National Security

FP's Situation Report: A major fraud scandal rocks the Army's ranks

CSBA puts the band back together; Karzai back-channels peace; What's Senate Intel talking about today?; The military and beer in the Super Bowl: Bad Buds? and a bit more.

By Gordon Lubold

A massive kickback scandal rocks the Army's ranks. When a retired Army colonel and an enlisted soldier from Albuquerque, N.M., were charged last year with defrauding the National Guard Bureau out of about $12,000, the case drew little public attention. But it's now become clear that the two men are among the roughly 800 soldiers accused of bilking American taxpayers out of tens of millions of dollars in what a U.S. senator is calling "one of the biggest fraud investigations in Army history."

The wide-ranging criminal probe centers around an Army recruiting program that had been designed to help the Pentagon find new soldiers during some of the bloodiest days of the Iraq and Afghanistan wars. The program went off the rails, investigators believe, after hundreds of soldiers engaged in a kickback scheme that allowed them to potentially embezzle huge quantities of money without anyone in the government noticing. In one case, a single soldier may have collected as much as $275,000 for making "referrals" to help the Army meet its recruiting goals, according to USA Today's Tom Vanden Brook, who first reported the story Monday. 

The military's failure to spot, or stop, the wrongdoing will be the focus of what is expected to be a highly contentious hearing Tuesday before the Senate's Subcommittee on Financial and Contracting Oversight. The committee's chairwoman, Sen. Claire McCaskill, D-Mo., has summoned several of the National Guard officials who were in power at the time the alleged wrongdoing was taking place.

The numbers of soldiers and money involved are staggering. An Army internal audit has discovered that 1,200 recruiters had received payments that were potentially fraudulent. Another 2,000 recruiting assistants had received payments that were suspicious. More than 200 officers remain under investigation, according to McCaskill's office. There are currently 555 active investigations involving 840 people. 

A Defense Department official to Situation Report: "I think it was human greed, and I think it's the cascading effects of contractors' lack of supervision, as well as the Defense Department's lack of supervision." Read the rest of our story, with FP's own Dan Lamothe, here.

From the WaPo's Ernesto Londono: "... Army criminal investigators are probing the actions of more than 1,200 individuals who collected suspect payouts totaling more than $29 million, according to officials who were briefed on the preliminary findings of the investigation and would discuss them only on the condition of anonymity. More than 200 officers are suspected of involvement, including two generals and dozens of colonels." More here.

Welcome to Tuesday's edition of Situation Report, where we'll never be driverless. If you'd like to sign up to receive Situation Report, send us a note at and we'll just stick you on. And if you like what you see, tell a friend.  And if you have a report you want teased, a piece of news, or a good tidbit, send it to us early for maximum tease, because if you see something, we hope you'll say something -- to Situation Report. And one more thing: please follow us @glubold.

Closed doors: The Senate Select Committee on Intelligence meets today and Topic A is... Edward Snowden, Situation Report has learned.

The hunted becomes the hunter: Merkel accused of spying says a hacker group. The NYT's Melissa Eddy: "The Chaos Computer Club, a leading hacker organization based in Germany, filed a criminal complaint against Chancellor Angela Merkel and members of her government on Monday, accusing them of violating the law by helping intelligence agencies in the United States and Britain to spy on German citizens. The move comes days after Secretary of State John Kerry visited Berlin to try to smooth over relations that have been strained by revelations of the extent of the National Security Agency's surveillance activities in Germany. While filing the complaint with the Federal Prosecutor General is only a first step in the cumbersome German legal process and does not guarantee that an investigation will be opened, it demonstrates unwillingness by some here to drop the issue. Along with the International League for Human Rights, based in New York, the 32-year-old hacker group said in the complaint that Ms. Merkel's government and German intelligence agencies violated the personal privacy of German citizens through 'illegal and prohibited covert intelligence activities, along with aiding and abetting such activities' by tolerating and cooperating with the N.S.A. and the British eavesdropping agency, known as GCHQ."  More here.

CSBA is putting the band back together for another big joint think tank event called "Alternatives to the QDR and the FY15 Defense Budget." The Center for Strategic and Budgetary Assessments is holding an event tomorrow morning with the American Enterprise Institute, the Center for New American Security and the Center for Strategic and International Studies to offer alternatives to the QDR and budget that the Pentagon will soon - in March - be submitting to Congress. The event follows a similar one CSBA did last year.

