In April 2010, National Security and Foreign Affairs Subcommittee initiated an investigation into allegations of corruption in connection with the U.S. contract to supply fuel to the Manas Transit Center in Kyrgyzstan and held a hearing on 22 April 2010. The Subcommittee will be issuing a report with the full results of its investigation soon.
On 3 November 2010 the Defense Logistics Agency awarded a $315 million one-year contract with a one-year option to Mina Corp. Ltd. to supply 96 million gallons of jet fuel to the U.S. Transit Center in Manas, Kyrgyzstan. (more precisely the contract says "a maximum $315,180,960 fixed price with economic price adjustment, requirements-type contract for jet fuel." This makes $3.28 per gallon). I don't know what else that price includes but when the contract was awarded the average jet fuel price in Europe and CIS was $2.27 per gallon. The Department of Defense is in ongoing negotiations with the Kyrgyz government to award a second contract to a Kyrgyz state-owned fuel supplier.
On 3 November 2010 Subcommittee released a Statement in response to the DOD's Manas Transit Center Fuel Contract to Mina Corporation. John F. Tierney, Chairman of the Subcommittee, stated that "Although our investigation has not uncovered any underlying corruption in the Manas fuel contract, we did find that the Pentagon and State Department had ignored widespread Kyrgyz public perceptions of contract corruption engendered by a fundamental lack of transparency in the contracting process and Mina Corporation's operations. Supplying vast quantities of fuel in support of U.S. operations in Afghanistan is an extremely sensitive endeavor with significant political, diplomatic, and geopolitical ramifications; it is not logistics-as-usual. The lesson going forward is that this critical fuel supply contract must have top-level oversight at every step of the way."
In an interview shortly before meeting with President Obama in September 2010, new Kyrgyz president demanded the Pentagon stop using private contractors and work through a state-run Kyrgyz venture instead. Well, the US government wants to make the Kyrgyz government also happy. The contract, awarded to Mina Corp covers only 80 percent of the overall projected jet fuel needs over the next year at Manas. The other 20 percent appears destined for a Kyrgyz government-run entity.
Washington Post ran a good piece about this on 1 November 2010 (Kyrgyz contracts fly under the radar). The article presents how legitimate are the Mina and Red Star companies and makes you wonder why the hell is the need for a long chain of intermediaries who buy the fuel and deliver it to the base. In essence "Mina and Red Star have little of the visible infrastructure usually associated with an enterprise handling billions of dollars of business. At an address in Gibraltar used by both Red Star and Mina is a law firm that specializes in virtual office services. Mina's London office consists of a small glassed-in cubicle. An address in Toronto that Red Star used to win its first Pentagon contract turns out to be a business center in a high-rise tower," documents the Post.
The problem is that last year's contract was given to the company without a competitive bidding to avoid unspecified "reasons of national security". The November 2010 contract however followed a review of rival offers by different firms. The ugly part of the contracting is that regulations do not require that companies detail their ownership. This is the best example of how transparent the DOD is.
Will the Kyrgyz government allow Mina Corporation to operate on its territory? If they still believe what they were saying before, they should not. But money is sweet.
On 5 November 2010, the Kyrgyz Foreign Ministry issued a statement urging the US government to "suspend its cooperation" with Mina Corp.
This story shows that talking only about military-industrial complex is just one side of the bigger story. There are two sides in corruption – corrupters and corrupteds. We can call these two as the group of greedy elites if you wish. A country like the US and a federal government institution like the DoD have always been shown as examples of transparency, justice and equality trinity. Where do they stand now? In the club or corrupters, or corrupteds or something else? The US government agencies should not be allowed to transfer contractor payments to overseas bank accounts. Moreover, they should investigate deeper the companies before giving any job.
For a simple tourist visa application USA asks hundreds of documents and questions. How come then it can give millions of dollars worth contracts to private companies without performing a thorough checking process? Why the reports of the Government Accountability Office on contractors are still neglected?
According to Scott Horton, the Kyrgyz admire "American rhetoric about transparency, democracy and human rights. But they see an increasingly large gap between U.S. rhetoric and U.S. action."
As far as fuel contracts to Afghan theater are concerned, I am not in a position of making recommendations. One recommendation mentions that the United States can publicly encourage the Kyrgyz interim government to nationalize the distribution of fuel to the Manas base. In less developed or developing countries corruption is an extremely big and important problem. And that neither nationalization nor liberal system would put an end to it. In order not to be perceived as a corrupter at least, the US government, for instance, could establish a company under DLA to take care of the fuel chain. Most of such a company's employees would be hired through fixed-term contracts.
Ray Mabus, Secretary of the Navy, said in October 2010 that "We have to change the way we operate. We have to change the way we produce and we use energy." Yes, but they have to change the way they procure energy too.
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http://www.scribd.com/doc/21693873/Indo-Pak-Wars-1947-71-A-STRATEGIC-AND-OPERATIONAL-ANALYSIS-BY-A-H-AMIN
Man would indeed be in a poor way if he had to be restrained by fear of punishment and hope of reward after death." --
Albert Einstein !!!
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