Report to the Inspector General into Mobile Telecommunications Licenses in Iraq

The Report to the Inspector General into Mobile Telecommunications Licenses in Iraq is a notable piece of fabricated propaganda that was orchestrated by disgraced Undersecretary of Defense Jack Shaw in an effort to manipulate the contracting process of telecommunications licenses in post-war Iraq.

At least two public versions of the report are available, one is hosted by Wikileaks since 2008, including an associated summary write up that assumes the report to be based on fact, another is hosted by Cryptome, and one is hosted by Cryptocomb.org. They are nearly identical, but differ In Minor typographical errors and formatting changes, such as a URL that has been pasted into the middle of the paragraph at the top of page 4 in the Cryptome and Cryptocomb versions.

The report was created though unauthorized investigations specifically to discredit the telecommunications contracting process managed by the Coalition Provisional Authority (CPA) with the aim of invalidating the contracts awarded to GSM providers. The goal was to allow a CDMA based consortium, organized by close friends of Shaw, to obtain the business in Iraq instead.

The report triggered an FBI investigation into Shaw's conduct and conflicts of interest. Shaw was ultimately fired as a result of this and of his further fabricating activities related to the WMD conjecture in the aftermath of the 2003 invasion of Iraq.

The report lead to a congressional inquiry into the conduct of Defense Inspector General Joseph E. Schmitz who was believed to be using his office to protect Republican political appointees, including Shaw.

In 2006, Daniel Sudnick, filed a civil claim against Shaw and the Department Of Defense (DoD) due to the violation of his rights with respect to Shaw's conduct in the preparation and leaking of this report.

Background and purpose

In 2003, Representative Darrell Issa, whose district included Qualcomm's headquarters, introduced House Resolution 1441 in order to mandate that any cellular contracts awarded in Iraq would use Qualcomm's CDMA technology. The resolution failed and triggered an indirect approach to insert Qualcomm technology into Iraq's cellular network.

Qualcomm tried to obtain a license through the competitive bidding process as a member of a consortium called Liberty Mobile, led by Irish businessman Declan Ganley. This effort failed, with their bid not even coming in the top 10 offers.

Eventually, Liberty Mobile board member Don DeMarino called on Shaw, his old friend, to help win the business. DeMarino immediately introduced Shaw to Ganley. Shaw received positive encouragement from both Issa and Senator Conrad Burns. With the help of disgraced Senator Ted Stevens, who was later found guilty of corruption in a separate affair, Shaw set out to implement a "sole-source" Alaska Native Corporation strategy to acquire a mobile license in Iraq for Qualcomm using a the resurrected Liberty Mobile team in a new shell company called Guardian Net.

Shaw worked diligently to bring the business to NANA Pacific and Guardian Net. On 12 January 2004, Ganley, Shaw and representatives from Qualcomm and NANA met in Shaw's Pentagon office where Shaw declared the contract a done deal. One attendee reported that "There was an almost thuggy quality to it. You can't do anything, here's the solution. Get out of the way." Shaw also arranged for DeMarino to be appointed for an official DoD mission to Iraq to visit the CPA telecommunications office, despite the fact that DeMarino was on the board of Liberty Mobile, Guardian Net, and had previously been a registered lobbyist for Qualcomm, none of which was disclosed to the CPA officials he visited.

Daniel Sudnick, who oversaw the cellular phone licensing competition, was unaware of Shaw's manipulation of the process. He even sought assistance from Shaw regarding what he suspected were irregularities in the behavior of Ganley and Janet Reiser, NANA Pacific's CEO. When he detected Shaw's master hand in the conspiracy, he reported it to the Pentagon's Defense Criminal Investigative Service. Citing conflicts of interest within the Inspector General's office, Joseph Schmitz referred the case to the FBI, despite the protests of senior criminal investigators in his office who had already found "specific and credible evidence" of wrongdoing by Shaw. This caused Shaw to attack Sudnick, both through office politics in the Pentagon and in the press. As a senior Pentagon official, Shaw met little resistance spreading rumors through the Pentagon that Sudnick, over in Iraq, was corrupt. These attacks culminated in the release of the report and Sudnick's resignation.