Here's how it works: Each think tank team was asked to develop its own strategy to rebalance the DoD's major capabilities in the context of shrinking budgets. Then, using CSBA's "strategic choices tool and methodology," the teams are able to choose from more than 700 "pre-costed options" to add or cut the defense program over the next two years. The first option will follow the guidelines from the Budget Control Act, or BCA, while the second option offers a more pie-in-the-sky option with more resources. Then tomorrow, CSBA will host a public event on Capitol Hill where all four teams present their alternative strategies, capability priorities and budget decisions, according to CSBA's invite. There will, of course, be extensive Q&A after.

CSBA's Todd Harrison, to Situation Report: "I think what you'll find from the think tanks are ... some dramatic departures from the directions in which DOD is going." Harrison of course hopes it's not too late to influence DOD policymaking when it comes to the budget. "We're always hopeful that folks from OSD policy will come to the event and that it will inform or shape their thinking."  

Where? The Senate's Dirksen SD-G50. What's the agenda? Introduction at 10 a.m., followed by an "exercise overview," and then at 10:20, each team will begin each of their presentations; at 11, there will be a discussion of comparisons of each team and then at 11:15, the Q&A.

Regs watch: Did the partnership between the soldier returning home and the beer commercial during the Super Bowl make "Bad Buds?" FP's Phillip Carter: "I like beer, and would wager that most veterans like beer too. Budweiser placed a similar bet last night during the Super Bowl with its ad "A Hero's Welcome," which showed a Norman Rockwell-esque homecoming for Army 1st Lt. Chuck Nadd in his hometown of Winter Park, Fla. -- courtesy of Budweiser. The ad tugs my heartstrings in the same complex way that standing ovations at Washington Nationals games for veterans do. The applause feels good, and is certainly better than what Vietnam-era veterans faced too frequently at home. Nonetheless, the Budweiser ad should have never been aired. The ad ignores the complicated relationship that veterans have with alcohol, obscuring how much harm booze does to veterans when they come home. And the one-minute spot arguably breaks a handful of government regulations meant to prevent public endorsement of private brands, especially where alcohol and drugs are concerned.

"Two main sets of military regulations exist to prevent the Army from getting, well, too buddy-buddy with companies like Budweiser. The first are the military's ethics regulations... Under this regulation, the Army cannot legally endorse Budweiser, nor allow its active-duty personnel to participate in their ads (let alone wear their uniforms), any more than the Army can endorse Gatorade or Nike." More on that here.

Page One: On peace talks, Karzai back-channels the Taliban. The NYT's Azam Admed and Matthew Rosenberg: "President Hamid Karzai of Afghanistan has been engaged in secret contacts with the Taliban about reaching a peace agreement without the involvement of his American and Western allies, further corroding already strained relations with the United States. The secret contacts appear to help explain a string of actions by Mr. Karzai that seem intended to antagonize his American backers, Western and Afghan officials said. In recent weeks, Mr. Karzai has continued to refuse to sign a long-term security agreement with Washington that he negotiated, insisted on releasing hardened Taliban militants from prison and distributed distorted evidence of what he called American war crimes."  More here.

An upsurge in terrorism in the Sinai raises concerns in the Suez. FP's own Keith Johnson: "The growing and sophisticated insurgency in the Sinai Peninsula, along with its declared emphasis on attacking the Egyptian regime's economic lifeblood, has raised fears over the security of the Suez Canal, one of the world's principal arteries for trade, and especially for moving oil and gas between Asia and Europe. Late last summer, after militants filmed themselves launching a rocket attack on a cargo ship that was making its way through the canal, worries over the channel's vulnerability to a terrorist attack began to proliferate. In January, West Point's Combating Terrorism Center published an article on the Sinai insurgency and possible threats to the canal. The Suez Canal serves as the main transit point for the U.S. Navy to move ships between the Eastern Mediterranean and the Red Sea.

