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& the Iraqi Oil Law

Did Big Oil Win the


War in Iraq?
http://www.upi.com Inside the Greed Zone
/Science_News
/Resource-Wars/2009
/10/07/Iraq-delays- by Glenn R. Simpson, Wall St. Journal
vital-oil-law-again/UPI-
37501254933262/ MOST RECENT
US Still Paying Lt. Col. Gutierrez was a whistleblower. Was he also tainted by POSTINGS
Blackwater Millions corruption around him?
Back to business in War Profiteer of the
Iraq? October 20, 2007; Page A1 Month: BP
Chevron seeks contract Hydrocarbons law is a
with Iraq on oil field Camp Arifjan, Kuwait priority for Iraq

Getting a Lube Job Iraq signs multi-billion


gas deal with Shell,
Video: Randi Rhodes Marshall Gutierrez was classic military material, a working-class Mitsubishi
Interviews Antonia kid whose father and both grandfathers served in the armed Iraqi Energy Protests
Juhasz on Corporate Oil forces. Grow
Grab in Iraq
True Cost of Chevron
Texas oil tycoon pleads He joined the Army and marched steadily up the hierarchy, CNBC Hypes Investment
guilty to conspiracy in in Iraq
Iraq oil-for-food ultimately becoming a lieutenant colonel and chief logistics
officer at this sprawling base in Kuwait. His Army record was Iraq seeking investors for
scandal 4 new oil refineries
Black gold turns grey spotless, and he developed a reputation as a bit of a straight
Iraq set to auction oil
as Western giants arrow. [Lt. Col. Gutierrez] Lt. Col. Marshall Gutierrez fields
prepare to draw from Oil Companies Dishonor
the wells of Iraq So it isn't surprising how Lt. Col. Gutierrez reacted in 2005 Our Troops and
Iraq ready to sign when he discovered signs of rampant overcharging by the Undermine Our Security
oilfield deals before Army's main food supplier for the Iraq war. Bags of Coca-Cola Zalmay Khalilzad from
new law Ambassador to Oil
syrup available in the U.S. for about $10, for example, were Consultant in Iraq.
More »
going for $90. He blew the whistle. That triggered a massive Iraq drives to protect oil
criminal probe of Kuwait-based Public Warehousing Co. that is pipelines

Take Action now raising questions for such major American food companies Iraqi explorers plan to
as Perdue Farms Inc. and Sara Lee Corp., and is shaping up as ride oil sector expansion
wave
one of the biggest fraud probes of the Iraq War.
Buying Blackwater
Iraqi oil industry races to
Then the tables turned. The Kuwaiti contractor accused Col.
PETITION: Gutierrez of seeking bribes, setting in motion a bizarre chain of
join global elite
The Long Game
Stand Up events that left his military career and his 22-year marriage in More »
Against ruins. On Sept. 4, 2006, he was found dead in his quarters at
the age of 41. Next to his body were an empty container of
Escalating More By This Author
prescription sleeping pills and a plastic bottle of antifreeze.
War in Food Companies Face
Afghanistan The story of Col. Gutierrez, who Army investigators allege U.S. Probe Over Iraq
wound up tainted by the very corruption he complained about, Deals
is one thread in the expansive fraud and corruption
Search

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US Labor Against the War : Inside the Greed Zone http://www.uslaboragainstwar.org/article.php?id=14857

