WASHINGTON – Some of the characters are new, but the scene in Bishkek, Kyrgyzstan is one of déjà vu. This past April’s riots were the second time in five years that the United States was left in the uncomfortable position of watching as a president of the small Central Asian country was ousted amidst allegations that U.S. fuel contracts supplying a major logistical hub for the war in Afghanistan were funneling millions of dollars to Kyrgyzstan’s presidential family.
Even before the most recent overthrow, the House National Security Subcommittee was looking into contracts in the region, which is renowned for its corruption. Now, the subcommittee has undertaken a full-fledged investigation, focused on the contracts at Manas Transit Center in Kyrgyzstan, while the Department of Defense moves to open up bidding on the suspect contracts.
“Let’s be honest: At many times throughout our history, the United States has closely dealt with unsavory regimes in order to achieve more pressing policy or strategic objectives,” Rep. John Tierney, D-Mass., said in his opening remarks at the investigation’s first hearing in April. “The United States will have to work hard to restore our credibility in (the Kyrgyz’) eyes, beginning with transparency regarding U.S. fuel contracts at Manas.”
The F.B.I. collaborated with the Kyrgyz government on an investigation in 2005, when accusations that the son of then-president Askar Akayev was improperly benefiting from U.S. fuel contracts. That FBI report was never made public, but an independent investigator for the Kyrgyz told The New York Timesthat he suspected the new president, Kurmanbek Bakiyev, simply took over the same business model, installing his son, Maksim Bakiyev, as the beneficiary.
Now, the anti-corruption interim government led by Roza Otunbayeva is opening its own investigation, focused on six subcontractors allegedly controlled by Maksim Bakiyev.
“Whatever the Pentagon’s policy of buying warlords in Afghanistan, the state of Kyrgyzstan demands more respect,” Edil Baisalov, chief of staff for the interim lead, told The Times in April. “The government of Kyrgyzstan will not be bought and sold. We are above that.”
The closely linked companies at the center of the allegations are Red Star and Mina Corp., which provide enormous amounts of Russian jet fuel to power U.S. troops in Afghanistan. Together, the companies have received more than $1 billion for fuel sales over the past six years.
The fact that companies’ director of operations, Charles “Chuck” Squires, is a retired Army lieutenant colonel and former defense attaché to the U.S. embassy in Bishkek raises some eyebrows. Except in the case where a presidential directive makes an exemption for national security concerns, military contracts are subject to the Foreign Corrupt Practices Act, the law that outlaws bribery in U.S. business transactions overseas.
“If this were a commercial setting, an investigator would probably start by studying whether there really is an arm’s-length relationship between Red Star and Pentagon contractors,” Scott Horton, an expert on accountability in military contracts, said in his written testimony to the House committee. “If not, an investigator might quickly conclude that it is a shell interposed to provide a buffer between the procurement officers and companies controlled by the president’s family.”
The hearing witnesses consistently hit the refrain that the U.S. embassy delegation was unnecessarily close with the Bakiyev regime. The essential question is whether this was a State Department blunder, or if it was part of a larger policy of currying favor with the regime to ensure the future of the Manas air base.
In February 2009, in what was widely seen as a quid pro quo, Bakiyev announced plans to close the Manas base on the same day that Russian President Putin announced $2.15 billion in aid to the country. Later, Bakiyev flipped when the U.S. agreed to pay $17 million more in annual rent for the base.
Earlier this month, the Department of Defense moved to open up bidding on the contracts to the Manas base. Meanwhile, the United States and Kyrgyzstan have been in intense negotiations over taxes on fuel being imported to the base.
In impoverished Kyrgyzstan, the U.S. air base and its connected contracts make an easy whipping boy for disgruntled citizens whose country was ranked 128 out of 149 for corruption by World Audit in 2009.
But in business environments like that of Kyrgyzstan, it may well be that only countries connected to political elite will be in a position to meet U.S. needs.
“Allegations like these are an inevitable by-product of working in this part of the world, where corruption is just the way business is done,” said Martha Brill Olcott, an expert on the region for the Carnegie Endowment for International Peace. “The question is, were these contracts illegal, or were they simply unethical? There are only a few places you can get oil from – you’ve got to have a refinery – and it’s predictable that the bigger companies, the ones with elite connections, are going to be the ones that can get the best deal for the U.S. government.”