"... While many of Ansar Bait al-Maqdis's attacks have focused on parts of the Egyptian security apparatus -- the Army and the police -- the group has made clear in its statements that it seeks to impose the greatest possible economic pain on a regime it sees as apostate. The group justified a January attack on a pipeline that exported gas to Jordan as part of a campaign to "target the regime's economic interests." Another attack on a pipeline, one that fueled a cement factory owned by the Egyptian military, was justified in similar terms." More here.

Good news/man-bites-dog story: U.S. troop morale in Afghanistan actually increased in 2013. AP's Pauline Jelinek: "U.S. soldiers had higher morale and suffered fewer mental health problems in Afghanistan last year as they handed off more duties to Afghans and saw less combat themselves, according to a report released Monday. The Army report was drawn from a battlefield survey and interviews in June and July. It was the ninth time since the practice started in 2003 in Iraq that the service had sent a team of mental health experts to the field of war to measure soldier mental health and assess available care. The report says rates of soldiers with depression, anxiety and acute stress - as well as tendencies toward suicide - were lower than in the most recent previous surveys.

"In a survey of nearly 900 soldiers, 20.2 percent said last year that their morale was high or very high, compared with 14.7 percent and 16.3 percent in 2012 and 2010, respectively. During those earlier survey years, there were more U.S. troops in Afghanistan - 100,000 at the height of the surge that started in 2010. Now, there are about 34,000 U.S. troops." More of that bit here.

China's getting a little spendy when it comes to its military. The NYT's Michael Forsythe: "China already spends more on its military than any country in the world except the United States. Now, as defense budgets at the Pentagon and in many NATO countries shrink, China's People's Liberation Army is gearing up for a surge in new funding, according to a new report. China will spend $148 billion on its military this year, up from $139.2 billion in 2013, according to IHS Jane's, a defense industry consulting and analysis company. The United States spends far more - a forecast $574.9 billion this year - but that is down from $664.3 billion in 2012 after budget cuts slashed spending. By next year China will spend more on defense than Britain, Germany and France combined, according to IHS. By 2024, it will spend more than all of Western Europe, it estimates."

How capable IS China's mil? "One military analyst, Ian Easton of the Project 2049 Institute in Arlington, Virginia, believes that China's military is far less capable than its large military budget would suggest. Last month he wrote that the P.L.A. probably wouldn't be able to effectively attack Taiwan - the prosperous, self-ruled island claimed by the mainland. In addition, Chinese troops lack real combat experience and some of the P.L.A.'s marquee projects, including the aircraft carrier, are plagued by technical problems."  More here.

And speaking of Asia: Japan should lift the ban on its collective defense, a panel says. AP: "A government panel will urge Japan to allow its military to help allies that come under attack, in a major reversal of the country's ban on collective defense under its pacifist constitution. The panel is expected to present its near-final draft recommendation later Tuesday. Prime Minister Shinzo Abe wants Japan to play a greater role in international peacekeeping and step up its defense posture, citing potential military threats from China and North Korea." Read the rest here.

The role of American contractors grows in Iraq. The WSJ's Dion Nissenbaum: "Hundreds of contractors working for America's biggest defense companies are taking on a broader role in helping Iraq's military learn to use new weapons in a growing battle against Islamist insurgents.  Over the next few months, the U.S. government is expected to begin sending more than $6 billion in military equipment to Iraq. The latest deal includes 24 Apache attack helicopters made by Boeing Co. and nearly 500 Hellfire missiles produced by Lockheed Martin Corp. While the helicopters may not arrive in time to help with the current fighting, the missiles are expected to be used by the Iraqi military in the battle to uproot Islamic fighters from Ramadi and Fallujah, cities that were the focus of major U.S. military operations during the height of the war in Iraq." Read the rest here.





National Security

FP's Situation Report: More officers behaving badly and a new focus on ethics

Frank Kearney: why the Afghan election is important; IAVA: The VA backlog is stalled; Germany ponders military muscle flexing; and a bit more.

