversial since the start. More than $20 billion in U.S. funds have been set aside for the work. Some members of Congress have challenged no-bid contracts awarded to companies such as Halliburton Corp., while federal auditors have found that the CPA was lax in overseeing billions of dollars in Iraqi funds from the sales of oil and cash transferred from the United Nations.

“There’s more to come” in the way of criminal charges, Ginger Cruz, the deputy special inspector general for Iraq reconstruction, said in an interview Thursday. Stein and Bloom have not been indicted by a grand jury, and Cruz said the investigation is continuing. She said her office is looking into 50 other potential criminal cases on the spending of U.S. and Iraqi funds in the war zone.

According to affidavits filed by government investigators, the two men allegedly conspired, starting in late 2003, to rig bids on contracts in the south-central region of Iraq from a CPA office in Al Hillah. Stein was the controller and funding officer at that office, in charge of some $82 million from the Development Fund for Iraq.

In the first six months of last year, the affidavits claim, Stein and another, unidentified official, who has admitted receiving illegal payments and is cooperating with authorities, used phony bids to ensure that Bloom’s companies got at least $3.5 million for work on nine contracts.

In return, the affidavits claim, Bloom made, or arranged for, $546,000 in transfers from overseas accounts to Stein and his wife, or to third parties on Stein’s behalf.