investigation into firms supplying food to troops in Iraq. The


Iranian Trade Justice and Defense Departments are investigating overcharging
Unionist and possible favoritism in awarding of contracts. Col.
Gutierrez's role in the inquiry emerges from interviews with
Executed military officials, contractors and others involved, as well as
Send Protest emails, letters, court filings and other written material. Subscribe to RSS
Message to Feeds for this site.
Marshall Gutierrez grew up in the little town of Las Vegas in the
Tehran foothills of New Mexico's Sangre de Cristo Mountains, a
More »
descendant of the original farmers who received Spanish land
grants to settle the area. He was a driven and intensely proud
Press Releases man, both of his achievements as a soldier and his Hispanic
heritage, says his widow Brenda, also a Las Vegas native. FROM
Protestors Put Iraq
THE ARCHIVE
Privatisation on Trial
KEY OVERSIGHT BODY • U.S. Pushes Probe of Iraq Food Deals1 10/18/07 • Food
IN IRAQ NEEDS MORE Companies Face Probe Over Iraq Deals2 10/17/07
TIME TO REVIEW
COALITION SPENDING, The two met a quarter-century ago at a church event. He was
NEW REPORT FINDS
15, she was 13. At the age of 16, Brenda discovered she was
pregnant -- a harsh predicament for two teenagers in a small,
Resources
conservative Catholic community. "His mother offered to send
him away to another school elsewhere in the state, and he
Iraqi oil in the balance
didn't. He married me," Ms. Gutierrez recalled. "This was not a
Oil in Iraq - guy that ran away from trouble or from any type of a difficult
Background, Analysis,
Reports, Articles
situation."
Facts about the Iraq
Oil (theft) Law They married two years later, and he started serving in the Army
Human Tragedy . . . or
National Guard the very next weekend. After high school, he
Business Opportunity? worked his way through college on a scholarship from the Army
Open Letter from Reserve Officers' Training Corps and became a commissioned
American Labor officer in 1987. The couple commenced the itinerant life of a
Leaders to Bush and military family, bouncing from Newport News, Va., to Colorado
Maliki Springs, Colo., to Saudi Arabia after the 1991 Persian Gulf War.
Stop the Oil Grab In Panama, Capt. Gutierrez led the 1097th Transportation
Iraq: Operation (Medium Boat) Company, which moved thousands of tons of
Corporate Takeover materiel and in 1994 won a prestigious Army award.
(the comic)
Photos of Solidarity "He was a hard charger. He did not accept any sort of failure.
Demo in San Francisco
to Support Iraqi Oil
His way or the highway was how he was," recalls Sgt. Sean
Workers' Strike, May Kelly, who served under him in Panama. "But he also was able
14, 2007 to motivate the people who worked under him to literally
About Production accomplish the impossible."
Sharing Agreements
Iraqi trade union Eventually Mr. Gutierrez rose to the rank of lieutenant colonel,
statement on the oil and in 2005, he shipped out to Camp Arifjan in Kuwait, a large
law Official translation logistics and staging facility with fast-food restaurants and
Internet cafés.
SUBSCRIBE to the CAMP ARIFJAN is now at the center of the U.S. inquiries into
USLAW Information contracting corruption. One Saudi catering company, Tamimi
Service Global, allegedly had a "party house" frequented by contractors
and at least five military contract officers, according to a sworn
statement in July 2006 by a former Army officer, contained in
U.S. court records. The officer admitted taking $8,000 in bribes
and gifts from a Tamimi executive and another $50,000 from
another catering firm. He claimed he had witnessed at least five
other Army officers taking bribes in the course of roughly a
dozen parties at the Tamimi house.

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US Labor Against the War : Inside the Greed Zone http://www.uslaboragainstwar.org/article.php?id=14857

Features Camp Arifjan sends numerous truck convoys to Iraq every day.
Most of the freight is handled by Public Warehousing, which
began as a modest Kuwaiti government spinoff. Now publicly
E-Mail This Page traded, it is one of the largest transport companies in the world.
Printer Safe Under a series of contracts worth more than $6 billion, Public
Version
Warehousing is designated a "Prime Vendor" for virtually all
Site Map
food served to U.S. forces in Iraq and Kuwait -- some 150,000
stomachs.

Within months of arriving in Kuwait, Col. Gutierrez clashed


with Public Warehousing over its prices for various items,
according to emails he sent that are now part of the Army record
of the case. He questioned why Public Warehousing was
charging the Army about $90 for five-gallon bags of Coca-Cola
syrup when they could be found for around $40 from Kuwait
City merchants, the emails indicate.