By Gordon Lubold

The moment the U.S. should be waiting for: After 12 years of war, the presidential election in Afghanistan is in just more than 60 days. With the bilateral security agreement dominating U.S. policymakers' attention, the Obama administration has generally been quiet about the Afghan presidential election in April in which a successor to President Hamid Karzai would be expected to emerge. For months, the administration has chosen to tread softly on the elections, choosing to work in the shadows - if at all - on a central issue involving a sovereign government. But some think the administration has treaded too softly, and experts and Afghan hands have for the last year or so been pushing the administration to elevate its engagement on this issue. Enter a new group, the Coalition for Afghan Democracy, that is pushing American policymakers to focus on the election as an opportunity that shouldn't be squandered. Hamed Wardak, who helps to fund the initiative, to Situation Report: "[The Coalition hopes to] mobilize and raise the public profile of the election, to bring more engagement and more focus on the significance and importance of it given the fact that it's not just an election but a transition to a new administration."

Here's why Frank Kearney, the retired Special Operations three-star, is also supporting the effort (in an e-mail to Situation Report): "First, I am personally invested in Afghanistan, I have spent a great deal of time there, my son has spent over three years there and my nephew was killed there.  Second, the region remains a tinder box of terrorism and nuclear tension when you look at India, Pakistan, Afghanistan, Iran and China. It remains a region key to US interests as a result but frankly, the American people are weary of the conflict and may no longer pay attention if a vibrant dialogue and discussion about the importance of this election is ignored in the press and on the national street.  Third, I believe promoting an active discussion which is a primary [Coalition] objective is critical to continued United States and other nations investment in the Afghan Army, Government and other ministries. Fourth, a fair election that represents the will of the Afghani people is required to earn the continued investment of US military men and women and the treasure of our people and partners.  I remain convinced that it is in our best interest to stay involved and insure the terrorists from the ungoverned spaces of the FATA do not pollute the potential opportunity for the Afghan people and that together we continue to deny terrorists a sanctuary from which to operate." See more about the coalition here.

The Afghanistan election begins. The WaPo's Sayed Salahuddin, in Kabul: "Campaigning officially started Sunday in the crucial election to choose Afghan President Hamid Karzai's successor, amid continuing concerns about attacks by the Taliban and the planned withdrawal of most U.S. and NATO troops starting this year. Eleven men vying to win the April 5 election have just two months to sway voters. Among the front-runners are two technocrats, Ashraf Ghani and Zalmay Rassoul, who served in key positions in Karzai's government, which has been in power since the Taliban was ousted in 2001. The election will result in the first peaceful transfer of power through a ballot in the country's history. A former foreign minister, Abdullah Abdullah, who ran against Karzai in the 2009 election, and one of Karzai's brothers, Qayoum Karzai, are also considered leading contenders. Even though his brother is running, the Afghan president has vowed not to take sides in the contest." Read the rest here.

Speaking of Afghanistan, heads up you veterans of the Afghan War: the McCain Institute is doing a survey and wants your input. The McCain Institute for International Leadership at Arizona State is developing a database for lessons learned from Afghanistan in the hopes that those lessons learned don't have to be re-learned. The "Afghanistan Data Initiative," as it's called, is described as "a robust, fact-based, data-driven analysis of what happened in Afghanistan," but the Institute is doing it "without imposing any preconceived ideological or political framework." As such, the Institute wants to hear from military and civilian veterans of the Afghan war. "We hope to disseminate this raw, fact-based information, providing a resource for future research and study, allowing others to draw conclusions and make better decisions in the future. In the long-term, we expect that this data set will serve as a resource for future research and academic study." They want military and civilian veterans of the Afghan war to participate in the survey. "Please take part in our survey to help ensure that the experiences and sacrifices of you and thousands of others like you are not lost to history, but recorded and learned from for the future." They want honest answers and won't attribute comments of poll participants to the public arena. It takes about 25 minutes to complete. Click here to take it.

It's a rainy post-game Monday and welcome to a very tardy edition of Situation Report. Apologies to Broncos fans who are crying in their Honey Nut Cheerios right now. It was a bad night altogether - even most of the ads didn't play well. Anyway, the passing of Philip Seymour Hoffman is what is really making us sad. If you'd like to sign up to receive Situation Report, send us a note at and we'll just stick you on. And if you like what you see, tell a friend.  And if you have a report you want teased, a piece of news, or a good tidbit, send it to us early for maximum tease, because if you see something, we hope you'll say something -- to Situation Report. And one more thing: please follow us @glubold.

