WASHINGTON — The chairman of Congress' top investigative committee has accused a longtime friend and benefactor of Florida Gov. Charlie Crist and Republican Sen. John McCain of "war profiteering" by overcharging the U.S. military by millions of dollars for fuel in Iraq.
In a 15-page letter to Defense Secretary Robert Gates, Rep. Henry Waxman, D-Calif., contends that Harry Sargeant III has used his monopoly on shipping fuel through Jordan to fleece the Defense Department for the past four years, despite large profits for his company and attempts by military officials to negotiate for "reasonable" prices.
But Sargeant, owner of International Oil Trading Co., hit back, calling the report baseless and saying Waxman and his investigators should have come to Iraq and seen "a highly complex, risky and, at-times, life-threatening effort to ensure the unimpeded flow of fuel to U.S. troops fighting in Iraq."
"They might also have learned that the reason the Department of Defense repeatedly entrusted this task to (his company) was precisely the ability, proven over time and quite literally under fire, to perform the mission," Sargeant wrote in a response.
Waxman is asking Gates to investigate. Waxman's account is based largely on documents and interviews with employees of the Defense Energy Support Center, a part of the Defense Department tasked with procuring fuel.
Other companies bid less for the contract to haul fuel to American forces in Iraq, but only Sargeant's firm, IOTC, had permission from the Jordanian royal family to route fuel through Jordan, wrote Waxman, chairman of the House Oversight and Government Reform Committee.
Sargeant countered that, too. "Other bidders had or could have obtained permission to transport fuel ... but none were able to complete the mission," he wrote. "That is what separated IOTC from other bidders."
Sargeant, who lives in Gulf Stream in Palm Beach County, has charged the government $1.4-billion for fuel over the past four years, at a profit of $210-million — including $70-million for Sargeant himself, according to the report. Waxman said that's unreasonable.
"In 2004, (defense energy) officials recognized that IOTC's charges were neither reasonable nor fair and personally intervened to ask Mr. Sargeant to lower his prices," Waxman's letter states.
Waxman said Sargeant used his monopoly position to overcharge for fuel. Sargeant said he charged a lot because his risks and costs were very high.
Sargeant was a fraternity brother of Crist's at Florida State University in the 1970s and has raised thousands of dollars for him through the years. He also was a top member of the Florida finance team for McCain's presidential campaign.
Sargeant came under the national spotlight this summer after the Washington Post reported that he raised thousands of dollars for McCain from people of modest means who often weren't registered to vote. The McCain campaign reviewed the donations and returned $50,000.
Tallahassee bureau chief Steve Bousquet contributed to this report. Wes Allison can be reached at (202) 463-0577 or firstname.lastname@example.org.