Col. Gutierrez began supplying information via email to Gary


Shifton, a top official at the Pentagon's Defense Supply Center
in Philadelphia. In November 2005, Pentagon officials launched
an investigation. The inquiry focused on Public Warehousing's
pricing agreements with its own suppliers.

Investigators suspect the military wound up paying inflated


prices for everything from preserved milk to lobster tails,
according people involved in the investigation and courts
records from U.S. civil litigation between Public Warehousing
and the Defense Department. The investigators are looking into
whether Public Warehousing passed along high prices from its
suppliers to the military, then was improperly compensated by
those suppliers through large rebates and discounts, the court
records and the people involved say. One focus is Sultan Center,
a supplier with close ownership and managerial ties to Public
Warehousing, which refunded to Public Warehousing some 10%
of the military sales it received.

Food wholesalers often give customers such as Public


Warehousing "prompt payment" discounts of a few percentage
points. The Pentagon agreed that Public Warehousing could
keep such discounts, according to emails cited in the U.S. civil
litigation. What's in dispute is whether those discounts were so
excessive they amounted to kickbacks, or whether they were
improperly used to pump up prices.

Public Warehousing says in a statement that its prices include


"not only the cost of the food it supplies, but also the costs
associated with storing, handling and delivering it at multiple
locations in a war zone." More than 30 of its employees, it adds,
have been killed on the job.

Col. Gutierrez and his aides began systematically analyzing


Public Warehousing's prices. He found some troubling
numbers, including that the Army was paying $8 a pound for
green beans, his emails indicate. Public Warehousing says the
military required a hard-to-find style of green beans. Prices
were high on some other items that were perishable or hard to
find from qualified suppliers, it says.

Col. Gutierrez and his team were getting help from Public
Warehousing's chief competitor, Tamimi Global. In January

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2006, Tamimi's director of operations in Iraq and Kuwait,


Shabbir Khan, provided Col. Gutierrez and other officials with a
spreadsheet comparing Public Warehousing's prices to the local
market.

AT THE TIME, Mr. Khan was already the subject of a major


investigation involving fraud and bribery at Camp Arifjan. He
was subsequently convicted. A spokesman for Tamimi says Mr.
Khan's illegal conduct occurred "without the company's
knowledge." Army officials say the investigation into Tamimi is
continuing, and investigators are looking into Mr. Khan's
contact with Col. Gutierrez. Tamimi is cooperating, its
spokesman says. [Lt. Col. Gutierrez and his wife, Brenda, at
the Great Pyramids of Egypt.] Lt. Col. Gutierrez and his wife,
Brenda, at the Great Pyramids of Egypt.

A week after he received the spreadsheet from Mr. Khan, Col.


Gutierrez submitted his own analysis to his superiors at Camp
Arifjan. "I have started looking at the items we are purchasing
from Public Warehousing," he wrote to the camp's commander.
"We are being charged way too much for food."

Two days later, on Feb. 8, 2006, Mr. Shifton of the Pentagon's


contracting office in Philadelphia sent an email to Public
Warehousing declaring that "the urgent concern is that we are
paying too much" for local items from Sultan Center. "This
matter is urgent."

That triggered alarm at an outside consulting firm used by


Public Warehousing to help it deal with the Pentagon. A few
hours after Mr. Shifton sent his email to Public Warehousing,
an executive at the consulting firm, Professional Contract
Administrators of Albuquerque, N.M., sent an email marked
"URGENT" to Public Warehousing. It advised Public
Warehousing's chief executive, retired Navy officer Charles
"Toby" Switzer, to "fire somebody, blame it on them and cover
up" by revising the local-market prices. "ASAP -- THIS IS VERY
SERIOUS." Mr. Switzer forwarded the messages to
subordinates, adding that he agreed, "except the firing part."

Public Warehousing officials say the tone of the emails is


misleading. The company, they say, was merely seeking to be
attentive to customer complaints. On Feb. 12, Mr. Switzer met
with Col. Gutierrez and other contracting officials and promised
a thorough price review.

But soon Col. Gutierrez was making decisions that weren't good
for either Public Warehousing or Sultan Center. In early May,
for example, he requested that some $21 million in purchases of
vegetables, dairy and baked goods be shifted from Public
Warehousing to Tamimi.

