Pentagon Ousts Official Under FBI Investigation

Times Staff Writer

A senior Defense official placed under investigation by the FBI on allegations that he tried to steer Iraqi reconstruction contracts toward friends has been removed from office, Pentagon officials confirmed Friday.

John A. “Jack” Shaw, the Pentagon’s deputy undersecretary for international technology security, was ordered to leave after refusing to sign a letter of resignation, the officials said. His last day was Friday.

“He was asked to discontinue his service,” a senior Pentagon official said.


Shaw, whose activities were detailed in the Los Angeles Times earlier this year, was one of a few high-ranking U.S. officials who drew the scrutiny of investigators looking into how billions in taxpayer dollars were being spent in Iraq to rebuild that country.

Shaw allegedly tried to steer two contracts, one involving telecommunications and a second involving dredging at an Iraqi port, to companies linked to longtime friends or clients of longtime friends.

After the allegations against him surfaced last spring, Shaw responded with a report of his own, charging that one of the U.S. officials accusing him had taken bribes in a conspiracy to place Iraq’s cellular phone network under the control of a former Saddam Hussein ally.

Shaw did not respond to requests for comment on his ouster. However, in e-mails and letters exchanged with Pentagon officials over his departure, Shaw portrayed himself as a whistle-blower who was being unfairly asked to resign for having highlighted problems with the cellular phone licensing process.

In a letter to Defense Secretary Donald H. Rumsfeld, Shaw expanded on the accusations made in his previous report, charging that Defense Undersecretary Douglas J. Feith, his former law partner L. Marc Zell and Ahmad Chalabi, leader of the Iraqi National Congress party, were also involved in the conspiracy.

He also charged that Lawrence DiRita, the Pentagon’s top spokesman, was organizing a “smear campaign” against him, according to an e-mail obtained by The Times. He threatened DiRita that, if forced to step down, he would unleash “Iran Contra II,” a reference to the scandal that roiled the Reagan administration.


“I cannot submit my resignation to you until it is clear that the well-orchestrated campaign to obstruct justice and suppress the findings of my office has been properly addressed and stopped,” Shaw wrote in a letter to Rumsfeld.

DiRita dismissed Shaw’s charges against Feith as “obviously ridiculous.”

“If Jack has information and credible evidence, he really has an obligation to produce it and deliver it to the inspector general,” DiRita said.

In reference to the allegations against him, DiRita said: “I certainly have not done and would not do what he’s alleging.”

Neither Zell nor Chalabi could be reached for comment.

Shaw, 65, is a longtime government employee who served in the White House under Presidents Ford, Nixon and Reagan and was an associate deputy secretary in the Department of Commerce.

He was appointed by Rumsfeld to head the newly created office of International Technology Security in October 2001. In his position, he was responsible for reforming controls over the export of sensitive technology to foreign countries.

As planning for the war in Iraq came to be a central focus at the Pentagon, Shaw, a former State Department inspector general, took an interest in conducting investigations of his own in Iraq.

At one point, he attempted to win a job as inspector general for the U.S.-led Coalition Provisional Authority, or CPA, that oversaw Iraq, U.S. officials have said. He also signed a special memorandum with the Pentagon’s inspector general allowing him to provide recommendations on investigations into technology transfers.

In the end, Shaw and his investigations came to be at the center of several controversies concerning Iraq’s reconstruction.

Shaw first raised concerns in fall 2003 about whether U.S. and Iraqi officials were bribed in the awarding of three licenses to private companies to provide cellphone service in Iraq. The licenses were each estimated to be worth several hundred million dollars.

At the same time, he began championing a company called Guardian Net, whose board included longtime friend Don DeMarino, to win a contract to provide a police and fire radio system to Iraq, according to current and former U.S. officials and documents.

Shaw urged top CPA officials to award the contract to Nana Pacific, a small business run by Alaska Natives. Nana, which had no experience in the Middle East or in telecommunications networks, then planned to subcontract the work to Guardian Net, according to current and former U.S. officials and documents.

Under special federal contracting guidelines designed to help small and minority businesses, firms like Nana Pacific have the ability to win contracts of any size without going through the competitive bidding process usually required to protect taxpayer dollars.

The plan fell apart after Shaw ordered CPA officials to modify language in the police radio contract to allow the Nana Pacific and Guardian Net team to construct an entire cellular phone network for Iraq -- creating, in effect, a fourth cellphone license, according to current and former U.S. officials and documents.

Daniel Sudnick, the CPA’s senior advisor to Iraq’s Ministry of Communication, reported his concerns over Shaw’s efforts to the Pentagon’s inspector general, who later turned the investigation over to the FBI.

FBI officials declined to comment Friday on the status of that investigation. As recently as Nov. 18, however, the Pentagon’s inspector general denied a Times’ Freedom of Information Act request on the case due to a “pending law enforcement investigation” by an unnamed federal agency.

Shaw later wrote his own report on the cellular phone controversy, accusing U.S. and top Iraqi officials of taking bribes. The Pentagon’s inspector general referred the report to the FBI. The FBI declined Friday to comment on whether it had investigated Shaw’s charges.

One Pentagon official said Shaw had repeatedly been asked to produce evidence to support his allegations, but had failed to do so.

After the round of accusations and counteraccusations, and with the FBI investigation pending, Pentagon officials in July attempted to transfer Shaw from his position to another post within the Defense Department, according to a senior Pentagon official. Shaw refused.

“He was asked to seek another position in the department,” a senior official said. “At that point, if we could find a spot, we were happy to do that.”

Shaw most recently made news late in the presidential campaign, when he inserted himself into the controversy surrounding a report that up to 380 tons of high-grade explosives had disappeared from an Iraqi storage bunker after U.S. troops had failed to secure it.

As Democrats highlighted the story, calling it an example of the administration’s failings in Iraq, Shaw was quoted Oct. 28 by the Financial Times and the Washington Times as saying he believed that Russian commandos had spirited the explosives out of Iraq in the days before the March 2003 invasion.

Conservative media outlets seized on Shaw’s remarks as proof that Bush had done nothing wrong. But Rumsfeld distanced himself from Shaw’s report, saying he “cannot validate that even slightly.”

Shaw’s remarks on the missing explosives -- made without the approval of DiRita’s press office -- apparently were the breaking point that led to the demand for his resignation. Shaw said in his letter that he was asked to resign for having exceeded his “authority and brief.”

Shaw defended his decision, however, saying that he had to get the information about the Russian commandos out as quickly as possible in the heat of the campaign.

“I realized I was probably the only person in the country who could disprove the story” of the missing munitions, he said.