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| Two Arrested Over Iraqi Vehicle Fraud |
15-Mar-10
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| Investigation centres on companies headed by ex-soldiers and former Met Assistant Commissioner ... |
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Two men have been arrested following a Ministry of Defence inquiry into an alleged multimillion pound fraud in post-invasion Iraq, involving British companies headed by ex-soldiers and a former high-ranking Scotland Yard officer.
One man was detained after he flew into Britain from the Far East, while a second is understood to have been arrested in London and freed on bail.
The arrests, carried out by the fraud squad of the MoD's police force, follow investigations on both side of the Atlantic that were triggered by a Guardian report on fraud on the Coalition Provisional Authority (CPA) that was installed in Baghdad shortly after the 2003 invasion.
In March 2007 the Guardian reported that a number of British companies were paid millions of dollars for the delivery of dozens of armoured buses to protect Iraqi civil servants from attack by insurgents, although the vehicles had never been delivered.
One company, headed by a former deputy assistant commissioner at Scotland Yard and a colourful ex-army officer, received $5.7m (£2.93m), even though the vehicles never left the factory in Russia where they were due to be manufactured. A second company, headed by another former British soldier, is understood to have received $2.7m for the same "phantom" vehicles.
The deal at the centre of the arrests was negotiated in late 2004, as the CPA was about to hand over responsibility to Iraqis. Amid the growing threat from insurgents, the CPA put out a tender for a fleet of 51 armoured vehicles. The money to pay for the contract came from Iraqi oil revenues which were held by the Trade Bank of Iraq, but under the control of US officials.
The $8.48m contract was won by Zeroline, a Norfolk-based armoured car company run by ex-soldier Peter Tarrant, 66. He subcontracted the sourcing of the vehicles to another British company called APTx, a subsidiary of Alchemie Technology Ltd. Alchemie and APTx were formed soon after the invasion of Iraq by Haslen Back, a former junior officer in the Royal Anglian Regiment. The chairman of APTx is Graham James, 55, a former deputy assistant commissioner of Scotland Yard. James is understood not to have been arrested.
Back, 42, from Suffolk, has lived for several years in Moscow, where he is said to have planned to acquire the armoured vehicles. It is understood that he faced difficulties in obtaining permission to export the vehicles from Russia to Iraq. Although the vehicles were never destined to pass through Britain, British government regulations specified that British export licenses were needed for the armoured vehicles because the principals behind the company were British.
A few weeks before the contract was due to expire in July 2005, however, APTx and Zeroline received their payments from the CPA, without the vehicles ever having been supplied.
After the Guardian reported that this had happened, investigations were launched by the Special Inspector General for Iraq Reconstruction, a US federal agency set up to inquire into fraud, corruption and waste in post-invasion Iraq, and by the MoD's own police.
One man, Massachusetts businessman Benjamin Kafka, 56, a director of Alchemie and head of its North American operations, pleaded guilty to fraud in a US court last April. Kafka has been co-operating with US investigators and is expected to be sentenced shortly. The US authorities are known to have taken a close interest in the British investigation, and have not ruled out further prosecutions.
The MoD police inquiries concentrated on the movement of funds once the payments had been received, as well as a series of documents which were presented to a bank in Britain which released the funds. JP Morgan Chase has confirmed that officials at its Global Trade division in Bournemouth, Hampshire, were shown documents which appeared to suggest that the convoy of vehicles was about to be shipped from Russia. At this point, the bank says, it agreed to make payments totalling $8.48m.
The US authorities in Iraq were unaware that the payment had been made and, six months later, in December 2005, they announced that the contract had been cancelled.
Tarrant has admitted to the Guardian that he had received his payment, although he knew the vehicles were never delivered.
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For more information click on or go to http://www.guardian.co.uk |
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