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Pentagon probes Leonie’s taxes, treatment of Afghan workers

Jun. 12, 2012 - 02:25PM   |  
By TOM VANDEN BROOK, USA TODAY   |   Comments

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Pentagon criminal investigators have launched a full probe into the military’s top propaganda contractor in Afghanistan regarding taxes paid by its owners and treatment of its Afghan employees, according to a letter obtained by USA Today.

The paper revealed in February that the owners of Leonie Industries had owed more than $4 million in back taxes to the federal government. That debt was settled in March, federal records show. The company has received at least $120 million in Pentagon contracts since 2009.

Rep. John Tierney, a Massachusetts Democrat and a senior member of the oversight committee, requested the Pentagon Inspector General investigation of Leonie in March. He praised the Defense Criminal Investigative Service‘s decision to move beyond its initial inquiry and to launch a more formal investigation.

“It is critical that we hold the Pentagon, and companies working with our government, to the highest standards,” Tierney said Monday. “Claims of ongoing lack of accountability in war zone contracting cannot be ignored. We are talking about hundreds of millions of dollars, and I welcome the news that the Defense Criminal Investigative Service will be closely examining the Leonie contract.”

Leonie is cooperating with the investigation, company spokesman Gar Smith said. The tax issues were the responsibility of the company’s owners, he said, and not the company.

Leonie hired a Washington lobbyist, Clark Ervin of the firm Patton Boggs, to stop the investigation. The tax issues were being addressed, and “no investigation of Leonie and its owners is warranted,” Ervin wrote the Pentagon inspector general on March 9. Ervin is a former Department of Homeland Security inspector general.

The inspector general’s criminal investigative unit “has initiated an investigation regarding allegations concerning the company’s failure to provide services to its employees and the tax issues associated with the contracts awarded to Leonie Industries,” the office wrote Tierney on June 7.

In May, one of Leonie’s co-owners, Camille Chidiac, acknowledged launching websites in the names of the two USA Today journalists reporting the story. The Pentagon admonished Leonie for the “smear campaign,” and Chidiac said he was selling his share of the firm.

Rep. Hank Johnson, a Georgia Democrat and member of the Armed Services Committee, said Monday that he will ask the inspector general to investigate the online campaign as well.

“The scope of this criminal investigation should be broadened to include the online dirty tricks campaign that smeared journalists investigating Leonie Industries, as well as any attempt to cover up responsibility by employees or shareholders,” Johnson said in a statement. “Leonie has acknowledged that at least one major figure associated with the firm was personally involved.”

Spending on “military information support operations” peaked at $580 million in 2009, mostly for the wars in Iraq and Afghanistan, Pentagon records show. Spending fell to $202 million last year, as U.S. participation in the Iraq War ended.

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