Bribing one politician is bad. Bribing all the politicians is worse. The U.S. Department of Justice is investigating a group of companies in Kurdistan, Iraq’s semi-independent northern region, that appears to be doing the latter in order to secure a monopoly on Pentagon fuel contracts worth hundreds of millions of dollars.
A previous New Republic investigation outlined how Kurdish and American firms used shell companies with connections to the Patriotic Union of Kurdistan, one of the region’s two major political parties, to dominate fuel sales to the U.S. military and inflate prices. But PUK-aligned groups aren’t the only ones cashing in on these American fuel purchases: A tangled network of corruption illustrates how ostensible rivals can cooperate to rip off the Defense Department.
According to Kurdish government documents provided to the Government Accountability Project, where I work, additional shell companies also connect the fuel-fleecing to the Kurdistan Democratic Party, the region’s other major political faction, led by former President Massoud Barzani and his powerful family, a clan of American-sponsored kleptocrats. The billionaire Barzanis are Kurdistan’s “unofficial monarchs,” said Kamal Chomani, a nonresident fellow at the Tahrir Institute for Middle East Policy and editor in chief of the Kurdistan Times, an independent news outlet. “We always referred to them as the Mafia,” said a former U.S. government adviser in Iraq, who requested anonymity to speak candidly.
The Barzani family’s assets span the globe. “It was never practical to keep track of that stuff,” a former U.S. anti-corruption official said about the vast Barzani holdings, which were spread from Syria to Switzerland. And, in an awkward twist, some of the millions swindled from the U.S. military may have ended up as investments in California’s luxury real estate market.
While the scope of the Barzanis’ wealth is vast, its source is simple: The money comes from Kurdistan’s rich oil and gas industry and deals like the Pentagon fuel purchases. Requests for comment sent to an adviser for Kurdish Prime Minister Masrour Barzani, as well as to a public relations firm that previously worked for the Barzani family, went unanswered.
Tracing the Kurdish fuel deals leads to a Virginia-based logistics company, DGCI. For at least half a decade, DGCI has been the Pentagon’s go-to fuel provider in Kurdistan and has been dogged by questions about its connections to Kurdish politicians.
Most recently, DGCI was contracted by the U.S. military to deliver wildly overpriced jet fuel, at rates as high as $10 a gallon, to an American base at the international airport in Erbil, Kurdistan’s capital. The Erbil airport is a key staging point for fuel deliveries into Syria, part of America’s continued involvement in that country’s civil war.
On the strength of such deals, DGCI’s annual revenue rose from $2 million in 2015 to about $150 million in 2017. That year, it was the fastest-growing corporation in the state of Virginia and No. 20 in the nation, “with three-year revenue growth of 10,999 percent,” according to a 2017 Virginia Business article.
This kind of stratospheric growth isn’t normal, particularly for a firm that only boasted 10 employees at the time. It’s not like DGCI invented the iPhone.
A Kurdish government–backed concession, rather than business genius, explains the windfall. “[DGCI] is the only contractor known to have successfully delivered gasoline and diesel fuel” to the Erbil airport, said a 2015 Pentagon justification letter, the first of many such letters, which awarded exclusive contracts to the company without “full and open competition.” In December 2019, the DOD attempted to award fuel contracts to two other logistics companies, Varec and Strategic Social. But the Kurds prevented the other companies from making deliveries, and the Pentagon ended up purchasing fuel from DGCI at even higher prices.
Repeated requests for comment from Varec, Strategic Social, and DCGI went unanswered. Instead, DCGI officials have warned employees not to speak to reporters about allegations surrounding the company’s business. When I sent follow-up inquiries to company officials from my work email, they were bounced back by the server.
In Kurdistan, monopolies happen because you have power or pay off those who do. DGCI is paired with a Kurdish conglomerate called Zozik Group; together, they share ownership of a subsidiary called Triple Arrow. Zozik, which did not respond to my requests for comment, has faced long-standing allegations that it’s a channel for bribes to PUK officials, as detailed in the earlier New Republic investigation.
But PUK connections alone don’t explain DGCI’s overpriced deliveries to Erbil, which is outside the party’s primary territory. Even early in the U.S. occupation of Iraq, State Department officials conceded internally that corruption in Erbil “centers more on the Barzani clan,” according to diplomatic cables published by Wikileaks. In Erbil, “the Barzanis have to have at least half of the shares of big businesses,” said Abdulla Hawez, a Kurdish journalist and researcher. Sources said that Zozik and DGCI cooperated with companies linked to Barzani’s Kurdistan Democratic Party bloc in order to deliver fuel to the U.S. government.