Red Tape Alert: The Iraq and Afghanistan Veterans of America will release a new report this morning about the backlog and why reducing it has stalled. The USA Today's Greg Zoroya: "The government's effort to cut a backlog of pending compensation claims for veterans has stalled at about 400,000 cases, and steps are needed to understand what is and isn't working to solve the problem, says a group representing recent war veterans. In a report to be released Monday, the Iraq and Afghanistan Veterans of America (IAVA) group recommends several ways it says will speed up claim processing, many of the ideas already supported and sought by the Department of Veterans Affairs. The VA called the report part of its continued collaboration with veterans groups and said it continues working aggressively to try to end the backlog in 2015."

IAVA's Jacqueline Maffucci, in a statement provided to Situation Report this morning: "In the State of the Union address, President Obama re-affirmed the VA disability claims backlog as a national priority... The VA has made progress since March to reform the system and bring the numbers down, but 400,000 veterans are still waiting and much work remains left to be done. It is not just about bringing the backlog to zero, but keeping it there. The Red Tape Report is vital to understanding how the system left so many disabled veterans waiting for so long - and ensuring that it won't happen again." More here later this morning. 

Scoopage: a new investigation into the Marine Corps and the urination video. FP's Dan Lamothe: "An investigation into whether senior Marine Corps officers attempted to cover up their own misconduct while prosecuting war crimes in Afghanistan has suddenly roared back to life, with a top civilian official now looking into whether the Marine brass unlawfully concealed crucial evidence in the cases, Foreign Policy has learned. "[Maj. James Weirick's] whistle-blower complaint received widespread media coverage last year. It did not, however, appear to get much traction with the Defense Department's inspector general, and it seemed like Amos and other top Marines were out of the woods. In the last few days, however, Weirick's charges have received new attention from a powerful civilian official, John Fitzgerald, the director of the U.S. Information Security Oversight Office in Washington. Fitzgerald's interest in the case, which hasn't previously been reported, means that the probe is far from complete and could yet ensnare top Marine brass.

Weirick, according to letters obtained by FP, met with Fitzgerald on Jan. 22. Fitzgerald and his office aren't widely known among the general public, but he is the top authority on whether evidence like the urination videos should have been classified. In the letter, Weirick thanked Fitzpatrick for the meeting and urged him to hold Amos and other Marine officials accountable for their actions." More here.

Meantime, did these two Marine generals abuse their authority - or were they just a bit careless? Marine Maj. Gen. Angie Salinas really wanted to have an aide with an aiguillette - even though she didn't rate one at the time. And Marine Maj. Gen. Michael Regner was accused of looking the other way when his subordinates did personal tasks for him - like shining his shoes or washing his car. Both are the subjects of DOD Inspector General complaints, the Marine Corps Times reports. Marine Corps Times' Gina Harkins: "To hear at least one Marine describe it, Maj. Gen. Angela Salinas was obsessed with having a subordinate who was readily recognizable as her aide. Specifically, she wanted the individual accompanying her to speaking engagements and other public events to wear an aiguillette, the braided cord worn across one's shoulder to denote he or she is acting as a general's aide-de-camp... The request was denied because, in her role, Salinas did not rate an aide-de-camp. She asked instead if the command's organizational table could be amended so she could have one. No, she was told again. But Salinas bought an aiguillette anyway and authorized the Marine to wear it at one event. That prompted an anonymous complaint to the Defense Department Inspector General's Office in December 2011, which turned over the matter to the Marine Corps IG a month later. A months-long investigation would conclude that Salinas, who retired last year after a trailblazing 39-year military career, inappropriately encouraged the Marine to violate the Marine Corps' uniform policy and that she used subordinates for her personal errands."

And, Harkins continues with Regner: "In April 2012, a similar complaint was filed with the command inspector general for Marine Corps Forces Pacific against Maj. Gen. Michael Regner, then the top Marine in Korea. It, too, was referred to the Marine Corps IG. Among other things, Regner was accused of looking the other way when his subordinates would do personal tasks for him, like shining his shoes and washing his car - claims the IG would substantiate. Regner was the subject of a Marine Corps Times cover story published in October after a 29-year enlisted Marine, Sgt. Maj. Jayme Winders, filed an inspector general complaint alleging he was victimized by the Marine Corps' top leaders after accusing Regner of wrongdoing. In July, the two-star was named staff director for Headquarters Marine Corps, where he continues to serve." Read the rest here.

