Inside the Ring
By Bill Gertz
February 29, 2008
New attention is being focused on indirect connections between Iraqi-British billionaire Nadhmi Auchi, who has been tied to illegal activities in Iraq and France, and Democratic presidential candidate Sen. Barack Obama.
Auchi gave at least $10.5 million to Obama fundraiser Antoin "Tony" Rezko, including a payment of $3.5 million that coincided with Mr. Obama's purchase in 2005 of a $1.65 million Chicago house, the London Times reported Tuesday. The newspaper said the timing of the payment and the house purchase, along with the purchase of land next door by Mr. Rezko's wife Rita from the same seller, raise questions about whether Auchi helped buy the house.
Bill Burton, a spokesman for Mr. Obama, would not answer when asked if Auchi helped buy the senator's house. He said the senator did not recall ever meeting Auchi, who was convicted of corruption charges in France in 2003.
UPDATE: Since initial publication of this story, Mr. Burton has stated in an e-mail to Inside the Ring that he flatly denies that Auchi indirectly helped Obama purchase the house.
A lawyer for Auchi told the London Times that his client is not aware that the money from a company linked to Auchi was used to buy Mr. Obama's house. The newspaper stated that Auchi and Mr. Obama had a brief encounter in 2004 at the Four Seasons Hotel in Chicago.
A 2004 Pentagon report obtained by The Washington Times identified Auchi as a global arms dealer and Iraqi billionaire "who, behind the facade of legitimate business, served as Saddam Hussein's principle international financial manipulator and bag man."
The report to the Pentagon inspector general stated that "significant and credible evidence was developed that a conspiracy was organized by Nadhmi Auchi to offer bribes to 'fix' the awarding of cellular licensing contracts covering three geographic areas of Iraq" under the U.S. Coalition Provisional Authority.
"Additionally, significant and credible evidence has been developed that Nadhmi Auchi has engaged in unlawful activities working closely with Iraqi intelligence operatives to:
• "Bribe foreign governments and individuals prior to Operation Iraqi Freedom to turn opinion against the American-led mission to remove Saddam Hussein.
• "Arrange for significant theft from the U.N. Oil-for-Food Program to smuggle weapons and dual-use technology into Iraq ....
• "Organize an elaborate scheme to take over and control the post-war cellular phone system in Iraq."
The report suggests Auchi has ties to British intelligence through a 2002 association with a former British intelligence chief, and that British telecommunications companies may have used Auchi to gain access to cellular phone markets in post-invasion Iraq.
Auchi has denied accusations over the cell phone contract.
The London Times reported that Auchi gave a $3.5 million loan to Mr. Rezko in May 2005 through a Panamanian company linked to the Iraqi expatriate called Fintrade Services SA.
Several weeks after the loan, Mr. Obama purchased a house on Chicago's South Side and Mr. Rezko's wife bought an expensive plot of land next to the house from the same seller on the same day. Mr. Rezko's wife later sold a 10-foot section of the property to Mr. Obama, to add to the Illinois Democrat's garden. Mr. Obama has called the land purchase a mistake.
Fight over China
Bush administration officials say a new political battle is brewing between U.S. intelligence analysts and policy-makers over the threat posed by China's military buildup.
The dispute involves differences between the Pentagon's tougher view, outlined in the forthcoming China military power report, and the softer views held by key intelligence community analysts.
Senior analysts in the office of the director of national intelligence (ODNI) are said by defense officials to be deliberately underestimating the nature and scope of China's conventional and nuclear forces buildup, and whether it is focused solely on a possible future conflict over Taiwan, or is much bigger and more ominous in posing a greater threat to the U.S. and its allies in Asia.
The Pentagon view, which is backed by the State Department, is that the buildup of mobile missiles, submarines, warships, bombers, space and cyber weapons is part of a Beijing program of preparing for war with Taiwan and an anticipated U.S. defense of the island, but also possible conflicts with India, Japan, Vietnam and others in the region.
The political fight is said to be similar to the battle triggered by a politically-charged National Intelligence Estimate made public in December asserting that Iran halted work on nuclear weapons years ago, even though Tehran is illegally enriching uranium, a key component for bombs.
Pentagon officials said hints of the dispute surfaced Wednesday during Senate Armed Services Committee testimony by Michael McConnell, the director of national intelligence (DNI). Mr. McConnell's written statement on China's arms modernization dismisses concerns that the buildup is a threat.
"We judge that any Chinese regime, even a democratic one, would have similar goals," he stated, suggesting China is a normal state and not a nuclear-armed communist dictatorship.
As with the Iran estimate, the key figure is Thomas Fingar, a career State Department analyst who is now deputy DNI for analysis. Two other analysts under Mr. Fingar identified as part of the faction on China are National Intelligence Officer for East Asia Paul Heer, and his deputy Lonnie Henley. The fourth is DNI military analyst and retired Army Maj. Gen. John Landry, who helped write the bogus 2002 Iraq weapons estimate and who, surprisingly, is still employed at the National Intelligence Council.
Of the four, Mr. Henley's pro-China bias is the most egregious. In 2006, he indirectly supported the unauthorized disclosure of intelligence to China by writing a letter of support to the judge on behalf of convicted former Defense Intelligence Agency analyst Ron Montaperto, who pleaded guilty to espionage-related charges after admitting he passed secrets to Chinese military intelligence agents.
DNI spokesman Ross Feinstein denied there is a dispute over China and said the assertion "appear to be merely an attempt by you or others to incite angst or provoke a fight that does not actually exist."
The four officials tried and failed to block elements of the tougher assessment of China's military capabilities to be released next month by the Pentagon that will contain new information on China's military, including its growing power projection arms. The report, required by Congress, will be the first made public close to the time it is required, and its content has surprised some officials by getting the stamp of approval from State Department policy-makers.
Perry in Pyongyang
Former Defense Secretary William Perry, who once prepared to go to war with North Korea to block the communist regime of Kim Jong-il from getting nuclear weapons, made a visit to Pyongyang this week.
Mr. Perry, defense secretary from 1994 to 1997, traveled to Pyongyang to take part in the New York Philharmonic concert held in the capital as part of an effort to develop cultural ties to the Stalinist Kim regime.
Mr. Perry said during a recent meeting at his Stanford University office that he expects North Korea to reach an agreement with the U.S. and four other nations to fully disclose its nuclear program, probably before the end of the year.
The six-party talks are stalled over North Korea's failure to provide a full accounting of its past uranium enrichment activities.