Identifying the details of each participating shell company, along with the relationships between participating political factions and proxy owners, is complicated and requires incredible attention to detail to even partially unravel. Sources identified a massive network of companies and political leaders designed to grease rails in Erbil, Baghdad, and Syria. Within the network, there is infighting between different factions and companies, and affiliations can change. But leaked Kurdish government documents make one thing clear: The Barzanis are major players.
A December 2017 memo from the Kurdish government’s Regional Security Council granted special privileges to DGCI and its Zozik-connected subsidiary, Triple Arrow, along with a third, related, subcontracting company, called Rainfloods. They were to be “the only companies vetted and approved to deliver fuel products to Erbil International Airport,” the memo said, decreeing that with one narrow exception for civilian fuel business, “no other companies will be given access.”
No one from Rainfloods responded to requests for comment, and public information about the company is limited, but three sources in the Iraqi fuel industry identified Rainfloods as a DGCI partner, owned by Mansour Barzani, brother of the prime minister and head of Kurdistan’s special forces. “Everyone knows Rainfloods is owned by Mansour,” one of them said.
The Barzanis put muscle behind the monopoly: “If I want to take a small jug of fuel [to the airport], my boss must get authorization from airport security,” one worker at the airport told me. According to the 2015 DGCI justification letter, an unidentified company tried to deliver fuel to the U.S. military by breaking through the airport’s security barrier and was permanently banned.
“The fact that no one else has access [to the airport], right then and there, means you’re dealing with a corrupt individual,” said Gary Kalman, the U.S. director of Transparency International, an international anti-corruption organization.
Earlier versions of the Kurdish government memo also reveal Barzani influence. In 2016, PetroKgas—another company with links to the KDP—was also granted access to the Erbil airport. PetroKgas is owned by a former Kurdish government economic adviser, Emad Ballack, who recently served in an honorary Ukrainian diplomatic position in Erbil. “Long live our beloved president BARZANI & God bless America,” Ballack had tweeted the previous fall, when the U.S. recognized Massoud Barzani as Kurdistan’s president. Ballack did not respond to requests for comment.
Documentation of this knot of politically connected subcontractors and bagmen also exists through a Zozik frenemy, a former DGCI subcontractor called Al Shimal Oil that had overlapping management with Rainfloods. A few older contracts identify Shimal delivering overpriced fuel, produced at a Barzani-controlled refinery, to the U.S. military. Al Shimal, it’s worth mentioning, was placed on a de facto Defense Department fuel blacklist in 2018, along with two other Zozik companies, for allegedly selling Iranian fuel. One source said Al Shimal was ratted out to the Americans because it had tried to break away from DGCI. (In an email, Al Shimal’s CEO refused to answer any questions unless I visited him in person at his office in Erbil.)
This network was built to be confusing in order to deceive its main customer, the Pentagon. But it gets even more convoluted with the introduction of yet another shell company, this one with potential connections to both the fuel deals and the Barzanis’ American assets.
Another leaked document—a directory of approved vendors at the Erbil airport—includes Repeat Consultants International, the Kurdish branch of a Virginia tech consultancy with alleged ties to Zozik and Rainfloods. “Repeat Consultants are one and the same with Rainfloods,” said one Iraqi oil industry source, adding that employees have represented the companies as affiliated.
Repeat Consultants is owned by a Kurdish businessman, Haval Dosky, who is widely believed to run “quite a bit” of the Barzani family business, according to Hawez, the journalist. Another source close to the Barzani family identified Dosky to me as a friend and employee of Mansour Barzani. In 2018, Dosky made U.S. headlines when he used shell companies to facilitate the purchase of two Beverly Hills mansions for the Barzanis. The total cost for both California properties was $47 million, paid in cash—plus at least $2 million more for remodeling.
The Kurdish prime minister’s office called the Beverly Hills allegations “fake news,” but neighbors told Variety that one of the mansions had been occupied by Sodabeh Khoshdaman, the (purportedly pregnant) mistress of one of Massoud Barzani’s sons, who had also purchased a $14 million house in London’s tony Kensington district two years earlier. (No one responded to messages sent to a phone number associated with the London property, but Khoshdaman’s presence at the mansion was confirmed to The New Republic by a source who worked on the property.)
The mansions’ exorbitant sale prices have led to suspicion they were bought with dirty money. Repeat Consultants’ American business “does not seem to be a profitable business at all,” said Sarkawt Shamsulddin, a member of Iraq’s Parliament, who questioned whether Dosky used secret assets hidden in anonymous shell companies to buy the properties. Repeat Consultants “is supposed to be an I.T. consultancy,” Shamsulddin said, but it’s unlikely that profits from the I.T. company could be enough to cover the cost of some of the most expensive properties in Beverly Hills.
