After the US invasion of Iraq, Libertas founder Declan Ganley was involved in a highyl controversial tender for a slice of the multi-billion-dollar mobile telecommunications industry
IN THE EARLY period of the shambolic, controversy-filled, multi-billion-dollar reconstruction effort that followed the US invasion of Iraq in March 2003, Irish businessman and Libertas founder Declan Ganley was central to a mobile-phone contract bid that involved Alaskan Native Americans, a deputy under-secretary at the US Department of Defence, US intelligence concerns, and a global battle between American and European communications technologies.
The bid eventually collapsed amid allegations and counter-allegations of impropriety (among US officials working on the reconstruction effort), political controversy, and Pentagon and FBI inquiries that went nowhere.
An outline of what occurred has been established using official US documentation available online, a book on the Iraqi reconstruction effort which deals with the episode, and contacts with a number of sources who have extensive knowledge of what occurred but do not wish to be identified. A key player in the events, former US deputy under-secretary of defence John A Shaw, could not be contacted. A request for comment from Ganley last Wednesday had not been responded to at time of going to press.
As part of its policy on Iraq the US government allocated billions of dollars to a post-invasion reconstruction effort that was to equal or exceed the post-second World War Marshall Plan in its ambition. After toppling Saddam Hussein, the US would build telephone networks, schools, water and electricity supply systems, hospitals, and so on, as part of a plan to build an island of prosperity and democratic rule in a part of the world long associated with harsh, undemocratic regimes and animosity towards Washington. Iraq would serve as an example to others in the region, and counter anti-US sentiment among the Arab masses in the wake of the September 11th attacks.
The failure of the project, and the enormous amounts of Iraqi and US money that were expended on the effort, have been and continue to be the subject of political controversy in the US. Many have laid the blame for the failure at the door of the so-called neoconservative elements who wrested control of the operation from the US State Department, which usually deals with such matters and was more aware of the difficulties involved. A key and repeated charge is that the level of planning was hugely inadequate, with the result that any goodwill existing in the immediate aftermath of the invasion was quickly squandered as Iraqis became aware of the massive gulf between what was being promised and what was being achieved. The consequences have proved extremely costly for the US, both in terms of lives lost and dollars expended, but most of all it is the people of Iraq who have suffered. First they had to live under Saddam, and suffer the consequences of the lengthy UN sanctions. Then the US invaded, their infrastructure was destroyed, and the people found themselves living in a collapsed state wracked by violence and without basic services.
WHILE MUCH OF the media and political attention on Iraq has focused on its oil reserves, the US invasion and the subsequent reconstruction effort also represented an enormous opportunity for those involved in telecommunications. Saddam had considered mobile phones a potential threat to his rule and had prevented the building of a mobile-phone network. In 2003 Iraq had a population of 26 million people, but no mobile phones. It was one of the last major untapped markets in the world and would-be investors were correct in their assessment of its potential. The Iraqi mobile-phone sector is now its largest business sector after oil.
But back in 2003 there was a secondary issue also in play. Most of the world's mobile-phone networks, including those in Ireland, use a system called GSM. Invented in France, it is the dominant player in most markets apart from the US, where the rival CDMA system is the most used. The CDMA technology is owned by a US company called Qualcomm. When the post-Saddam Iraqi phone business came up for grabs, Qualcomm, as a US company, was naturally hopeful that it would get at least some of the action in this new market.
In the summer of 2003 the Coalition Provisional Authority (CPA) in Baghdad announced that it was to hold a competition for the awarding of three mobile-phone licences. Qualcomm joined a consortium called Liberty Mobile. Others involved in the consortium included Declan Ganley and Don De Marino, a businessman and former deputy assistant secretary with the US Department of Commerce in 1989-90 during the administration of George Bush snr. De Marino is a long-time associate of Ganley's and was involved with him in the bid for the Republic's second mobile-phone licence in 1995. That competition was won by Denis O'Brien's Esat Digifone.
John A Shaw, the former deputy under-secretary of defence, is a Republican Party supporter who worked for presidents Gerald Ford, Ronald Reagan and George Bush snr. He was appointed deputy under-secretary by then defence secretary Donald Rumsfeld after George W Bush became US president in 2000. Despite having little experience in telecommunications, he was appointed by the White House as the Pentagon's liaison to Iraq on telecommunications issues in 2003. In this position he was lobbied by US politicians with a political interest in supporting Qualcomm.
According to Blood Money: Wasted Billions, Lost Lives and Corporate Greed in Iraq, by Los Angeles Timesjournalist T Christian Miller (Little Brown 2006), Shaw was also told there was an intelligence reason for supporting CDMA over GSM. CDMA was harder to tap into, so a CDMA system built by Americans might allow US intelligence agencies to tap into the system but make it more difficult for other intelligence agencies to do so. A source with knowledge of the matters related in this article has backed up this account.
Shaw was an old friend of De Marino - they had worked together in the US Department of Commerce - and in April or May 2003, De Marino introduced Ganley to Shaw and the suitability of the Liberty Mobile bid for Iraq was discussed.
