August 27, 2003: Custer Battles Bilks CPA in Contract for Iraqi Currency Program

Custer Battles is awarded a “cost plus” contract in Iraq to provide security and logistical support for the Iraqi Currency Exchange, a CPA-created agency charged with replacing the country’s old currency with a new currency. Under the terms of the contract, Custer Battles is to be paid for all of its operational expenses, plus a 25 percent markup for overhead and profit. According to a lawsuit that is later filed against the company, Custer Battles uses a complex network of shell companies to inflate the fee it gets to over 60 percent of its actual costs. In one notorious incident, the company bills the CPA for the use of at least one forklift that it does not even own. The forklift belonged to Iraqi Airways and was confiscated by Custer Battles employees. Paint was used to cover up the Iraqi Airways insignia on the machine. [Special Inspector General for Iraq Reconstruction, 7/30/2004, pp. 79 ; Grayson and DiMuro, 8/26/2004, pp. 3, 15-17, 21 ]