Could U.S. government money have been used for the purchases? On its website, Repeat Consultants lists the Department of Defense as a client, but Dosky’s lawyers denied he was involved in ripping off the Pentagon.
Repeat Consultants “does not have any contracts, either prime or sub, with any entity for providing fuel in Kurdistan to the United States Government,” said a statement from Victoria Toensing and Joseph diGenova, a Washington legal power couple who moonlight as minor conservative celebrities and frequent Fox News personalities. The two lawyers, who nearly represented President Trump during the Mueller investigation, are known for ethical lapses and “spreading disinformation” on behalf of their clients, according to an internal Fox memo obtained by the Daily Beast in February. (Dosky’s hiring of Toensing and diGenova was itself an audacious move: Their firm is registered under the Foreign Agent Registration Act as lobbyists for Barzani’s KDP, which paid them over $300,000 to advocate for military and financial support from the U.S. government.)
“Neither Mr. Dosky nor [Repeat Consultants International] has any knowledge of pricing associated with fuel supply contracts with the United States government,” Toensing and diGenova’s statement said. Repeat Consultants has won several public Pentagon shipping contracts since 2018. Details are scarce and don’t identify the exact products shipped, but the company was hauling “specialized freight” into Syria for the U.S. military.
Dosky’s lawyers also denied he purchased the California mansions. “Mr. Dosky does not own any real property in California,” Toensing and diGenova’s statement said.
Of course, the allegation isn’t that Dosky’s shell corporations purchased the mansions for himself, but rather for the Barzanis. The family has used front companies to purchase American real estate before. A Virginia mansion, purchased through an anonymous shell company in 2010, has links to the Ster Group, another Barzani company.
After being sent requests for comment, Dosky took active steps to obscure his relationships. Several of his social media accounts, which contained pictures of him with members of the Barzani family, were recently deleted. But Dosky’s overlapping connections, to both the Erbil airport fuel monopolies and the Barzani houses, are awkward.
If it could be proven that corrupt funds were used to purchase these houses, they could be subject to confiscation, anti-corruption experts said. “It’s a double whammy when corrupt funds are being used to facilitate corruption in the United States,” said Shruti Shah, the president of the Coalition for Integrity, a Washington-based anti-corruption nonprofit. “Then we are facilitating corruption twice.”
The political connections and inflated fuel prices surrounding these Pentagon deals have attracted the attention of American law enforcement agencies, including federal agents from the Justice Department and the Defense Department’s Criminal Investigative Services, which are looking into potential corruption, said four sources. (The FBI declined to comment; a representative for the DOD’s inspector general said they do not confirm or deny the existence of investigations.)
It will be an uphill battle for the feds to connect corrupt money from Kurdish fuel deals to Barzani real estate purchases. In America’s corporate regulatory environment, where companies and their subcontractors are not required to disclose beneficial ownership, “it’s tough to prove guilt,” said Transparency International’s Kalman. This has made America attractive to oligarchs and dictators who see it as a place to park dirty money. “Iraq may be more dysfunctional” politically, Kalman said, but in terms of covering up financial corruption, “countries that are functioning democracies are not a lot better.”
Meanwhile, the U.S. continues to fund Kurdish politicians—accidentally, through corruption, and on purpose, by outfitting their private armies, a cause boosted by lobbyists like Toensing and diGenova. The U.S. government has provided hundreds of millions of dollars to partisan Kurdish militias, called the Peshmerga, as part of the fight against ISIS.
Peshmerga fighters have been invaluable in defeating the terrorist group, but the U.S. government has long known that funding the militias means enabling corruption. “The core of the corruption in [Kurdistan] lies with those who control the security forces,” the State Department said internally, in 2006. “They keep the game running because controlling the guns means they can enforce their illegal contracts.”
In practical terms, enforcing contracts means oppressing the citizens of Kurdistan. Kurdish security forces have routinely beaten, kidnapped, and killed anti-corruption protesters, even abducting Shamsulddin in 2017, while he covered protests as a journalist. “The same weapons that the ‘global coalition’ gave to the Peshmerga, they used against the protesters,” said the Tahrir Institute’s Chomani. For him, the question is clear: “Why is the U.S. continuing to support these oil Mafia lords?”
The answer, the former U.S. anti-corruption official told me, lies in a prevailing attitude among members of America’s foreign policy establishment, summed up in a saying he’d heard used to justify looking the other way: “We don’t care if they steal, rape, kill, or torture their own people,” it goes, “as long as they do what we ask from time to time.”