In excess of 30 bids were made for the Iraqi licences and when the results of the competition were announced later that year, the three winners were non-US GSM operators with experience of running systems in the Middle East. Ganley and Liberty Mobile had failed.
However, that wasn't the end of the story. In late 2003 reports began to emerge in the media that Department of Defence inquiries had been initiated into possible corruption during the licence process. Court filings (the US equivalent of pleadings) seen by The Irish Timesshow that Shaw was still in contact with senior politicians lobbying for the Qualcomm/CDMA technology. He was also looking at the possibility that a nationwide network that would use CDMA could be introduced as part of a First Responder Network (FRN) that would service the Iraqi police, who were desperately in need of a communications system in a country which was by then possibly the most dangerous in the world.
DAN SUDNICK IS a former telecommunications expert and US Navy Reserve officer who was senior adviser for communications to the CPA in 2003 and 2004. He was the senior official reporting to the presidential envoy, ambassador Paul Bremer, on the American government's $1 billion investment in telecommunications and postal services infrastructure. In 2006 Sudnick took a case against Shaw and the Department of Defence, seeking damages arising from alleged breaches of the US privacy laws. The case against Shaw was dropped for reasons to do with jurisdiction, and the case against the department was dismissed for 45 days in May 2008 to allow for settlement negotiations. It has not been re-entered.
As part of the case, Sudnick, Shaw and the department made filings which deal with events surrounding the 2003 licence competition and its aftermath. According to the Sudnick complaint, Shaw e-mailed him on November 14th 2003 and said the corruption scandal was growing "and we should carefully strategize on using it to ensure your and our success". He suggested getting a system in place in quick time even if the award system was scrapped and suggested a First Responder Network system using CDMA that "could then morph into a commercial service with our having total control over it".
On November 29th 2003 Shaw e-mailed Sudnick saying he had been talking to a Senator Conrad Burns (Republican) "who is strongly supportive of creating for First Responder/911 a CDMA system countrywide that have parallel military/interior system imposed on it along the lines we discussed. Believe we could concoct new configuration of Liberty CDMA bid with emergency system grafted on top of it . . . We could have an essentially American contractor which is ready to move." Sudnick told The Irish Timeshe met Ganley in Shaw's offices in the Pentagon in early January 2004, when he was called there to hear from Ganley and other representatives of the consortium about its plans for the FRN.
Later in January 2004 Shaw again e-mailed Sudnick about the plan for the FRN. Included with this communication was e-mail correspondence, concerning technical matters, between US government officials and representatives of Liberty Mobile and of Guardian Net, a new consortium that included many of the members of Liberty Mobile, including Ganley and De Marino.
The bid for the FRN contract was structured in such a way that it would not have to go through a competitive process. In an effort to support Native Americans, US law allows Alaskan Native Corporations (ANCs) to get no-bid contracts from the government. The law has been used by many non-Native American US corporations, which use ANCs to win contracts that they then sub-contract to others to implement.
There had been political controversy in the US about the fact that companies such as Halliburton and Bechtel had been given huge no-bid government contracts in Iraq before and soon after the invasion. New legislation was introduced in late 2003 requiring full and open competition for Iraqi reconstruction contracts. However, a clause in the new law stipulated that ANCs would not have to go through competitive bids for contracts in Iraq. Some people scoffed about the idea of Eskimos working in the Iraqi desert, but Ganley's new consortium, Guardian Net, in time made use of the provision.
The Guardian Net bid for the FRN contract was submitted to Baghdad in partnership with an Alaskan company called Nana Pacific. This meant it was absolved from the requirement to go through a competitive process. According to Sudnick's court filing, and Blood Money, Shaw was lobbied by Nana and introduced the Alaskans to Ganley/Guardian Net.
In February, Sudnick flew to Washington and briefed the National Security Council on his work in Iraq. Among those in attendance were US government heavyweights Dick Cheney, Colin Powell, Condoleezza Rice and Paul Wolfowitz. After the meeting, according to Blood Money, it was agreed by those who heard Sudnick that the FRN for the Iraqi police was the "single highest communications priority" for the US in Iraq. Sudnick thought the system could be in place by the summer.
Shaw, in the Pentagon, was e-mailing Sudnick in Baghdad in support of the Guardian/Nana proposal. By March the CPA had sent out a technical document (a Request for Proposal) explaining what was required and requesting Guardian/Nana to outline how it would meet the stated requirements. The response was received by the CPA on March 9th 2004, and brought matters to a head.
According to Sudnick's court filing, a new element in the contract was included in the document received from Guardian/Nana, which stated: "The FRN shall be designed so that the operators of the network shall be able to offer nationwide commercial cellular service on a nationwide basis throughout Iraq." In other words, the contract for the FRN was to allow Guardian to set up a commercial system similar to the one Liberty Mobile had unsuccessfully sought to be allowed to establish through the 2003 competition process.
