The State Department's
acerbic top auditor wasn't happy when Justice Department officials told
one of his aides to leave the room so they could discuss a criminal
investigation of Blackwater Worldwide, the contractor protecting U.S.
diplomats in Iraq.
The episode reveals the badly strained relationship between
Bush administration officials over the probe into whether Blackwater
smuggled weapons into Iraq that could have gotten into insurgents'
As a result of the bureaucratic crosscurrents between State's
top auditor and Justice, the investigation has been bogged down for
A key date was July 11, when Howard Krongard, State's
inspector general, sent an e-mail to one of his assistant inspector
generals, telling him to "IMMEDIATELY" stop work on the Blackwater
investigation. That lead to criticisms by Democrats that Krongard has
tried to protect Blackwater and block investigations into
contractor-related wrongdoing in Iraq.
"Instead of cooperating, Mr. Krongard apparently created a
series of obstacles to the inquiry," said Rep. Henry Waxman, D-Calif.,
chairman of the House Oversight and Government Reform Committee
examining Krongard's performance as the State Department official
responsible for stamping out waste, fraud and abuse.
Krongard, whose credibility was damaged by the recent
disclosure that his brother had a business affiliation with Blackwater,
has disputed the charge, though he recused himself from Blackwater
matters after the potential conflict of interest emerged.
His aide, Terry Heide, who was kicked out of the July 31
meeting, also says she's been unfairly blamed for slowing the
Blackwater probe. Her role was to collect State Department documents
for the investigators - a job she did well, according to her lawyer.
But even Krongard's own staff saw her as a hindrance.
Brian Rubendall, a senior State Department investigator, has
questioned the halt in the inquiry, telling the oversight committee in
an October interview that there was no justifiable "reason for us to
stop that investigation. None."
Krongard said he put the brakes on because he was concerned a
separate audit of Blackwater contracts might "contaminate" the Justice
Blackwater has called the smuggling allegations baseless.
However, earlier this year two former Blackwater employees pleaded
guilty to possession of stolen firearms that were shipped in interstate
or foreign commerce. They are cooperating with federal agents.
Blackwater said the two were fired after it was learned they were
stealing from the company.
Altogether, the trail of internal e-mails, testimony from a
Nov. 14 oversight hearing and interviews with participants form a
picture of bureaucratic infighting with consequences far beyond
The State Department's role in the Blackwater weapons probe
began months before the Sept. 16 Baghdad shootings by Blackwater guards
that killed 17 Iraqis and escalated public scrutiny of the company.
In March, Ron Militana, a special agent in the investigations
unit, received Rubendall's approval to interview State Department
personnel and meet with Blackwater attorneys about allegations the
company was illegally transporting arms into Iraq. Militana also
discussed potential criminal proceedings in the case with a federal
In late June, John DeDona, then chief of the IG's
investigative unit, e-mailed Krongard and his deputy, William Todd, to
alert them to the probe. Krongard responded cryptically: "Please do not
treat anything in the e-mail below as having been seen by me, advised
to me, or understood or approved by me. If there is something
significant in the message below, please come and tell me about it."
Two weeks later, as Militana was trying to obtain copies of
Blackwater contracts from the department's Bureau of Diplomatic
Security, DeDona sent another message to Krongard telling him of
In a July 11 e-mail to DeDona, Krongard told him Militana was
to "IMMEDIATELY" stop the work. Krongard said he wanted a briefing from
the U.S. Attorney's office in North Carolina on its Blackwater
investigation before his agents went farther.
Waxman and other critics say Howard Krongard's order to halt
came at the same time Blackwater CEO Erik Prince was considering
whether to offer his brother, Alvin "Buzzy" Krongard, a spot on the
company's newly forming advisory board.
On July 26, Prince invited Alvin Krongard to join
Blackwater's advisory board. A week later, Robert Higdon, chief of the
criminal division in the U.S. Attorney's office for the eastern
district of North Carolina, and James Candelmo, Higdon's deputy, were
in Washington for the July 31 meeting with Krongard and his
Blackwater is based in Moyock, N.C.
Howard Krongard initially said his brother had no ties to
Blackwater. But during the Nov. 14 oversight hearing, he recused
himself from inquiries related to the company, explaining that Alvin
Krongard had just told him he had attended an advisory board meeting.
Alvin Krongard resigned from the board two days later because of the
uproar the arrangement created.
While Democrats claimed a glaring conflict of interest,
Krongard said he pulled his staff off the Blackwater probe so they
wouldn't step on work being done by Stuart Bowen, the special inspector
general for Iraq reconstruction.
Bowen had sought help from Krongard's office to audit two
Blackwater contracts — the same ones Militana was helping the U.S.
Attorney's office examine, according to Krongard, who said alarms went
off when he realized the potential overlap.
"To be assisting a criminal investigation into the exact same
two contracts that we were already assisting a civil audit into, raised
a question of parallel proceedings, which needed to be deconflicted
before one infected or contaminated the other," he said.
Krongard did not say what the contracts are for or give their
value. The State Department pays Blackwater and two other firms $570
million a year for security services.
In a deposition to the oversight committee, Todd, the deputy
inspector general, supported Krongard. "We had basically several of the
same organizations looking at the exact same stuff," Todd said.
But Waxman rejected the rationale. "You halted an
investigation, demanded a personal briefing from the Justice
Department, (and) assigned your congressional affairs director to keep
tabs on the investigation," Waxman said to Krongard at the hearing.
Waxman called the moves "highly unorthodox."
Heide, the congressional affairs director Krongard called his
"alter ego," was collecting the documents needed by Bowen and the U.S
Attorney's office, e-mails show.
But members of Krongard's own staff, along with Higdon and
Candelmo of the U.S. attorney's office in North Carolina, saw her as a
roadblock. Rubendall told the committee Candelmo and Higdon planned in
advance to raise grand jury information during the July 31 meeting in
order to force Heide out of the room.
"We weren't going to discuss grand jury material, but that
was the ruse that they were going to use to get her out of the
meeting," Rubendall said.
Heide referred questions to her attorney, David Laufman, who
said an e-mail exchange between Krongard and Heide indicated she was
doing as directed.
"I am trying to stay only situationally aware," she wrote Aug. 8, "so I can keep any conflicts at bay."
Justice Department spokesman Dean Boyd would not comment on
the investigation, but said, "The suggestion that the Justice
Department engaged in a ruse in this matter is flatly incorrect."
According to Waxman, the problems hampering the Blackwater
probe persist. Justice investigators have been unable to get needed
documents. Militana has not been allowed to give his full attention to
the criminal investigation even though Krongard said he would.
"I think that the State Department is responsible for
investigating crimes perpetrated against the State Department,"
Militana said in an October interview with the committee. "The (Justice
Department) can do it, of course, but there has to be some involvement
by the State Department."