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US: Head of firm paid to track Iraq spending investigated

by Matt KelleyUSA Today
September 21st, 2007

Robert Raggio quit his $97,000-per-year government job as a financial manager for the Iraq reconstruction effort in September 2005. He said in his resignation form that he wanted to "pursue other opportunities."

That same day, Raggio's newly formed company, Reviewer Management International (RMI), received a U.S. contract to audit $7.3billion in Iraqi reconstruction spending, according to Army documents obtained by USA TODAY under the Freedom of Information Act.

The $1.5 million contract was designed to help investigators fight fraud in Iraq. Now, Raggio is under investigation.

Before he quit his government position, Raggio wrote the requirements for the federal contract at the same time he negotiated to obtain it for RMI, according to the documents. The Army's Suspension and Debarment Office suspended Raggio and his consulting firm from getting new government contracts in August amid an ongoing investigation into whether he violated conflict of interest laws.

The laws, which bar government officials from benefiting from their official actions, carry penalties of up to five years in prison. Civil penalties can include fines equal to the amount of the contract, Army documents say.

The suspension and the investigation have not been made public before.

Army contracting officials began looking into the case after the government's Iraq reconstruction watchdog, Stuart Bowen, passed along an anonymous complaint his office received about Raggio, documents show.

Raggio did not respond to repeated telephone messages left at the phone number he listed as RMI's office, which public records show is his brother's home in suburban New York.

RMI was hired to create a database to track the $7.3 billion in Iraqi government money U.S. officials doled out -- much of it in $100 bills shipped to the country on pallets -- after the 2003 invasion. Federal auditors had uncovered a bribery scheme involving more than $8.6million from the Development Fund for Iraq and wanted to determine whether there was more corruption.

The Army failed to properly oversee Raggio's contract and after nearly a year of work he delivered a database that was incomplete, unreliable and nearly unusable, according to a January report from Bowen, the Special Inspector General for Iraq Reconstruction. The database couldn't meet one of its primary goals: allowing investigators to connect payments to the U.S. officials who made them, Bowen's report said.

RMI told investigators its database included more than 300,000 entries; Bowen's report described it as "only a collection of records that were not audited or effectively connected to one another."

Army contracting officials didn't monitor the contract or ensure RMI filed required status reports every two months, Bowen's report said. The report faulted the contract's initial requirements, which the Army documents reveal Raggio wrote.

Raggio had incorporated RMI on Aug. 5, 2005 -- the day after the Joint Contracting Command-Iraq in Baghdad solicited proposals for auditing the Development Fund for Iraq. At the time, Raggio was the financial manager of the Accelerated Iraq Reconstruction Program, one of the fund's main components, the Army documents say.

RMI was given the contract after the government's aborted attempt to seek competitive bids, Air Force Lt. Col. Joe Mazur of the Joint Contracting Command-Iraq said in an interview in April.

Mazur said an unsigned memo in the contract file showed the competitive bidding process for the contract was canceled because the process had been "compromised," meaning one or more of the bidders had inside information about the contract. Mazur said another unsigned document indicated RMI got the contract because it was the only company able to do the work in time to meet a deadline at the end of 2005, which was later extended to the end of 2006. 

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