In July 2006, the investigation took a strange turn. Col.


Gutierrez had a meeting at Camp Arifjan with a Public
Warehousing sales executive, Mike Abdul Rahman. He passed
Mr. Rahman a piece of paper which read: "I need 1,000 KD, can
you help?" according to a subsequent affidavit from an Army
investigator who interviewed Mr. Rahman. KD is the
abbreviation for Kuwaiti dinars. A thousand dinars is worth
around $3,500.

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Mr. Rahman told other officials at Public Warehousing, the


company said. While top executives at the company debated
what to do, the two men met again on Aug. 6. On Aug. 9, case
documents state, Public Warehousing's chief, Mr. Switzer,
approached one of the most senior officers at Camp Arifjan,
Brig. Gen. Raymond Mason, and revealed the alleged bribe
solicitation. The general referred the matter to criminal
investigators at Camp Arifjan.

On Aug. 13, Col. Gutierrez and Mr. Rahman met once again,
this time at the officer's home. They allegedly discussed a
$3,500 payoff in exchange for inside information on bulk fuel
and laundry services contracts, the Army case record states. But
again no money changed hands. The officer claimed to need
cash because he had taken a young Kuwaiti woman as a
girlfriend, according to an investigator's affidavit. [screen] U.S.
Army A few days before Col. Gutierrez was arrested, his former
housekeeper called his American wife and alleged he had
secretly converted to Islam and married an 18-year-old Kuwaiti
woman. Investigators found several text messages he allegedly
sent to the housekeeper denying her claims and urging her to
retract them.

At the time, Col. Gutierrez's American wife, who had been living
with him in Kuwait, had returned to the U.S. to attend to a sick
relative. Days later, she received the news that he had
purportedly married the Kuwaiti girlfriend in a phone call from
her husband's former housekeeper in Kuwait, who was angry
about being fired.

On Aug. 18, Mr. Rahman met Col. Gutierrez a little before


midnight at an upstairs corner table at Diva's, a restaurant with
English sports playing on the television and pictures of
American movies stars such as Marilyn Monroe and John
Travolta stripped across the marquee. The two men smoked
tobacco through a shisha, a traditional Arab water pipe. Mr.
Rahman was wearing a hidden microphone. Both Kuwaiti and
Army criminal investigators were monitoring from nearby, case
records indicate.

The two men left in Col. Gutierrez's car for Mr. Rahman's
home, the case record says. As they drove, Mr. Rahman offered
the officer a bundle containing the 1,000 dinars, according to
two people with knowledge of the investigation. Col. Gutierrez
told him to put it in the car's center console, they say. Agents
then surrounded the car and arrested Col. Gutierrez.

The colonel protested that he was being set up. His widow and a
lawyer hired by his family now say they suspect he was framed
by Public Warehousing because the company knew he had
blown the whistle on it. A spokesman for Public Warehousing
say the company had merely "notified the government of a
suspected corruption ring within the U.S. military in Kuwait"
and "played a pivotal role in a successful sting operation that
stemmed from the investigation."

FOLLOWING THE ARREST, Army investigators searched Col.


Gutierrez's home off the base and found alcohol and a magazine
it termed pornography. Both are illegal in Kuwait. They also

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found some $27,000 in U.S. and Kuwaiti currency and a


two-week-old Kuwaiti marriage certificate, which described Col.
Gutierrez as the husband of an 18-year old Kuwait resident
named Fatima Al-Rahdi under the religion of Islam. Ms.
Al-Rahdi, also known as Yasmine, couldn't be located for
comment.

Col. Gutierrez was charged with bribery, mishandling secret


information, accepting illegal gifts and illegal possession of
weapons, alcohol and pornography, and bigamy.

