Monongahela contractor wins $89 million judgment from Iraqi government
A federal judge ordered an $89 million judgment against the Iraqi government to a Monongahela contractor it hired to rebuild mat茅riel U.S. forces destroyed while invading the country.
In an opinion on Tuesday, Judge Royce Lamberth of the U.S. District Court in Washington, D.C., found the country’s Ministry of Defense – part of the government the United States installed following the 2003 invasion – had breached its agreement with Wye Oak, which in 2004 had agreed to assess whether Iraqi tanks and other vehicles and weapons could be salvaged, refurbish whatever could be saved and sell the rest as scrap.
A bench trial in the lawsuit, which Wye Oak brought in 2009, ended in March.
Lamberth found not only that Wye Oak hadn’t been paid for the $25 million in invoices it submitted to the fledgling Iraqi government for construction work and other items, but also that the breach of contract caused the company to lose profits from scrap metal sales and refurbishment work, as well as additional building projects it planned to carry out with CLI Corp. – a closely related construction and engineering firm – using the capital.
The company had entered an agreement in 2004 with the Iraqi government and Wye Oak went on to surpass “the goal of producing a mechanized brigade of operational armored vehicles for Iraq’s January 2005 parliamentary election” but was never paid for its work, the ruling said.
Among the events that overlapped with those in the case was the fatal shooting of Charleroi native Dale Stoffel, the company’s president, with his colleague Joe Wemple on Dec. 8, 2004, while they were en route to Baghdad. The pair were on their way from their base in Taji to collect payment for three invoices the company had submitted under the contract.
Stoffel – an arms merchant who also was part owner of CLI – had complained about Iraqi officials’ failure to pay the invoices, which the company submitted two months earlier. A laptop belonging to the Carroll Township resident, who had an appointment to meet with the special inspector general overseeing the reconstruction two days later, was also stolen, court papers say.
Court papers say the money for which the company billed the MoD was instead paid to Lebanese businessman Raymond Zayna, whose ambiguous role in the affair was a central question in the case even though he wasn’t named as a party.
The apparent murder was initially blamed on insurgents. Still, at one point during his 107-page ruling, Lamberth said Iraq bore responsibility for Stoffel’s death because “but for MoD’s breach Stoffel never would have been in the situation he was in on December 8, 2004, when he was murdered.”
Attorneys for Wye Oak and Iraqi officials offered radically different explanations for how Zayna – who oversaw a company called Global Investment Group and who was granted limited power of attorney by Wye Oak for financing and bank guarantees in September 2004 on its behalf for its contract with MoD – had come to be involved.
“Wye Oak insists Zayna was inserted by MoD, while defendants claim Wye Oak and Zayna had a business relationship dating back to summer 2004,” Lamberth wrote in his ruling. “Neither side offers definitive evidence on this point. Wye Oak bases its contention on several witnesses’ personal observation giving the impression that Dale Stoffel and Raymond Zayna did not have any form of relationship.”
He nevertheless sided with Wye Oak, finding testimony from two of its senior members – Dale Stoffel’s brother David, who worked stateside, and William Felix, who took over as president – supported their position that the company didn’t have prior dealings with Zayna.
The judge also noted that several Iraqi officials involved in the Wye Oak contract were convicted in 2011 by a court in their country for breaking their country’s laws through an agreement with Zayna’s company. A summary of the case included in Lamberth’s ruling noted one of the payments the officials made in that corruption case matched the amount in the invoices Wye Oak had submitted.
Lawyers for both sides in the cases didn’t return messages on Wednesday.