By Penn Bullock, special to msnbc.com
A lawsuit in Florida has cracked open a rare window into the cloistered world of high-level war contracting, as a billionaire oilman defends himself against allegations that his company paid off Jordanian government officials to control supply lines of fuel to U.S. forces in Iraq.
The controversial businessman at the center of the trial that began last week in Palm Beach is Harry Sargeant III, a retired Top Gun pilot and former GOP fundraiser who is denying the lawsuit’s claim that an ex-CIA agent working at his oil company wired a $9 million bribe to the head of Jordan’s intelligence agency in 2007.
Mohammad al-Saleh, the plaintiff in the case first reported by NBC News in May 2008, is a member of Jordan’s royal family. He claims that the payment was a kickback that helped Sargeant perpetuate a monopoly on shipping fuel though Jordan to U.S. bases in neighboring Iraq.
The existence of the monopoly was confirmed by a congressional investigation in 2008 that accused Sargeant’s energy business, the International Oil Trading Co. (IOTC), of gouging the Pentagon in what it called the “worst form of war profiteering.” A Pentagon audit found this year that IOTC was overpaid by as much as $200 million on fuel contracts dating from 2005. The company, however, insists it was underpaid and has sued the U.S. government for $75 million.
The $9 million wire to the Jordanian government has become a focal point in the high-stakes civil trial, in which al-Saleh is seeking $53 million in profits from the Pentagon contracts that he claims were wrongfully denied him when he was unceremoniously dumped as a one-third partner in IOTC by Sargeant and another defendant. Sargeant's counsel has not disputed that al-Saleh was removed from the company, but argues that he was forced out by the Jordanian government without the oilman’s approval.
Circuit Court Judge Robin Rosenberg, however, has forbidden any mention in court of Sargeant's claim that Jordan’s King Abdullah II, who is al-Saleh's brother-in-law, personally ordered his ouster, or any reference to the wire as a “bribe” – at least until closing statements.
But what happened to the $9 million wire payment remains a mystery.
Sargeant, an imposing figure with swept-back gray hair who has appeared by turns jocular and nervous during proceedings, testified last week that he wasn’t sure where the $9 million ended up and “didn't ask.” But he denied that it “directly or indirectly” benefited the Jordanian government.
On Thursday, IOTC official Marty Martin, who headed the CIA unit formed to hunt Osama bin Laden during the Bush administration before joining Sargeant’s company in 2007, took the stand to face questions about his role in sending the wire payment. Asked what ultimately happened to the $9 million by a plaintiff attorney, Martin elicited gasps from the courtroom audience when he responded, “I don’t know.”
Internal company correspondence unveiled in court allegedly shows that IOTC endeavored to disqualify competitors from winning the Pentagon fuel contracts, an effort that al-Saleh has linked to the $9 million payment.
To win the contracts, companies had to present the Pentagon with a so-called “letter of authorization” from the Jordanian government that allowed its holder to send fuel-truck convoys through Jordanian territory to U.S. bases in Iraq.
In August 2007, IOTC's contract lawyer, Ron Uscher, advised Sargeant, Martin and other company officials in an email that IOTC would gain an effective monopoly on the fuel contracts and thereby render the bidding process a formality if it managed to be the only company with the letter of authorization.
“Procurement becomes a sole source favoring IOTC,” he wrote. “Others can bid, but without the (letter of authorization), they cannot legally perform the contract in Jordan.”
Uscher then asked for ideas on how to “ensure that IOTC alone has the (letter of authorization).”
Two months later, in October 2007, Martin sent a letter to a representative of the Jordanian spy agency, the General Intelligence Directorate (GID), with which he had formed a close relationship through his covert CIA work in the Middle East. Admitting that the request “may sound self-serving,” he asked for assurances that the Jordanian government would grant no letters of authorization to bidders other than IOTC on “current or future” tenders of Pentagon fuel contracts, and that it would make that intention clear to Washington.
A month later, Martin wired the $9 million. Emails to the same GID representative show that Martin deposited the money in a government account “designated” for the head of the GID – the Jordanian equivalent of the CIA director.
“We are ready for immediate transfer for Basha (the head of the GID),” Martin wrote on Nov. 7, 2007. “In addition to the bank details, we need a name on the account. After 9/11, much harder for numbered account from U.S. banks. :)"
In 2009, according to testimony, IOTC bid on another massive fuel contract and told the U.S. government that it retained its letter of authorization. It won the contract.
Martin insisted that there was no connection between the wire and IOTC's request that the Jordanian government deny letters of authorization to rivals. He and Sargeant testified that the $9 million was supposed to be passed from the government account to the Taurus Trading Co., a firm that worked for IOTC on the ground in Jordan.
But why would a payment to the Taurus Trading Co. be made through a government account, and not sent to the company directly?
Asked this question in April by msnbc.com, two of Sargeant’s lawyers, Roger Kobert and Mark Tuohey, replied that Taurus was a “quasi-government entity." Pressed last week during a court recess, however, Kobert admitted that he “may have misspoken.”
“I believe Taurus Trading Company is privately owned,” he said, adding that the money was wired to Taurus through the GID “on the Jordanian government’s request.”
In court on Tuesday, Kobert presented a spreadsheet that purportedly shows payments to Taurus beginning in November 2007 with the $9 million wire.
But IOTC’s chief financial officer, Kevin Kirkeide, testified that the $9 million was the only payment wired to the Jordanian government account. All subsequent payments, totaling nearly $50 million, went to Taurus directly. A company email introduced as evidence shows that IOTC notified Jordanian intelligence of those subsequent payments.
Speaking to msnbc.com outside court, Kobert said that IOTC never signed a contract or any written agreement with Taurus, despite having paid it tens of millions of dollars in exchange for purported ground services.
Kobert explained that Taurus was brought in by the Jordanian king and the GID to replace al-Saleh as a “profit-sharing partner” with IOTC. Al-Saleh’s side argued that Taurus was not a legitimate subcontractor: Plaintiff attorney Barry Ostrager alleged during a sidebar with the judge that it "did nothing" but serve as “a vehicle for corrupt payments.”
According to its website, Taurus is a “wholly owned subsidiary” of a larger company, the Commercial and Industrial Co., which has a storied past: In 1969, the British government secretly hired the company to promote arms sales in Jordan because it was believed to be “hand in glove” with the country’s royal family.
The Guardian newspaper, which unearthed the arrangement in 2007, reported based on declassified documents that the company was paid commissions for arms sales that its owner did not “materially assist.” For Sargeant, the civil trial may not be his biggest concern.
As msnbc.com reported last month, the oilman is allegedly facing a Justice Department investigation and could be criminally prosecuted under the Foreign Corrupt Practices Act, which prohibits overseas pay-offs.