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The Conspirators:
Secrets of an Iran Contra Insider

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by Al Martin

Fraud For Lunch at Redstone Arsenal

      Last week there was another $40,000 lunch for foreign arms dealers at the Redstone Arsenal paid for by US taxpayers. In other words, it was business as usual.

      The menu featured giant prawns and stone crab. There was also a bowl of green punch to celebrate Saint Patrick's Day.

      Underneath the punch bowl, there was an arrangement of crisp brand-new fifty and hundred dollar banknotes arranged in a floral pattern. They were wrapped up with little ribbons and given out as party favors.

      At the party there was an active lieutenant general, an active three star general no less, who was talking about moving his fraud money to Corsica. This is the type of scam that's been done for years. He's just doing it a little more professionally. It's called the Old Double Inventory Whammo Scam, and it's often done against the Department of Defense. The general is doing it with his clique of ten confederates. Some are in DoD Procurement. Some are in DoD Inventory Control. Some are in DoD Payment and Disbursement. And some are in DoD Audit. You have to have someone in each of these offices to make the scam work.

      He was bragging about it. "We just committed this scam last week. It cost $40,000 and it netted $2.5 million." He said his end was $250,000 and it just got wired to his offshore account and he's going to bury the money by buying a piece of beachfront property in Corsica because he doesn't have anything else to do with it.

      The scam is relatively simple. They are reselling back to the Department of Defense actual Department of Defense inventory items that the Department of Defense already owns, but doesn't realize it owns. What they do is they go through the Department of Defense inventory list which is massive. They look for some esoteric but generic part. It doesn't have to be big. Just something that can be easily misplaced or mislaid.

      What this guy does on the inside is he simply deletes it from the computer. That's all he does. He deletes it. He doesn't leave a paper trail pretending it was sold to some other company. It's just erased. It's just deleted.

      What happens when it's an inventory item is that whether they need it or not (this is the way that DoD procurement works) nobody ever figures out or bothers to check whether it's an item that they actually need. It could be a component left over from the Second World War that's still in inventory. What the computer does when it sees an item deleted is that it automatically generates an electronic bid for the item for the same quantity of the item, no matter what the item is, even if its not used, or rusted, or whatever. It doesn't make any difference.

      So what they do is form an offshore armaments corporation. Then they submit a bid so cheap that they know they're going to get it. The Department of Defense pays them almost immediately. It's nothing big, just two or three million at a time. And they're doing it every month. Two or three million. Two or three million.

      The guy on the inside then makes the item reappear in the inventory list and just changes the seller's code from what it was originally to this new offshore company. Then after they've gotten paid (which is almost immediately once the bid is accepted) as soon as the money is in the offshore account, they dissolve the offshore corporation the next day and disburse the money to the individual accounts which are hidden all over the world. They reopen a corporation the following day using a similar sounding name just in a different offshore jurisdiction.

      So for instance Pan Global Armaments last week becomes Trans Global this week. But anyway this guy is complaining that he's making so much money he's having a hard time hiding it all. There were about 400 guys at this lunch - the biggest crowd they ever had there. What the generals and colonels are most worried about is hiding their money because they're making so much they're running out of places to hide it without making it look obvious.

      They know the FBI is snooping around. They know congressional committees are looking around. They know the media is getting interested. But they talk so openly about it. They've been doing it for so long and nobody has ever been prosecuted because they give so much of the money away. The general was talking about this Defense Contracting Association that gives millions and millions to the Republican Party. Enormous amounts of money.

      These meetings are composed of active military officers, mostly the rank of major and above. They are in association with retired military officers, from majors to three star generals. A lot of one star and two star generals are involved.

      What they do is form offshore arms companies. Seatac Arms. Teltac Arms. Very generic sounding names. "We like to make the names what we call military techno-babble. The more military techno-babble sounding the name the less scrutiny there is," the general said.

      They form offshore corporation and they bid on DoD contracts. They are strictly shell companies with no assets in some lawyer's file cabinet in Nassau or Cayman Islands. A lot of them are domiciled in the former Soviet Union, not the classic Caribbean domiciliaries as you might imagine. It's an active area for weapons transfers, and it's becoming increasingly active in subcontracting weapons development by US defense contractors because the former Soviets have all this military capacity.

      Then they bid on the contract. After they make the bid they turn over the bid to a defense contractor. Then the contractor lists this offshore corporation as a sub-contractor despite the fact it hasn't done anything other than submit the initial bid. This way the defense contractor can hide liability, since they know they're going to manufacture something that doesn't work.

      The general added that since the defense contractors already know their own track record -- that 70% of all the weapons systems and components they produce don't work - it works out well for the defense contractors because they get to hide liability in a shadowy offshore corporation that won't be in existence the next day.

      The colonels and generals make these enormous subcontracting fees that the contractors pay them, which are then paid to other offshore accounts. They have dual offshore account mechanisms.

      In other words, they need one offshore account as an arms dealer to make the bid. Then they need another offshore account to hide the money. A lot of them tend to hide money in accounts in Mexico, Uruguay, Peru and Taiwan. In other words, they create a paper trail which is not only long, but is closeable. It's called a daisy chain of offshore corporations operating on a basis of interlocking concentric circles. When you collapse the final circle, the big circle in the middle that touches all the rest, all the other circles collapse at the same time.

      It is literally a continuation of the Iran Contra operations. This is simple, as George Bush once said, when he was asked what was ultimate meaning of Iran Contra.

