Tuesday, October 25, 2005

Oil, Guns, and Money

While We're Waiting for Saint Patrick's Day…

Andrew Brenner has a story up at ePluribus titled "War Profiteers Plead Guilty to Grand Larceny." (Fair disclosure: I had a small hand in the editorial process.)
The owner of a Virginia business indicted for paying kickbacks in the U.N. Oil-for-Food program in Iraq has a reputed history of dealing with the CIA in foreign arms sales.

On October 20, 2005, Midway Trading of Reston, Va., pleaded guilty in New York State Supreme Court to grand larceny charges of paying $440,000 in kickbacks to Iraqi officials. The kickbacks had been funneled through the Romanian company Bulf Oil. Midway Trading agreed to pay a $250,000 fine.

This story has a number of odd angles and raises interesting questions.

First, it's significant in that a U.S. company has been indicted and punished for involvement with Oil-for-Food program abuses. Next, we have a punishment--the $250,000 fine--that seems light in view of the nature of the crime. What's more, the charge and the fine were levied at a company, not an individual. Nothing goes on anyone's criminal record, and if the company folds, the fine never gets paid.

So what's really going on here?

Part of the answer may lie in the background of Midway Trading's owner, Stephen "Satch" Baumgart (this info came from Ken Silverstein of In These Times).
A former Naval officer, Baumgart has been involved in the murkier fringes of the weapons trade since the ’70s, when he brokered sales to American allies such as Mobutu and Ferdinand Marcos in the Philippines — all apparently with a wink and a nod from U.S. intelligence. “A CIA agent would drop by our office and Baumgart would brief him about his overseas travels, particularly about his contacts in the Arab world,” recalls Gerhard Bauch, a one-time German intelligence officer who worked for Baumgart. “They knew about everything we did.”
During the mid-’80s, Baumgart — who did not return phone calls seeking comment — helped supply Saddam Hussein, who was then seen by the Reagan administration as a bulwark against the Ayatollah Khomeini in Iran.

A pal in my "retired military bubbas" network tells me it's standard procedure for arms dealers to keep the CIA in the loop. As long as the CIA knows what the dealers are doing, it generally leaves them alone.

Silverstein also reports that one of Baumgart's "closest contacts in the arms business" is Pierre Falcone, a key figure in the Angolagate arms-for-oil scandal in which over $600 million in weaponry were sold to the government of Angola president Eduardo dos Santos.

Falcone and his wife Sonia travel in the elite social circles of Paradise Valley, Arizona. They're also big political donors. Sonia made a $100,000 donation to the Republican Party during the 2000 presidential election campaign. In the summer of that year, the couple threw a fundraiser at their home for Scott Bundgaard. Bundgaard is a GOP Arizona state senator and a "close ally of President Bush."


Spinning scenarios based on incomplete information can lead one down a blind alley, but as long as everyone in the information world is speculating on what Fitzgerald is up to, we might as well apply our imaginations to the Midway Trading case.

Is it possible that Baumgart got a tap on the wrist over his Oil-for-Food shenanigans because of his CIA connections and his relationship with the Bush friendly Falcones?

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