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The Staggering Costs of Kickbacks, Bribery, and Theft in the Military

The structure of the military means that when people high up in the chain of command aren’t held responsible for the crimes they commit, that message will quickly ripple down the ranks.
(Photo: xzserg/Shutterstock)

(Photo: xzserg/Shutterstock)

Over 1,200 military officers and soldiers have been implicated in a long-running, widespread kickback scheme in the National Guard, according to a Congressional oversight panel last week. The scheme is as simple as it is scandalous. In 2005, with the country embattled in two wars, the Army National Guard established a “Recruiting Assistance Program” to help make signing up for service more attractive. The program awarded cash bonuses to National Guard soldiers, retirees, and their relatives for referring and signing up new recruits.

Aside from the occasional friend making a referral, though, in actuality, hundreds of service members who were professional recruiters took advantage of the program too, pocketing in some cases hundreds of thousands of dollars each. Investigators also say that “in many cases, high school guidance counselors and even principals with access to their students’ personal information took credit for recruiting students who they happened to know were joining the Army,” according to The New York Times. Although the program ended in 2012, this investigation will likely take years.

“Clearly, we’re talking about one of the largest criminal investigations in the history of the Army,” Senator Claire McCaskill, chair of the Financial and Contracting Oversight Committee, told USA Today.

In 2011, the Commission on Wartime Contracting determined that the total money lost through waste and fraud throughout the supply chain was "at least $31 billion, and possibly as much as $60 billion."

While this investigation is certainly impressive in size, and scope, and the potential cost of the crimes being examined (estimated at nearly $100 million), it’s not at all unprecedented. With regard to shocking scandals involving various branches of the military, it’s not even alone in the current news cycle. There are the queasy-making scandals, like widespread cheating on exams in Navy and Air Force programs that train men and women to handle nuclear reactors and launch intercontinental missiles, among other things. There are icky individual cases, like the head of a program to prevent sexual assault in the Air Force being arrested for sexual battery outside a strip club, and absurd cases, like the Navy commander who traded military secrets for prostitutes and Lady Gaga tickets.

Then, of course, there are the insidious scandals that actually drain the nation’s war chest, one greasy palm at a time. In 2011, an FBI-led task force against contract corruption in Afghanistan reported that the U.S. had spent over $770 billion on private contractors in Afghanistan, Iraq, and Kuwait since 2002. That includes money for both fighting and reconstruction. “With that much money at stake, fraud and corruption are inevitable,” reads a summary on the FBI website. And that grand total has certainly grown since then. As for how much money has been wasted through corruption, the FBI didn’t say. But also in 2011, the Commission on Wartime Contracting determined that the total money lost through waste and fraud throughout the supply chain was “at least $31 billion, and possibly as much as $60 billion.” The commission also warned that “as least as much additional waste may develop if host countries cannot or will not sustain U.S.-funded projects and programs after the United States hands them over or reduces its support.”

Joe Newman, director of communications at the Project on Government Oversight, a non-profit watchdog group, says that this type of corruption—if not on this scale—has been going on since long before President Eisenhower warned of the potential for undue influence of the military-industrial complex in 1961. Certainly, if money corrupts, there was quite a lot of it wrapped up in that complex since 2002. Newman says that it’s not the case that the culture of the military is itself corrupt. Rather, the inherent structure of the military means that when people high up in the chain of command aren’t held responsible for the crimes they commit, that message will quickly ripple down the ranks. The fact that over 200 of the 1,200 service members being investigated in the National Guard kickback scheme are officers, including two generals, is a dangerous one.

“The military by its very nature is a very top-down institution,” Newman says. “And it’s based on discipline, and it's based on integrity. That's thoroughly shaken by some of these scandals: if officers and generals and colonels are being implicated in some of these scandals, what effect does that have on the guys lower down? Does it become OK to steal something from the supply room, because the command structure up top has already set that tone?”

Speaking of “supply rooms,” one of the most valuable supplies that soldiers overseas can access is fuel, and capitalizing on access that can be a strong and dangerous temptation. Just last week, a former Army soldier was sentenced for her role in facilitating the theft of fuel from an Afghanistan base over several months in 2010. According to the Justice Department:

The essence of the scheme was that the conspirators would create fraudulent TMRs [transportation movement requests] that purported to authorize the transport of fuel from FOB Fenty to other military bases, even though no legitimate fuel transportation mission was required. After the trucks were filled with fuel, the fraudulent TMRs were used by the drivers of the fuel trucks at FOB Fenty’s departure checkpoint to justify the trucks’ departures from FOB Fenty. In truth, the fuel was simply stolen, and the conspirators would receive money from the trucking company that stole the fuel.

The stolen fuel was worth over $1.2 million. The soldier got sentenced to 87 months in jail. That particular theft occurred in 2010, but then two years later, different soldiers on the same base in Afghanistan also stole and then sold jet fuel on the black market.

"It seems like a victimless crime to folks, if you're just siphoning off a little bit for yourself,” says Newman, of these types of fuel thefts. “I can't speak for these people, but maybe you justify it in your mind, if you're a sergeant on a military base, and you know someone higher up in your chain of command has done worse.”

Higher up in the chain—much higher—Defense Secretary Chuck Hagel, has condemned the “growing problem” of ethical scandals in the military. A Pentagon spokesman told reporters last week, “Secretary Hagel is not afraid to hold people accountable,” even “very senior people.”

Newman says he is heartened by Hagel’s stance, and agrees that holding senior officers accountable is a vital first step. As for more long-term solutions to cleaning up the culture, Newman offers: limiting the revolving door between military service and private contracting, more education early on in military training, and much stronger protections for whistleblowers who speak out when they see fraud and abuse of power.

"There are more good apples than bad apples,” Newman says, “but the few bad apples that we read about, what influence does that have?"