According to sources and to Blood Money, an assistant working with Sudnick, Bonnie Carroll, was surprised when she saw this new material in the technical documentation. She rang Janet Reiser of Nana, who told her the change had come from Ganley.
Ganley was in an airport in London when contacted by Carroll. He told her he had put the new clause into the contract documentation and had received Shaw's permission to do so. Sudnick's court filing also says Shaw approved the change. Neither Shaw nor the US Department of Defence specifically reject Sudnick's claim in their filings.
Sudnick brought the matter to the attention of ambassador Bremer in Baghdad and the tentative contract with Guardian/Nana was cancelled. Shaw sent a series of angry e-mails to Sudnick, which are quoted in his court filing. One, on March 11th 2004, reads in part: "As your principal supporter at , let me suggest that you step aside and become part of the immediate solution rather than a continuing part of the problem."
Sudnick filed reports to Bremer and the Department of Defence, outlining what had occurred. Soon afterwards, according to Sudnick's filing, he was approached by a range of reporters for various publications, who said they had information that he had been involved in improper activity in Iraq. At the same time he came under pressure in Baghdad, and he and Bonnie Carroll resigned. According to Blood Money, it was two years later before the urgently required police network was fully operational in Iraq, using European technology.
ON JULY 27TH 2004, a member of the Committee on Government Reform in the US House of Representatives, Henry Waxman (Democrat), wrote to the then chairman of the committee, Tom Davis (Republican), complaining of the committee's refusal since the election of President Bush to investigate matters that would have "triggered exhaustive investigations had they occurred during the Clinton years".
He wrote that, even on the subject of controversies in Iraq, the committee had protected officials from scrutiny, and cited a number of matters in support of his contention: "Your staff rejected my request that we write a joint letter to Defence Secretary Rumsfeld about the allegations that a political appointee, John A Shaw, deputy under-secretary of defence for international technology security, steered Iraq contracts to friends and business associates. Your staff informed the minority that 'the chairman thinks that since the matter is currently the subject of an FBI investigation, that at least for now, we will not join on your request'. " (The letter can be accessed on http://oversight.house.gov.)
The matter was also raised by Senator John McCain in May 2004 in a series of questions at the Senate Committee on Armed Services. Sudnick and Carroll now work at the Washington-based Tragedy Assistance Program for Survivors ( www.taps.org), which was founded by Carroll in 1994 to help those who had people close to them die while in the armed services. Carroll is a major in the air force reserve and her brigadier-general husband died in an army plane crash in 1992. The honorary board of the organisation includes McCain, his Democratic rival in the presidential election campaign, Barack Obama, and former US president Jimmy Carter.
Shaw had to leave office in December 2004 as a result of controversy over a statement he issued to the media during the Bush re-election campaign. A story that more than 380 tonnes of explosives had disappeared from a facility south of Baghdad during the US invasion became an issue in the campaign. Shaw said he had intelligence that the material had been stolen by Russian commandos.
The statement provided temporary cover for Bush, but Rumsfeld and others later said they could not validate Shaw's claim and soon afterwards he left the Pentagon.
Ganley has, meanwhile, formed a new venture, Rivada Networks, which has teamed up with Nana Pacific to win a number of lucrative communications contracts with the US military and the national guard. Rivada Pacific ( www.rivadapacific.com), as the venture is called, can win no-bid contracts because of Nana's involvement.
The US government website, www.usaspending.gov, gives details on government contractors. It shows that, between 2004 and 2008, Rivada Pacific won contracts worth $37.3 million. None of the contracts involved a full and open competition, according to the website.
Rivada Networks has an Irish subsidiary with a registered office at Ganley's home in Tuam. A number of employees of the subsidiary were founding members of Libertas and one of them, executive director Naoise Nunn, told The Irish Timesduring the Lisbon Treaty campaign that he had carried out work for Libertas during 2007 and 2008, having been instructed to do so by Ganley. Ganley later contradicted this and said Nunn had carried out voluntary work for Libertas while working for Rivada.
A spokeswoman for Rivada in Washington said it had not made a financial contribution to Libertas as it had been forbidden by Ganley to do so. A company called Guardian Net Ltd with an address at Ganley's home was incorporated in March 2004 and was dissolved in November 2005.
THE PLAYERS:
DECLAN GANLEY Businessman and founder of Libertas
DON DE MARINO Former deputy assistant secretary with the US department of commerce
DAN SUDNICK Telecommunications expert and US navy reserve officer, and senior adviser for communications to the Coalition Provisional Authority in Iraq
JOHN A SHAW Former US deputy under-secretary of defence
LIBERTY MOBILE A consortium that included Declan Ganley and Don De Marino in the bid for a mobile licence in post-war Iraq
GUARDIAN NET A consortium including Ganley, De Marino and other members of Liberty mobile, which put in a bid to run Iraq's First Responder Network
NANA PACIFIC A Native American Alaskan corporation whose involvement in Guardian Net's bid absolved it from the requirement to go through a competitive process