      Bush explained it as the continuous consolidation of power and money into higher, tighter and righter hands at the expense of the US taxpayer. And that is what it's all about.

      So these colonels were talking about a scam involving a component that they call a "doodad." What it is - it's a wire, a coated wire that's six and a half inches long. It's got a three-pronged electrical connection at the top. As it turns out the doodad is a key component in missile guidance systems. That's what they call it. They had to think of some name because technically it's a restricted product. Even though it's a six and a half inch wire with a three pronged top. So they coded it with orange. And the boxes, shipped to the Peoples Republic of China, Pakistan and other places it's illegal to sell to, are marked as "cases of doodads."

      They also sell them back to the Department of Defense. So they have an offshore corporation with a contract for "doodads" to be produced in Mexico, Taiwan and Uruguay. It costs them 18 cents to produce a "doodad." And they have a contract with the Department of Defense to sell them for $18,000 each.

      That's the scam, but here's the problem. They got a big shipment of "doodads' in from the Uruguayan operation that manufactures "doodads," but these guys never see anything. It's all trans-shipment. Everything is marked for trans-shipment on these shadowy authorized US government flights. So they shipped ten zillion of these "doodads" to Beijing for the guidance systems into the illegal weapons components, which were previously sold.

      It turns out that the Uruguayans -- the bushmen or whatever they were that were making these things -- used to make bamboo sandals for tourists, so they ended up having only two prongs. They were supposed to be three ended prongs, but turned out to be two ended prongs.

      The Chinese got all pissed off about it. He got a call from a Chinese general he deals with and they were talking about wiring money to this general's offshore account. The Chinese general had wasted three months because they thought it was a national design change in the "doodads" and they didn't know it was an error.

      The Chinese military spent three months trying to figure out how to make the "doodads" work, but they couldn't get them to work right.

      The colonel was surprised when the Chinese general called up and told them that there were only two prongs. And the colonel said, "Well,it's no wonder they don't work, They're supposed to have three prongs."

      They had to send the general an enormous shipment of three-pronged "doodads" and they had to give him an extra $200,000 in his offshore account to cool everybody down.

      But what's so funny about it is that the colonel is complaining about something that's illegal that goes into something that was illegal that was made by something that's illegal. Every step of the way, it's illegal.

      These illegal shipments, by the way, are all done on US military flights. They don't even have to pay for the freight. They get flown out at three or four o'clock in the morning out of the Huntsville Airport in unmarked commercial air carriers, mostly old modified Boeings. These are authorized but unspecified US Government flights. They're beginning to move because there have been so many complaints about the air traffic at all times of day and night. One of their big problems is moving all this stuff. They are stretching the resources of how much covert materials the US Government can ship.

      It's a convenient interlock between the US Government and between active and retired colonels and generals.

      At the top of the chain is the Government, which is surreptitiously selling high technology weapons to an embargoed nation, namely the PRC, as a matter of covert State policy.

      What makes this all work, in other words, is what the US Government wants to happen - covertly. Starting at the top is the US administration, which is simply carrying forward from the administration before, which is attempting to covertly and illegally arm China. And why are they doing this? To create a new boogeyman. Because nobody makes any money without a boogeyman.

      This is a policy directive of the United States Government. This is a policy that the government wishes to see happen pursuant to a certain outcome. Also China can then sell weapons and weapons components to other countries that the United States would like to see weapons being sold to, but can not sell said weapons components itself directly. Yet China can.

      The United States Government pays lip service in the media to pressure China "to stop its proliferation of weapons." Although the humanitarian rights issue was tied to the entry of China's entry into the WTO, weapons proliferation was not.

      The end users are embargoed nations, politically embargoed for terrorism.

      The Russians however are picky buyers -- like the four Russian generals and two Russian colonels who show up for the US taxpayer funded lobster dinner. They actually do inspect the stuff that they buy. One of them said, "Unlike your military, we will only buy weapons components that actually work."

      But to get back to the "doodads" - they don't want to waste the money. Even at 18 cents a piece. They had about 50 grand into this box of Uruguayan "doodads," which only had two prongs, were no good, and which the Chinese general sent back.

      What they're going to do with the "doodads" that don't work is sell them to the Department of Defense.

      And what does everyone joke about? When the foreign government understands that something doesn't work, they want it replaced with something that actually does work.

      It gets shipped back to one of these offshore arms companies, who then in turn dump it on the Department of Defense. Everything that doesn't work gets dumped on the Department of Defense.

      Nothing works. Hardly any of the nation's missiles systems work.

      Then they were talking about the Bell Ranger. The general's buying about a hundred Bell Rangers. They sell 70 to foreign nations and then supposedly sell back 30 to the Department of Defense - but only 25 get delivered.

      They claim that the other 5 sank on a ship in the Gulf of Mexico.

      The general's got all these names for all these different scams.

      He calls that one the "Old Five Out Of a Hundred Sinkeroo Scam."

Previous Columns:
What will it be like with George Bush Jr. as president?
More Skeletons from the Bush Dynasty Closet
Hitting America Below the Beltway...
From Cradle to Cabal: The Secret Life of Gale Norton
DoJ: The Old Conspiracy and Coverup Crowd
Fraud-As-Usual at the Redstone Arsenal
FBI Angst & the Redstone Arsenal Fraud Saga
Why Iraq Was Recently Bombed & A Blast from the Past
Missing Chemical Weapons at Redstone
The Strange Case of the Infamous Hanssen Affair


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