Developage.com

Article on fraud and theft in Iraq by Army officers and contractors:

“I believe the real looting of Iraq after the invasion was by US officials and contractors, and not by people from the slums of Baghdad,” said one US businessman active in Iraq since 2003.

In one case, auditors working for SIGIR discovered that $57.8m was sent in “pallet upon pallet of hundred-dollar bills” to the US comptroller for south-central Iraq, Robert J Stein Jr, who had himself photographed standing with the mound of money. He is among the few US officials who were in Iraq to be convicted of fraud and money-laundering.

Despite the vast sums expended on rebuilding by the US since 2003, there have been no cranes visible on the Baghdad skyline (…) One of the few visible signs of government work on Baghdad’s infrastructure is a tireless attention to planting palm trees and flowers in the centre strip between main roads. Those are then dug up and replanted a few months later. (…)

In 2004-05, the entire Iraq military procurement budget of $1.3bn was siphoned off from the Iraqi Defence Ministry in return for 28-year-old Soviet helicopters too obsolete to fly and armoured cars easily penetrated by rifle bullets. (…)

the evidence of a small-time US businessman called Dale C Stoffel who was murdered after leaving the US base at Taiji north of Baghdad in 2004 is being re-examined. Before he was killed, Mr Stoffel, an arms dealer and contractor, was granted limited immunity from prosecution after he had provided information that a network of bribery – linking companies and US officials awarding contracts – existed within the US-run Green Zone in Baghdad. He said bribes of tens of thousands of dollars were regularly delivered in pizza boxes sent to US contracting officers.

Here is an article about a one-man fraud scheme at Fry’s, an American consumer electronics chain. Even though Fry’s is a small operation (less than 40 stores), the executive was able to grab tens of millions of dollar in kickbacks. He did this for years, without raising any eyebrows. His huge gambling debts ended up doing him in.

The allegations came as a shock to the owners of Fry’s, who had thought so highly of their longtime employee that they had given him one of their top jobs — and lent him $10.1 million.

“He has a strong ability to persuade,” said spokesman Manuel Valerio, who worked in the Fry’s corporate offices with Siddiqui. “He carried himself as a confident individual, a businessperson with acumen.”

It is unclear when Mr. Siddiqui, Fry’s vice president of merchandising and operations, allegedly began receiving kickbacks. The IRS says he persuaded Fry’s to let him bypass the independent brokers who usually supply products, then demanded that vendors pay him commissions as high as 31% through a “fraudulent company” he set up in 1998. The sole purpose of PC International was to receive kickbacks (…).

Siddiqui deposited at least $167.8 million in PC International’s bank account between 2005 and 2008. The IRS alleges that $65.6 million came from just five vendors. It is still investigating where he got the rest.

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Interesting article on the behind the scene story of the Bear Stearns crash.

I recommend you read the whole thing, but are are a few interesting quotes:

On March 10, 2008, Bear Stearns stock [was] $70 a share (…). On or before March 10, 2008, requests were made to the Options Exchanges to open a new April series of puts with exercise prices of 20 and 22.5 and a new March series with an exercise price of 25. The March series had only eight days left to expiration, meaning the stock would have to drop by an unlikely $45 a share in eight days for the put-buyers to score. It was a very risky bet, unless the traders knew something the market didn’t; and they evidently thought they did, because after the series opened on March 11, 2008, purchases were made of massive volumes of puts controlling millions of shares.

On or before March 13, 2008, another request was made (…) and massive amounts of puts were bought. (…) There is only one plausible explanation for “anyone in his right mind to buy puts with five days of life remaining with strike prices far below the market price”: the deal must have already been arranged by March 10 or before.

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In 2006 and 2006, Deutsche Telekom was spying on its own board members, top level employees, and journalists, logging and possibly listening in on their conversations. This was just revealed by Der Spiegel.

Only the paranoid survive.

Behind The Scenes is a new series of blog posts where I’ll put the spotlight on things that are happening in the shadows; things that not many people are aware of, or want to be aware of.

Most people I know (including myself) are way too naive and innocent, and this my attempt at remembering what’s really going on out there.

And today’s random fact comes from this NYT article on professional background checks:

There is plenty of wrongdoing out there. Employee theft alone exceeds $400 billion annually, according to Automatic Data Processing, the nation’s largest provider of payroll services.

400 billions a year – in the US alone. I don’t know about you, but had I been asked, I wouldn’t have guessed anywhere near that number.

Few face greater risks than start-ups. Mr. Springer cited a technology company that grew from 50 to 500 employees in nine months and recruited a seasoned project manager to handle its physical expansion. The manager hired an acquaintance as his sole contractor and in collusion with him signed off on fraudulent invoices. The company managed to get back $1 million of the $3 million they stole.

In another case:

Once hired, the executive began his scheme almost immediately, buying a large number of computers, returning most of them and depositing the refund checks in an account that he had opened with the same name as the company’s except that it had L.L.C. at the end instead of Inc.

(That guy smuggled 3 millions USD and vanished)

Also:

“Nearly 1,000 workers are murdered and 1.5 million are assaulted in the workplace each year.”