A logistics company with millions of dollars in defense contracts is being investigated for ties to federally banned companies in Iran, the Project on Government Oversight reported Wednesday.
The government accountability group was tipped off on the investigation by Sen. Robert Menendez, D-N.J., who asked the Treasury Department's Office of Foreign Assets Control (OFAC) in a March 19 letter to investigate the Kuwait and Gulf Link Transport Co., called KGL, for working with banned companies in Iran.
Last year, KGL was awarded part of a five-year, $850 million logistics contract with the Army and a four-year, $157 million contract with the Defense Logistics Agency for storage services, according to news reports.
Menendez said in the letter he was given information that KGL did business with four companies that are on OFAC's list of "specially designated nationals." OFAC blocks the assets of those on the list and generally prohibits the government and American companies from doing business with them.
"This information raises the serious question [of] whether KGL should be included on the [specially designated nationals] list and whether KGL should be a U.S. DoD contractor with access to U.S. military facilities while it also partners and contracts with banned entities," Menendez said in the letter.
Menendez said he heard the FBI and Defense Criminal Investigative Service might be investigating the allegations.
Neither agency has confirmed that there is an investigation into KGL. FBI policy in many cases precludes confirming an investigation, or discussing what, if anything, might be involved, an FBI spokesman told POGO.
POGO http://www.pogo.org/pogo-files/alerts/contract-oversight/co-ca-kgl-iran-connection-20120403.html">said in its report that its investigators have seen documents and talked to sources that confirm the agencies have been interviewing KGL executives and former employees about the company over the last year.
KGL has denied links to banned companies in Iran and is suing an unknown person for emailing false information about the company to investigators. In the suit, now pending at a District of Columbia civil court, the company says it severed ties with Iranian shipping companies after the U.S. imposed sanctions on those firms.
POGO is not pushing the agency to suspend or debar the company while the investigation is going on, though congressional committees have asked the Defense Department and other agencies to use suspension and debarment more often. The group is mostly concerned by Defense Deputy Secretary Ashton Carter's response to congressional inquiries about KGL, said POGO spokesman Joe Newman.
Last year Carter, then undersecretary of Defense for acquisition, technology and logistics, said he found no substantial information to support the claims against KGL.
When asked about the investigation mentioned in Menendez's March letter, a Pentagon spokesperson told POGO that Carter's position on KGL was unchanged.
"Either he was completely ignorant of the [investigation] and didn't check or he was misleading Congress," Newman said. "Someone needs to explain why he told members of Congress what he did."