The two senior Marine officers aren't alone, as we journos are fond of writing. Ethical lapses are beginning once again to flood the inboxes of senior Pentagon leaders and it has, once again, become the 25-meter target for the Pentagon. The issue has "the full attention" of Chairman of the Joint Chiefs of Staff Gen. Marty Dempsey, who initiated an ethical review effort last year. He sat down with the WSJ's Julian Barnes. Barnes: "The U.S. military is intensifying its focus on ethics training in the wake of a series of investigations of military brass, the Pentagon's top uniformed officer said. Gen. Martin Dempsey, chairman of the Joint Chiefs of Staff, said that as part of this new emphasis, the military needs to place more importance on officers' character when weighing promotions."

Dempsey to Barnes: "The Joint Chiefs and I are concerned and committed to ensuring that our military leaders of all ranks uphold the trust that we've established with the American people...This has my full attention."

Barnes: The military has been rocked in recent months by a wide-ranging Navy contracting scandal, involving allegations of bribes, as well as by high-profile sexual assault cases and other probes. Last week, the Air Force announced that a test-cheating scandal involving nuclear missile crews was more widespread than previously thought, with 92 junior officers suspended in connection with cheating allegations. In the interview, Gen. Dempsey said he and the military service chiefs were working together on a series of initiatives that will place a renewed focus on military ethics." Read the rest here.

More Marines could be based in Africa. Marine Corps Times' Gina Harkins again: "Marine units that specialize in crisis response could be based in Africa in coming years as military leaders work with host nations that have shown interest in the U.S. posturing troops in their countries, according to a top general in the region. Lt. Gen. Steven Hummer, deputy to the commander for military operations in U.S. Africa Command, said these units would likely be similar to the Special-Purpose Marine-Air Ground Task Force Crisis Response based at Morón Air Base in Spain, which stood up in 2013." Hummer to Harkins: "There's quite a reach from Morón to get to [certain African countries], depending on the operational aircraft... As we look at the future of the environment around the world, and the fiscal challenges impeding the number of ships we would like to have, there's a balancing act we have to achieve between MAGTFs aboard ships and MAGTFs ashore, where they can respond to indications and warnings." Read the rest here.

Hagel returned from the Munich Security Conference over the weekend after appearing with Secretary of State John Kerry. WaPo's Craig Whitlock on the joint appearance:  "[Kerry and Hagel] told European allies Saturday that Washington would depend more heavily on them to tackle a litany of political and security crises, even as the two pushed back against concerns that the Obama administration was abdicating leadership on the same issues."  More here.

Kerry: "This narrative, which has frankly been pushed by some people who have an interest in saying the United States is on a different track, I will tell you it is flat wrong."

Hagel: "In the face of budget constraints here on the continent, as well as in the United States, we must all invest more strategically to protect military capability and readiness.  The question is not just how much we spend, but how we spend together."

And the NYT's Erlanger and Shanker on Munich: "Hagel, sitting alongside Mr. Kerry, sought to reassure Europeans that the United States was not abandoning the Continent as it rebalanced its interests - diplomatic, military and economic - to Asia after more than a decade of conflict in Iraq and Afghanistan."  More here.

Meantime, Germany is thinking about building more military muscle mass. The NYT's Alison Smale:  "German leaders are pushing a vigorous new case that it is time for their nation to find a more muscular voice in foreign affairs, even suggesting that Germany should no longer reflexively avoid some military deployments, as it did in Libya almost three years ago... Germany's Nazi and Communist pasts are no excuse for ducking international duties, [German President Joachim Gauck] said. He argued that the current Germany - "the best we have ever known," he said - was well established as a democracy and as a reliable partner and ally, and that it should step out "earlier, more decisively and more substantially" on the world stage.

The president has no power to make policy under Germany's Constitution, but is expected to guide debate. Günther Nonnenmacher, co-publisher of Frankfurter Allgemeine Zeitung, a center-right newspaper, wrote after the speech that Mr. Gauck 'may well have spoken the authoritative word in the debate over German foreign and security policy.'" More here.