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Pentagon’s ultra-secretive fuel contractor linked to revolutions in Kyrgyzstan

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Wednesday, December 22, 2010 14:41 EDT
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The Department of Defense paid billions of dollars to an ultra-secretive fuel contractor linked to two revolutions in Kyrgyzstan and turned a blind eye to corruption that threatened diplomatic relations, a congressional report published Monday found.

The 75 page report was prepared by the House Subcommittee on National Security and Foreign Affairs after an eight-month investigation into the Department of Defense’s fuel contracts.

The Department of Defense failed to properly consider the geopolitical and diplomatic consequences of its contracting arrangements with companies in Central Asia, according to the report.

“At multiple critical junctures over the past eight years, both the Pentagon and State Department turned a blind eye to glaring red flags in the fuel contracts,” the report said. “Real and perceived corruption in the fuel contracts has now been linked to two revolutions and seriously strained US-Kyrgyz relations.”

Mina Corporation and its associated firm, Red Star Enterprises, have been awarded over $3 billion dollars in contracts to supply Manas Air Base in Kyrgyzstan and Bagram Air Base in Afghanistan since 2003.

“The Subcommittee’s investigation uncovered a serious failure by the United States to oversee its fuel contracts in Central Asia,” Congressman John Tierney (D-MI) said. “The United States needs to know who its wartime contractors are and how they operate, period. This lack of oversight could lead to unacceptable loss of American taxpayer dollars, danger to our troops, and a decline in diplomatic relations in this region of the world.”

The companies are two of the largest suppliers of jet fuel in the world to the US military and have been accused of corruption by numerous politicians in the former Soviet republic of Kyrgyzstan.

“Allegations of corruption in the Manas contracts have been linked to two revolutions in Kyrgyzstan and resulted in widespread public perceptions – shared by interim President Rosa Otunbayeva and much of the political elite – that the United States has deliberately and illicitly used the fuel contracts to bribe Kyrgyzstan’s two past presidents,” the report noted. “US-Kyrgyz relations are seriously strained by the allegations and President Otunbayeva has raised the issue personally with both President Barack Obama and Secretary of State Hillary Clinton.”

In 2005, protesters angered by alleged fraud and corruption forced then-President Akayev to flee the country.

Akayev’s successor, President Kurmanbek Bakiyev was also ousted from power amidst widespread anti-government protests sparked by alleged corruption related to fuel supply contracts.

“According to some commentators, President Bakiyev began following the same model as President Akayev to enrich his family by inserting them into the fuel supply contracts at Manas and using the base as a ‘get-out-of-jail-free card with the US,’” the report continued.

After coming to power in 2010, President Rosa Otunbayeva launched her own investigation into the Mina Corporation.

Although the report failed to find any direct evidence that Mina and Red Star were involved in government corruption, suspicion of the companies have been fueled by their extreme secrecy. The companies have no website and their physical address is a drop-box in Gibraltar. The official ownership of the companies is buried beneath layers of front companies formed in multiple countries whose corporate laws facilitate secrecy and tax avoidance.

“The companies’ mysterious ownership and operations in a corner of the world known for official corruption engendered public suspicions,” the report said. “Uncontested by the companies or the U.S. government, the Kyrgyz public’s suspicions blossomed into accepted wisdom and finally a call to action. In both 2005 and 2010, opposition leaders claimed that allegations of official corruption at Manas were key motives for the overthrow of Presidents Akayev and Bakiyev, respectively.”

Otunbayeva demanded, at a meeting of the UN General Assembly in September, that the US government no longer contract with Mina and Red Star.

Despite her plea, the Pentagon awarded Mina with a fuel contract worth $630 million in November.

 
 
 
 
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