Col. Gutierrez was locked in an 8-by-8-foot steel cage next to


some soldiers accused of murdering Iraqi detainees. During his
first hours of detention, his lawyer wrote in a later legal filing,
he "momentarily succumbed to the weight of his circumstances"
and underwent "a brief bout with momentary anxiety over his
current predicament." Military officials describe it as a suicidal
episode, but decline to elaborate. Later, Col. Gutierrez was
caught with a makeshift knife fashioned from a plastic spoon,
and charged with illegal possession of a weapon. Two days later,
he was caught allegedly attempting to make a weapon from a
safety razor.

FIVE DAYS AFTER his arrest, his military lawyer, Capt. Stephen
McGaha, motioned to release him from preventive detention.
"The government has chosen to materially misrepresent the
strength of their case by charging one alleged instance of bribery
5 separate ways," he complained. About a week later, Col.
Gutierrez was released from detention and transferred to nearby
Camp Victory to await court-martial proceedings.

On Sept. 4, shortly after 9 a.m., Col. Gutierrez went to a


restaurant at the camp, the Green Beans Café, and bought $1.50
worth of muffins. Later that day, his body was found in his
camp quarters. There was no note. Two autopsies concluded
that he had died of poisoning from ingesting ethyl glycol, the
active ingredient of antifreeze. The Army ruled his death a
suicide.

In an interview, his widow Brenda expresses bewilderment


about his death, which she is reluctant to characterize as a
suicide. "The last time I spoke to him, he said, 'We're going to
fight this.' The lawyer said it looks good. So there's no way."

Many questions about the case remain. How did he meet his
second wife and why did they decide to marry? What was the
nature of the Col. Gutierrez's relationship with the Tamimi
executive later convicted of bribery?

And more broadly, how pervasive is fraud and corruption in the


Army's food-procurement system? The amount in dispute in
the Public Warehousing investigation is, at a minimum, $100
million, according to people involved in the probe.

Col. Gutierrez probably violated military law in his relationship


with the Kuwaiti woman. Official records show the marriage
was legally registered with Kuwait's Ministry of Justice on July
29. The document states that Ms. Al-Rahdi was his second wife
(taking a second wife is legal in most Islamic countries), and
lists his religion as Muslim. He agreed to pay her a $20,000

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penalty in the event they divorced.

James Culp, a lawyer who represents the Gutierrez family,


argues that the evidence of corruption by the colonel is far from
clear. The audiotape of the sting operation, he says, is of poor
quality and hard to understand, and the other evidence is "weak
at best, if it even existed." The Army says it cannot talk about
the Public Warehousing probe because it is still open.

NO EVIDENCE has been found indicating that Col. Gutierrez


had any substantial hidden assets. The evidence inventory in
the case listed a silver-and-gold Rolex watch, but it was recently
returned to his family after Mrs. Gutierrez produced a receipt
showing her husband bought it before his deployment to
Kuwait. Several receipts seized by the agents showed that the
liquor found in his home consisted of $400 in purchases from
the U.S. Embassy's American Employees Welfare Association.
Liquor sales are legal at the embassy, but Kuwaiti law bars the
possession of liquor outside foreign embassies.

The government claims in a civil-forfeiture action that the


$27,000 in cash is the proceeds of bribery. Mrs. Gutierrez says
she insisted that her husband have a large sum of cash on hand
"to make sure we could get [the family] out of Kuwait fairly easy
should something happen."

Mrs. Gutierrez says she doesn't know what to think about her
late husband's purported second marriage. But she refuses to
believe that he was corrupt. "None of this stuff fits in his
character at all," she says. "He had never been involved in
anything like this, and he has been in several other positions
like this where he had access to lots of money, millions and
billions."

"I'm very upset that he was put in that situation in the first
place," she continues, referring to his assignment to a base
allegedly riddled with corruption. "Either way, whether he did
commit suicide or not, the military has blood on their hands, in
my opinion."

Write to Glenn R. Simpson at glenn.simpson@wsj.com3

Hyperlinks in this Article: (1) http://online.wsj.com/article


/SB119267275391362998.html (2) http://online.wsj.com/article
/SB119258983531961678.html (3)
mailto:glenn.simpson@wsj.com Copyright 2007 Dow Jones &
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