Contractor Charged with Rigging Iraq Development Bidding

James Joyner · Thursday, November 17, 2005 · 2 comments

Philip H. Bloom, head of Global Business Group, has been indicted for fraudulent bidding on government contracts for rebuilding Iraq.

U.S. Files Charges Against U.S. Contractor in Iraq (Bloomberg)

The U.S. Justice Department filed the first criminal charges against an American contractor involved in Iraq’s reconstruction. Philip H. Bloom, 65, funneled at least $693,000 in bribes and kickbacks through bank accounts in Iraq, Switzerland, Romania and the Netherlands over the year through January 2005, according to court documents filed yesterday. The money then went to at least two unnamed U.S. government officials and their spouses in exchange for reconstruction work valued at over $3.5 million, the documents show.

Bloom appeared in U.S. District Court in Washington where the papers were filed, marking the first charges brought as a result of audits and follow-up probes by Special Inspector General Stuart Bowen. The office was established by Congress in late 2003 to oversee the spending of almost $30 billion in appropriated U.S. tax dollars and a separate Development Fund for Iraq that’s controlled by the Iraqi government. Bloom’s firms were paid out of the Development Fund.

“This is the first case and there will be more,” said Bowen’s spokesman James Mitchell. The case was the result of a joint task force of agents with the Inspector General, Treasury Department and Department of Homeland Security, he said. “Bloom conspired with U.S. government contract employees and military officials to obtain fraudulently government contracts which were awarded for the reconstruction and stabilization of Iraq,” wrote Inspector General Special Agent Patrick McKenna in an affidavit filed with the federal court.

Bloom’s firms did business as Global Business Group, GBG Holdings and GBG-Logistics Division, the affidavit said. “The investigation has revealed that contracts were awarded to businesses controlled by Bloom through a rigged bidding process, that work was ordered by certain of Bloom’s co- conspirators and that such contracts were authorized for payment in some cases without any performance of the contracts by Bloom’s companies,” McKenna wrote.

One of the “co-conspirators” is identified as a public official performing as comptroller and funding office for the now defunct Coalition Provisional Authority’s South Central Iraq region. This official “rigged” the contract awards through the creation of fake, excessively high bids that justified the awards to Bloom’s companies’ “low bids,” McKenna wrote.

It’s about time for a crackdown on this front.