In the report, Shaw weaves together a fantastic story of corruption and intrigue that, according to investigative reporter T. Christian Miller, is "John le Carre and Joseph Heller mixed into one." The report details a criminal business alliance that is supposedly headed by a British billionaire of Iraqi origin, Nadhmi Auchi, and includes elements from the Oil-for-Food Programme, a shadowy group of French elites called Le Cercle, and a Luxembourg telecommunications company called Mec-Telematik sarl. Many of these assertions had already been proven false, such as the connection between Auchi and the Oil for Food Scandal.

Shaw claimed, "We have huge circumstantial evidence that we're dealing with the most sophisticated money-laundering operation and ruthless group, as ruthless and sophisticated as you'll find in the world". Although he failed to produce any solid evidence to back up the report, even at the request of the Department of Defense and the US Courts during Sudnick's subsequent lawsuit against him. Shaw threatened Larry Di Rita, Chief Pentagon Spokesman, to "unleash Iran-Contra II" if he was fired. To which Di Rita publicly replied, "If Jack has information and credible evidence, he really has an obligation to produce it and deliver it to the inspector general."

In an effort to maximize the impact of the report, Shaw leaked it to Bill Gertz, his contact at the Washington Times. Shaw heaped accusations on everyone whom he felt stood in his way to delivering a telecommunications contract to his friends at Guardian Net, including Doug Feith, Ahmed Chalabi and Di Rita. In a later statement Shaw said that Di Rita had organized a smear campaign against him and "whispered sotto voce to journalists that there was no substance to my information and that it was the product of an unbalanced mind."

In an effort to parry the public knowledge of the FBI investigation into his conduct, Shaw issued a false press release exonerating himself, which Di Rita retracted following a letter from Senator Charles E. Grassley inquired as to the nature of the clearly false press release. The subsequent congressional investigation revealed that Michael Wynne had signed a letter giving Shaw false authority for his unauthorized investigations and that Inspector General Schmitz had possibly obstructed two criminal investigations into Republican appointee personnel, one of whom was Shaw. Schmitz resigned shortly after Grassley's letter was sent, although he denied that his resignation was a result of the inquiry.

Results of the report

The report caused senior officers to demand, and obtain, the resignations of two senior American civil servants, Daniel Sudnick and Bonnie Carrol, both of whom had been managing the telecoms licensing process at the CPA in Iraq and had their careers destroyed by Shaw. The accusations of corruption in the report, heaped on The Two civil servants, have had lasting effects on their business dealings.

The report and the related FBI investigation triggered a congressional investigation into whether Inspector General Joseph Schmitz was obstructing investigations into fellow Republican appointees.

In 2006, Sudnick sued Shaw and the Department of Defense, alleging that his rights had been violated by Shaw. The claim against Shaw was ultimately dismissed under Westfall Act provisions which "accord federal employees absolute immunity from common-law tort claims arising out of acts they undertake in the course of their official duties” and the DoD settled out of court for an undisclosed sum.

Following the affair, Carroll wrote, "Simply stated, we were used in an attempt to 'rig' a contract. This is truly not my Defense Department."

This report and the affair around it is a small chapter in Iraq reconstruction boondoggles that have been called "A 'Fraud' Bigger Than Madoff" by The Independent. In their article, they noted a subpoena for Col. Anthony B. Bell's financials as part of this massive fraud investigation, the first phase of which resulted in one of Bell's subordinates, Maj. John L. Cockerham, pleading guilty to multiple counts of fraud and money laundering. Col. Bell was a confident of Shaw and the senior active duty military procurement officer to work on the allocation of telecoms licenses in Iraq.

In 2012, Shaw stated, "His (Nadhmi Auchi's) visa was revoked ... specifically because of our report in May, 2004. That prevented his planned return to Chicago in the fall to build on the Rezko land deal to become the Olympic village..."

See also

  • Coalition Provisional Authority
  • John A. Shaw
  • Telecommunications in Iraq
  • U.S. Department of Defense
  • Office of the Inspector General, U.S. Department of Defense
  • War profiteering

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